FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 33-66676
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 1, 1995)
$86,975,000
HEALTH CARE PROPERTY INVESTORS, INC.
MEDIUM-TERM NOTES, SERIES B
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
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Health Care Property Investors, Inc. (the "Company") may offer its Medium-
Term Notes, Series B (the "Notes"), from time to time in an aggregate initial
offering price of up to $86,975,000 subject to reduction as a result of the
sale by the Company of certain other Securities. Such Notes are in addition to
the $63,000,000 aggregate principal amount of the Notes that were issued prior
to the date of this Prospectus Supplement. Each Note will mature on a Business
Day nine months or more from the date of issue, as specified in a pricing
supplement hereto (each, a "Pricing Supplement"), and may be subject to
redemption by the Company or repayment at the option of the Holder thereof, in
each case, in whole or in part, prior to its Stated Maturity Date, as set
forth therein and specified in the applicable Pricing Supplement.
The interest rate, if any, or the formula for the determination of any such
interest rate, applicable to each Note and other variable terms of the Notes
as described herein will be established by the Company at the date of issue of
such Note and will be set forth therein and specified in a Pricing Supplement.
Interest rates, interest rate formulae and such other variable terms are
subject to change by the Company, but no change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or definitive form (a "Definitive Note"), as set forth in the
applicable Pricing Supplement, in denominations of $1,000 and integral
multiples thereof, unless otherwise specified in the applicable Pricing
Supplement. Each Book-Entry Note will be represented by one or more fully
registered global securities deposited with or on behalf of The Depository
Trust Company (or such other depositary as is identified in an applicable
Pricing Supplement) (the "Depositary") and registered in the name of the
Depositary or the Depositary's nominee. Interests in Book-Entry Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary (with respect to its participants) and the
Depositary's participants (with respect to beneficial owners).
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will bear interest at fixed rates (the "Fixed Rate Notes") or at floating
rates (the "Floating Rate Notes"). The applicable Pricing Supplement will
specify whether a Floating Rate Note is a Regular Floating Rate Note, Floating
Rate/Fixed Rate Note or Inverse Floating Rate Note and whether its rate of
interest is determined by reference to one or more of the CD Rate, the
Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the Federal
Funds Rate, LIBOR, the Prime Rate or the Treasury Rate (each, an "Interest
Rate Basis"), or any other interest rate basis or formula, as adjusted by any
Spread and/or Spread Multiplier and will specify such other terms applicable
to such Note. See "Description of Notes." Interest on Fixed Rate Notes will
accrue from their date of issue and, unless otherwise specified in the
applicable Pricing Supplement, will be payable semiannually in arrears on June
15 and December 15 of each year and at Maturity. Unless otherwise specified in
an applicable Pricing Supplement, the rate of interest on each Floating Rate
Note will be reset daily, weekly, monthly, quarterly, semiannually or
annually, as set forth therein and specified in the applicable Pricing
Supplement, and interest on each Floating Rate Note will accrue from its date
of issue and will be payable in arrears monthly, quarterly, semiannually or
annually, as specified in the applicable Pricing Supplement, and at Maturity.
Notes may also be issued with original issue discount, and such Notes may or
may not currently pay interest.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE
PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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PRICE TO AGENT'S DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(1)(2) COMPANY(1)(3)
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Per Note............. 100% .125%-.750% 99.875%-99.250%
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Total................ $86,975,000 $108,719-$652,312 $86,866,281-$86,322,688
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(1) Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or
Goldman, Sachs & Co. (each an "Agent" and, collectively, the "Agents"),
will purchase the Notes, as principal, from the Company, for resale to
investors and other purchasers at varying prices relating to prevailing
market prices at the time of resale as determined by the applicable Agent,
or, if so specified in an applicable Pricing Supplement, for resale at a
fixed public offering price. Unless otherwise specified in an applicable
Pricing Supplement, any Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage of the principal amount equal to the commission
applicable to an agency sale (as described below) of a Note of identical
maturity. If agreed to by the Company and the applicable Agent, such Agent
may utilize its reasonable efforts on an agency basis to solicit offers to
purchase the Notes at 100% of the principal amount thereof, unless
otherwise specified in an applicable Pricing Supplement. The Company will
pay a commission to each Agent, ranging from .125% to .750% of the
principal amount of a Note, depending upon its Stated Maturity, sold
through such Agent. See "Plan of Distribution."
(2) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to, certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution."
(3) Before deducting expenses payable by the Company estimated at $85,000.
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The Notes are being offered on a continuing basis by the Company through the
Agents. Unless otherwise specified in an applicable Pricing Supplement, the
Notes will not be listed on any securities exchange and there can be no
assurance that the Notes offered by this Prospectus Supplement will be sold or
that there will be a secondary market for the Notes. The Company reserves the
right to cancel or modify the offer made hereby without notice. The Company or
an Agent, if it solicits the offer on an agency basis, may reject any offer to
purchase Notes in whole or in part. See "Plan of Distribution."
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MERRILL LYNCH & CO. GOLDMAN, SACHS & CO.
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The date of this Prospectus Supplement is August 1, 1995.
IN CONNECTION WITH THE OFFERING OF NOTES, ANY AGENT MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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DESCRIPTION OF NOTES
The Notes will be issued as a series of Debt Securities under an Indenture
(the "Indenture") between the Company and The Bank of New York, as trustee (the
"Trustee"). The following summary of certain provisions of the Notes and of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus are a part. Capitalized terms used but not defined herein have the
meanings given to them in the Indenture or the Notes, as the case may be. The
term "Debt Securities," as used in this Prospectus Supplement, refers to all
securities issued and issuable from time to time under the Indenture and
includes the Notes. The following description of Notes will apply unless
otherwise specified in an applicable Pricing Supplement.
GENERAL
All Debt Securities, including the Notes, issued and to be issued under the
Indenture will be unsecured general obligations of the Company and will rank
pari passu with all other unsecured and unsubordinated indebtedness of the
Company from time to time outstanding. The Indenture does not limit the
aggregate principal amount of Debt Securities which may be issued thereunder
and Debt Securities may be issued thereunder from time to time in one or more
series up to the aggregate principal amount from time to time authorized by the
Company for each series. The Company may, from time to time, without the
consent of the Holders of the Notes, provide for the issuance of Notes or other
Debt Securities under the Indenture in addition to the $86,975,000 aggregate
initial offering price of Notes offered hereby and the other Debt Securities
previously issued, if any.
Except as described under "Description of the Debt Securities--Certain
Covenants of the Company--Limitation on Borrowing Money" in the Prospectus, the
Indenture does not contain any other provisions that would afford Holders of
Debt Securities protection in the event of a highly leveraged transaction,
reorganization, restructuring, change in control, merger or similar transaction
involving the Company that may adversely affect Holders of Debt Securities.
The Notes are currently limited to $149,975,000 aggregate initial offering
price. As of the date of this Prospectus Supplement, $63,000,000 aggregate
principal amount of the Notes has been issued by the Company in varying
principal amounts and at varying interest rates and maturities, in each case as
specified in the applicable Pricing Supplement filed with the Securities and
Exchange Commission at the time of issuance of such Notes. The Notes will be
offered on a continuing basis and will mature on any business day nine months
or more from the date of issue, as specified in an applicable Pricing
Supplement. Unless otherwise specified in an applicable Pricing Supplement,
interest-bearing Notes will either be Fixed Rate Notes or Floating Rate Notes
as specified in the applicable Pricing Supplement. Notes may be issued at
significant discounts from their principal amount payable at the Stated
Maturity Date (or on any prior date on which the principal or an installment of
principal of a Note becomes due and payable, whether by the declaration of
acceleration, call for redemption at the option of the Company, repayment at
the option of the Holder or otherwise) (each such date, a "Maturity"), and some
Notes may not bear interest. The Notes will be denominated in United States
dollars and payments of principal of, and premium, if any, and interest on, the
Notes will be made in United States dollars.
Interest rates, interest rate formulae and other variable terms of the Notes
are subject to change by the Company from time to time, but no such change will
affect any Note already issued or as to which an offer to purchase has been
accepted by the Company.
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Each Note will be issued in fully registered form as a Book-Entry Note or a
Definitive Note, in denominations of $1,000 and integral multiples thereof,
unless otherwise specified in the applicable Pricing Supplement. Book-Entry
Notes may be transferred or exchanged only through the Depositary. See "Book-
Entry Notes." Registration of transfer of Definitive Notes will be made at the
office or agency of the Company maintained by the Company for such purpose in
the Borough of Manhattan, The City of New York. No service charge will be made
by the Company or the Trustee for any such registration of transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith
(other than exchanges pursuant to the Indenture not involving any transfer).
Payments of principal of, and premium and interest, if any, on Book-Entry
Notes will be made by the Company through the Trustee to the Depositary. See
"Book-Entry Notes." In the case of Definitive Notes, payment of principal or
premium, if any, at the Maturity of each Definitive Note will be made in
immediately available funds upon presentation of the Definitive Note at the
office or agency of the Company maintained by the Company for such purpose in
the Borough of Manhattan, The City of New York, or at such other place as the
Company may designate (or, in the case of any repayment on an Optional
Repayment Date, upon presentation of the Definitive Note in accordance with the
provisions thereon as described below). Payment of interest due at Maturity
will be made to the person to whom payment of the principal of the Definitive
Note shall be made. Payment of interest due on Definitive Notes other than at
Maturity will be made at the office or agency of the Company maintained by the
Company for such purpose or, at the option of the Company, may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the registry books of the Company. Notwithstanding the foregoing, a
Holder of $10,000,000 or more in aggregate principal amount of Definitive Notes
having the same Interest Payment Dates will, at the option of the Company, be
entitled to receive interest payments (other than at Maturity) by wire transfer
of immediately available funds if appropriate wire transfer instructions have
been received in writing by the Trustee not less than 15 days prior to the
applicable Interest Payment Date. Such wire instructions, upon receipt by the
Trustee, shall remain in effect until revoked by such Holder.
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise indicated in an applicable Pricing Supplement, Notes will
not be subject to any sinking fund. The Notes will be redeemable at the option
of the Company prior to the Stated Maturity Date only if an Initial Redemption
Date is specified therein and in the applicable Pricing Supplement. If so
indicated in the applicable Pricing Supplement, Notes will be subject to
redemption at the option of the Company on any date on and after the applicable
Initial Redemption Date specified in such Pricing Supplement. On or after the
Initial Redemption Date, if any, the related Note may be redeemed at any time
in whole or from time to time in part in increments of $1,000 at the option of
the Company at the applicable Redemption Price, together with interest thereon
payable to the date of redemption, on notice given not more than 60 nor less
than 30 days prior to the date of redemption and in accordance with the
provisions of the Indenture. "Redemption Price," with respect to a Note, will
initially mean a percentage, the Initial Redemption Percentage, of the
principal amount of such Note to be redeemed specified in the applicable
Pricing Supplement and shall decline at each anniversary of the Initial
Redemption Date by a percentage, the Annual Redemption Percentage Reduction, if
any, specified in the applicable Pricing Supplement, of the principal amount to
be redeemed until the Redemption Price is 100% of such principal amount.
REPAYMENT AT THE OPTION OF THE HOLDER
If so indicated in an applicable Pricing Supplement, Notes will be repayable
by the Company in whole or in part at the option of the Holders thereof on
their respective Optional Repayment Dates specified in such Pricing Supplement.
If no Optional Repayment Date is indicated with respect to a Note, such Note
will not be repayable at the option of the Holder prior to the Stated Maturity
Date. Any repayment in part will be in increments of $1,000 provided that any
remaining principal amount of such Note will be an authorized denomination of
such Note. Unless otherwise provided in an applicable Pricing Supplement, the
repayment
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price for any Note so repaid will be 100% of the principal amount to be repaid,
together with interest thereon payable to the date of repayment. For any Note
to be so repaid the Note must be received, together with the form thereon
entitled "Option to Elect Repayment" duly completed, by the Trustee at the
Corporate Trust Office (or such other address of which the Company shall from
time to time notify the Holders) not more than 60 nor less than 30 days prior
to the Optional Repayment Date. Exercise of such repayment option by the Holder
will be irrevocable.
While the Book-Entry Notes are represented by global securities held by or on
behalf of the Depositary, and registered in the name of the Depositary or the
Depositary's nominee, the Depositary or its nominee will be the Holder of such
Book-Entry Notes and therefore will be the only entity that can exercise a
right to repayment. In order to ensure that the Depositary or its nominee will
timely exercise a right to repayment with respect to a particular Book-Entry
Note, the beneficial owner of such Book-Entry Note must instruct the
participant through which it holds an interest in such Book-Entry Note to
notify the Depositary of its desire to exercise a right of repayment. Different
firms may have different deadlines for accepting instructions from their
customers. Accordingly, beneficial owners of Book-Entry Notes should consult
the participants through which they own their interest in the Book-Entry Notes
for the respective deadlines for such participants. All notices shall be
executed by a duly authorized officer of such participant (with signature
guaranteed) and shall be irrevocable. In addition, such beneficial owners of
Book-Entry Notes shall effect delivery of such Book-Entry Notes at the time
such notices of election are given to the Depositary by causing the participant
to transfer such beneficial owner's interest in the Book-Entry Notes, on the
Depositary's records, to the Trustee. Conveyance of notices and other
communications by the Depositary to participants, by participants to indirect
participants and by participants and indirect participants to beneficial owners
of the Book-Entry Notes will be governed by agreements among them, subject to
any statutory or regulatory requirements as may be in effect from time to time.
If applicable, the Company will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended, and any other securities
laws or regulations in connection with any such repayment.
The Company may at any time purchase Notes at any price or prices in the open
market or otherwise. Notes so purchased by the Company may be held or resold
or, at the discretion of the Company, may be surrendered to the Trustee for
cancellation.
INTEREST
General
Unless otherwise specified in an applicable Pricing Supplement, each Note
will bear interest from the date of issue at the rate per annum or, in the case
of a Floating Rate Note, pursuant to the interest rate formula, stated therein
and in the applicable Pricing Supplement until the principal thereof is paid or
made available for payment. Interest will be payable in arrears on each
Interest Payment Date specified in the applicable Pricing Supplement on which
an installment of interest is due and payable and at Maturity. Unless otherwise
specified in an applicable Pricing Supplement, the first payment of interest on
any Note originally issued between a record date and the related Interest
Payment Date will be made on the Interest Payment Date immediately following
the next succeeding record date to the registered Holder on such next
succeeding record date. Unless otherwise specified in an applicable Pricing
Supplement, a "record date" shall be the fifteenth day (whether or not a
Business Day) immediately preceding the related Interest Payment Date.
Fixed Rate Notes
Unless otherwise specified in an applicable Pricing Supplement, each Fixed
Rate Note will bear interest from, and including, the date of issue, or the
most recent date to which interest has been paid or duly provided for, to, but
excluding, the Interest Payment Date or Maturity, as the case may be, at the
rate per annum stated on the face thereof until the principal amount thereof is
paid or made available for payment. Unless
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otherwise specified in an applicable Pricing Supplement, interest on Fixed Rate
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
Interest on Fixed Rate Notes will be payable semiannually, unless otherwise
specified in an applicable Pricing Supplement, on June 15 and December 15 of
each year and at Maturity. If any Interest Payment Date or the Maturity of a
Fixed Rate Note falls on a day that is not a Business Day, the related payment
of principal, premium, if any, or interest will be made on the next succeeding
Business Day as if made on the date such payment was due, and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date or Maturity, as the case may be.
Floating Rate Notes
Unless otherwise specified in an applicable Pricing Supplement, Floating Rate
Notes will be issued as described below. Each applicable Pricing Supplement
will specify certain terms with respect to which such Floating Rate Note is
being delivered, including: whether such Floating Rate Note is a "Regular
Floating Rate Note," a "Floating Rate/Fixed Rate Note" or an "Inverse Floating
Rate Note," the Interest Rate Basis or Bases, Initial Interest Rate, Interest
Reset Dates, Interest Reset Period, record dates, Interest Payment Dates, Index
Maturity, maximum interest rate and minimum interest rate, if any, and the
Spread and/or Spread Multiplier, if any, and if one or more of the specified
Interest Rate Bases is LIBOR, the Designated LIBOR Page, as described below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," an "Inverse Floating Rate Note" or as having an
Addendum attached, such Floating Rate Note will be designated a "Regular
Floating Rate Note" and, except as described below or in an applicable
Pricing Supplement, bear interest at the rate determined by reference to
the applicable Interest Rate Basis (i) plus or minus the applicable Spread,
if any, and/or (ii) multiplied by the applicable Spread Multiplier, if any.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Regular Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period from the Original Issue Date to the Initial Interest
Reset Date will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in an applicable Pricing
Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis (i) plus or
minus the applicable Spread, if any, and/or (ii) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (i) the interest rate in effect for the period from
the Original Issue Date to the Initial Interest Reset Date will be the
Initial Interest Rate, and (ii) the interest rate in effect commencing on,
and including, the Fixed Rate Commencement Date to Maturity shall be the
Fixed Interest Rate, if such rate is specified in the applicable Pricing
Supplement, or if no such Fixed Interest Rate is so specified, the interest
rate in effect thereon on the day immediately preceding the Fixed Rate
Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in an applicable Pricing
Supplement, such Floating Rate Note will bear interest equal to the Fixed
Interest Rate specified in the related Pricing Supplement minus the rate
determined by reference to the Interest Rate Basis (i) plus or minus the
applicable Spread, if any, and/or (ii) multiplied by the applicable Spread
Multiplier, if any. Commencing on the Initial Interest Reset Date, the rate
at which interest on such Inverse Floating Rate Note is payable shall be
reset as of each Interest Reset Date; provided, however, that the interest
rate in effect for the period from the Original Issue Date to the Initial
Interest Reset Date will be the Initial Interest Rate.
Notwithstanding the foregoing, if such Floating Rate Note is designated as
having an Addendum attached as specified on the face thereof, such Floating
Rate Note shall bear interest in accordance with the terms described in such
Addendum and the applicable Pricing Supplement.
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Unless otherwise provided in the applicable Pricing Supplement, the interest
rate with respect to each Interest Rate Basis will be determined in accordance
with the applicable provisions below. Except as set forth above or in an
applicable Pricing Supplement, the interest rate in effect on each day shall be
(a) if such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date immediately preceding such Interest Reset Date
or (b) if such day is not an Interest Reset Date, the interest rate determined
as of the Interest Determination Date immediately preceding the next preceding
Interest Reset Date.
Interest on Floating Rate Notes will be determined by reference to an
"Interest Rate Basis," which may be one or more of (i) the "CD Rate," (ii) the
"Commercial Paper Rate," (iii) the "Eleventh District Cost of Funds Rate," (iv)
the "Federal Funds Rate," (v) "LIBOR," (vi) the "Prime Rate," (vii) the
"Treasury Rate," or (viii) such other Interest Rate Basis or interest rate
formula as may be set forth in the applicable Pricing Supplement; provided,
however, that with respect to a Floating Rate/Fixed Rate Note, the interest
rate commencing on the Fixed Rate Commencement Date and continuing, unless
otherwise specified in the applicable Pricing Supplement, until Maturity shall
be the Fixed Interest Rate, if such rate is specified in the applicable Pricing
Supplement, or if no such Fixed Interest Rate is so specified, the interest
rate in effect thereon on the day immediately preceding the Fixed Rate
Commencement Date.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate Note.
The "Spread Multiplier" is the percentage of the related Interest Rate Basis or
Bases applicable to such Floating Rate Note by which such Interest Rate Basis
or Bases will be multiplied to determine the applicable interest rate on such
Floating Rate Note. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the Interest Rate Basis or Bases
will be calculated. The Spread, Spread Multiplier, Index Maturity and other
variable terms of the Floating Rate Notes are subject to change by the Company
from time to time, but no such change will affect any Floating Rate Note
previously issued or as to which an offer has been accepted by the Company.
Each applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually, annually or such other specified period (each, an
"Interest Reset Period") and the dates on which such Interest Rate will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Date will be, in the case of
Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly, the
Wednesday of each week (with the exception of weekly reset Treasury Rate Notes
which will reset the Tuesday of each week, except as specified below); (iii)
monthly, the third Wednesday of each month (with the exception of Eleventh
District Cost of Funds Rate Notes, all of which reset monthly, which will reset
on the first calendar day of the month); (iv) quarterly, the third Wednesday of
March, June, September and December of each year; (v) semiannually, the third
Wednesday of the two months specified in the applicable Pricing Supplement; and
(vi) annually, the third Wednesday of the month specified in the applicable
Pricing Supplement; provided however, that, with respect to Floating Rate/Fixed
Rate Notes, the fixed rate of interest in effect for the period from the Fixed
Rate Commencement Date until Maturity shall be the Fixed Interest Rate or the
interest rate in effect on the day immediately preceding the Fixed Rate
Commencement Date, as specified in the applicable Pricing Supplement. If any
Interest Reset Date for any Floating Rate Note would otherwise be a day that is
not a Business Day, such Interest Reset Date will be postponed to the next
succeeding day that is a Business Day, except that in the case of a Floating
Rate Note as to which LIBOR is an applicable Interest Rate Basis, if such
Business Day falls in the next succeeding calendar month, such Interest Reset
Date will be the immediately preceding Business Day. As used herein, "Business
Day" means, unless otherwise specified in the applicable Pricing Supplement,
any day that in The City of New York, is not a day on which banking
institutions are authorized or required by law or regulation to close and, with
respect to Notes as to which LIBOR is an applicable Interest Rate Basis, is
also a London Business Day. As used herein, "London Business Day" means any day
on which dealings in deposits of United States dollars are transacted in the
London interbank market.
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A Floating Rate Note may also have either or both of the following: (i) a
maximum numerical limitation, or ceiling, on the rate at which interest may
accrue during any interest period and (ii) a minimum numerical limitation, or
floor, on the rate at which interest may accrue during any interest period. In
addition to any maximum interest rate that may be applicable to any Floating
Rate Note pursuant to the above provisions, the interest rate on Floating Rate
Notes will in no event be higher than the maximum rate permitted by California
law, as the same may be modified by United States law of general application.
Each Floating Rate Note will bear interest from the date of issue at the
rates specified therein until the principal thereof is paid or otherwise made
available for payment. Except as provided below or in an applicable Pricing
Supplement, the Interest Payment Dates in the case of Floating Rate Notes which
reset: (i) daily, weekly or monthly, will be the third Wednesday of each month
or the third Wednesday of March, June, September and December of each year as
specified in the applicable Pricing Supplement; (ii) quarterly, will be the
third Wednesday of March, June, September and December of each year; (iii)
semiannually, will be the third Wednesday of the two months of each year
specified in the applicable Pricing Supplement; and (iv) annually, will be the
third Wednesday of the month of each year specified in the applicable Pricing
Supplement and, in each case, at Maturity. If any Interest Payment Date for any
Floating Rate Note (other than an Interest Payment Date at Maturity) would
otherwise be a day that is not a Business Day, such Interest Payment Date will
be postponed to the next succeeding day that is a Business Day except that in
the case of a Floating Rate Note as to which LIBOR is an applicable Interest
Rate Basis, if such Business Day falls in the next succeeding calendar month,
such Interest Payment Date will be the immediately preceding Business Day. If
the Maturity of a Floating Rate Note falls on a day that is not a Business Day,
the payment of principal, premium, if any, and interest will be made on the
next succeeding Business Day, and no interest on such payment shall accrue for
the period from and after such Maturity.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation on Floating Rate Notes will be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts
used in or resulting from such calculation on Floating Rate Notes will be
rounded to the nearest cent (with one-half cent being rounded upward).
Unless otherwise specified in the applicable Pricing Supplement, interest
payments on Floating Rate Notes will equal the amount of interest accrued from
and including the next preceding Interest Payment Date in respect of which
interest has been paid (or from and including the date of issue, if no interest
has been paid with respect to such Floating Rate Notes), to but excluding the
related Interest Payment Date; provided, however, that the interest payments on
Floating Rate Notes made at Maturity will include interest accrued to but
excluding the date of Maturity.
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the period for which accrued interest is being calculated. Unless
otherwise specified in the applicable Pricing Supplement, the interest factor
for each such day will be computed by dividing the interest rate applicable to
such day by 360, in the case of Notes for which the Interest Rate Basis is the
CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of
days in the year in the case of Notes for which the Interest Rate Basis is the
Treasury Rate. Unless otherwise specified in an applicable Pricing Supplement,
the interest factor for Notes for which the interest rate is calculated with
reference to two or more Interest Rate Bases will be calculated in each period
in the same manner as if only one of the applicable Interest Rate Bases applied
as specified in the applicable Pricing Supplement and the Notes.
The interest rate applicable to each Interest Rate Reset Period commencing on
the Interest Reset Date with respect to such Interest Rate Reset Period will be
the rate determined as of the applicable Interest Determination Date. Unless
otherwise specified in the applicable Pricing Supplement, the Interest
Determination Date with respect to the CD Rate, the Commercial Paper Rate, the
Federal Funds Rate and
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the Prime Rate will be the second Business Day preceding each Interest Reset
Date for the related Note; the Interest Determination Date with respect to the
Eleventh District Cost of Funds Rate will be the last working day of the month
immediately preceding each Interest Reset Date on which the Federal Home Loan
Bank of San Francisco (the "FHLB of San Francisco") publishes the Index; the
Interest Determination Date with respect to LIBOR will be the second London
Business Day preceding each Interest Reset Date. With respect to the Treasury
Rate, unless otherwise specified in an applicable Pricing Supplement, the
Interest Determination Date will be the day in the week in which the related
Interest Reset Date falls on which day Treasury Bills (as defined below) are
normally auctioned (Treasury Bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held on
the preceding Friday); provided, however, that if an auction is held on the
Friday of the week preceding the related Interest Reset Date, the related
Interest Determination Date will be such preceding Friday; and provided,
further, that if an auction falls on any Interest Reset Date, then the related
Interest Reset Date will instead be the first Business Day following such
auction. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Determination Date pertaining to a Floating Rate Note the interest
rate of which is determined with reference to two or more Interest Rate Bases
will be the latest Business Day which is at least two Business Days prior to
such Interest Reset Date for such Floating Rate Note on which each Interest
Rate Basis is determinable. Each Interest Rate Basis will be determined on such
date, and the applicable interest rate will take effect on the related Interest
Reset Date.
Unless otherwise provided in the applicable Pricing Supplement, The Bank of
New York will be the "Calculation Agent." Upon request of the Holder of any
Floating Rate Note, the Calculation Agent will provide the interest rate then
in effect and, if determined, the interest rate that will become effective as a
result of a determination made for the next Interest Reset Date with respect to
such Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity, as the case may be.
CD Rate. CD Rate Notes will bear interest at the rates (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in such CD Rate Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CD Rate (a "CD Rate Interest Determination Date"), the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)," or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the rate on such CD Rate Interest
Determination Date for negotiable certificates of deposit of the Index Maturity
specified in the applicable Pricing Supplement as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M.
Quotations for U.S. Government Securities" or any successor publication
("Composite Quotations") under the heading "Certificates of Deposit." If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the related Calculation Date, then the CD Rate on
such CD Rate Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market offered rates as
of 10:00 A.M., New York City time, on such CD Rate Interest Determination Date,
of three leading nonbank dealers in negotiable United States dollar
certificates of deposit in The City of New York selected by the Calculation
Agent (after consultation with the Company) for negotiable certificates of
deposit of major United States money market banks for negotiable certificates
of deposit with a remaining maturity closest to the Index Maturity designated
in the applicable Pricing Supplement in an amount that is representative for a
single transaction in that market at that time; provided, however, that if the
dealers so selected by the Calculation
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Agent are not quoting as set forth above, the CD Rate with respect to such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
Commercial Paper Rate. Commercial Paper Rate Notes will bear interest at the
rates (calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any) specified in such Commercial Paper Rate Notes
and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date relating to
a Commercial Paper Rate Note or any Floating Rate Note for which the interest
rate is determined with reference to the Commercial Paper Rate (a "Commercial
Paper Rate Interest Determination Date"), the Money Market Yield (as defined
below) on such date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the heading "Commercial Paper." In the event that such rate is not published by
3:00 P.M., New York City time, on the related Calculation Date, then the
Commercial Paper Rate will be the Money Market Yield on such Commercial Paper
Rate Interest Determination Date of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Commercial Paper" (with an Index
Maturity of one month or three months being deemed to be equivalent to an Index
Maturity of 30 days or 90 days, respectively). If by 3:00 P.M., New York City
time, on the related Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the Commercial Paper Rate on such
Commercial Paper Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent
(after consultation with the Company) for commercial paper having the Index
Maturity designated in the applicable Pricing Supplement placed for an
industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized securities rating agency, provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate determined on such Commercial Paper
Rate Interest Determination Date will be the Commercial Paper Rate in effect on
such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Money Market Yield = D x 360 X 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Eleventh District Cost of Funds Rate. Eleventh District Cost of Funds Rate
Notes will bear interest at the rates (calculated with reference to the
Eleventh District Cost of Funds Rate and the Spread and/or Spread Multiplier,
if any) specified in such Eleventh District Cost of Funds Rate Notes and in any
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to any Interest Determination
Date relating to an Eleventh District Cost of Funds Rate Note or any Floating
Rate Note for which the interest rate is determined with reference to the
Eleventh District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate
Interest Determination Date"), the rate equal to the monthly weighted average
cost of funds for the calendar month preceding such Eleventh District Cost of
Funds Rate Interest Determination Date as set forth under the caption "11th
District" on Telerate Page 7175 as of 11:00 A.M., San Francisco time, on such
Eleventh District Cost of Funds Rate Interest Determination Date. If such rate
does not appear on Telerate Page 7175 on any related Eleventh District Cost of
Funds Rate Interest Determination Date, the Eleventh District Cost of Funds
Rate for such
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Eleventh District Cost of Funds Rate Interest Determination Date shall be the
monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Index") by the FHLB of San Francisco as such cost of funds for the calendar
month preceding the date of such announcement. If the FHLB of San Francisco
fails to announce such rate for the calendar month next preceding such Eleventh
District Cost of Funds Rate Interest Determination Date, then the Eleventh
District Cost of Funds Rate for such Eleventh District Cost of Funds Rate
Interest Determination Date will be the Eleventh District Cost of Funds Rate in
effect on such Eleventh District Cost of Funds Rate Interest Determination
Date.
Federal Funds Rate. Federal Funds Rate Notes will bear interest at the rates
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in such Federal Funds Rate Notes and in
any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to
a Federal Funds Rate Note or any Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
published by 3:00 P.M., New York City time, on the related Calculation Date,
the rate on such Federal Funds Rate Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If by
3:00 P.M., New York City time, on the related Calculation Date such rate is not
published in either H.15(519) or Composite Quotations, then the Federal Funds
Rate on such Federal Funds Rate Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the rates for the
last transaction in overnight United States dollar federal funds arranged by
three leading brokers of federal funds transactions in The City of New York
selected by the Calculation Agent (after consultation with the Company) prior
to 9:00 A.M., New York City time on such Federal Funds Rate Interest
Determination Date; provided, however that if the brokers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate with respect to such Federal Funds Rate Interest Determination Date
will be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR. LIBOR Notes will bear interest at the rates (calculated with reference
to LIBOR and the Spread and/or Spread Multiplier, if any) specified in such
LIBOR Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note or any Floating Rate Note for which the interest rate is determined
with reference to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will
be either: (a) if "LIBOR Reuters" is specified in the applicable Pricing
Supplement, the arithmetic mean of the offered rates (unless the specified
Designated LIBOR Page by its terms provides only for a single rate, in
which case such single rate shall be used) for deposits in United States
dollars having the Index Maturity designated in the applicable Pricing
Supplement, commencing on the second London Business Day immediately
following that LIBOR Interest Determination Date, that appear on the
Designated LIBOR Page specified in the applicable Pricing Supplement as of
11:00 A.M. London time, on that LIBOR Interest Determination Date, if at
least two such offered rates appear (unless, as aforesaid, only a single
rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate"
is specified in the applicable Pricing Supplement, the rate for deposits in
United States dollars having the Index Maturity designated in the
applicable Pricing Supplement commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date that appears
on the Designated LIBOR Page specified in the applicable Pricing Supplement
as of 11:00 A.M. London time, on that LIBOR Interest Determination Date. If
fewer than
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two offered rates appear, or no rate appears, as applicable, LIBOR in
respect of the related LIBOR Interest Determination Date will be determined
as if the parties had specified the rate described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on
the applicable Designated LIBOR Page as specified in clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent (after consultation with the Company), to provide the
Calculation Agent with its offered quotation for deposits in United States
dollars for the period of the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Business Day
immediately following such LIBOR Interest Determination Date, to prime
banks in the London interbank market at approximately 11:00 A.M., London
time, on such LIBOR Interest Determination Date and in a principal amount
that is representative for a single transaction in United States dollars in
such market at such time. If at least two such quotations are provided,
LIBOR determined on such LIBOR Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR determined on such LIBOR Interest Determination Date will
be the arithmetic mean of the rates quoted at approximately 11:00 A.M., New
York City time, on such LIBOR Interest Determination Date by three major
banks in The City of New York selected by the Calculation Agent (after
consultation with the Company) for loans in United States dollars to
leading European banks, having the Index Maturity designated in the
applicable Pricing Supplement and in a principal amount that is
representative for a single transaction in United States dollars in such
market at such time; provided, however, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined on such LIBOR Interest Determination Date will be LIBOR in
effect on such LIBOR Interest Determination Date.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated in
the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for United States dollar deposits, or (b) if "LIBOR Telerate" is
designated in the applicable Pricing Supplement, the display on the Dow Jones
Telerate Service for the purpose of displaying the London interbank rates of
major banks for the United States dollar deposits. If neither LIBOR Reuters nor
LIBOR Telerate is specified in the applicable Pricing Supplement, LIBOR will be
determined as if LIBOR Telerate had been specified.
Prime Rate. Prime Rate Notes will bear interest at the rates (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified in such Prime Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Interest Determination Date relating to a Prime Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the
rate on such date as such rate is published in H.15(519) under the heading
"Bank Prime Loan." If such rate is not published prior to 9:00 A.M., New York
City time, on the related Calculation Date, then the Prime Rate shall be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen NYMF Page as such bank's prime rate or base
lending rate as in effect for that Prime Rate Interest Determination Date. If
fewer than four such rates but more than one such rate appear on the Reuters
Screen NYMF Page for such Prime Rate Interest Determination Date, the Prime
Rate shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent (after
consultation with the Company). If fewer than two such rates appear on the
Reuters Screen NYMF Page, the Prime Rate will be determined by the Calculation
Agent on the basis of the rates furnished in The City of New York by three
substitute banks or trust companies organized and doing business under the laws
of the United States, or any
S-11
state thereof, having total equity capital of at least $500 million and being
subject to supervision or examination by Federal or state authority, selected
by the Calculation Agent (after consultation with the Company) to provide such
rate or rates; provided, however, that if the banks or trust companies selected
as aforesaid are not quoting as mentioned in this sentence, the Prime Rate for
such Prime Rate Interest Determination Date will be the Prime Rate as
determined based on the last such rate published in H.15(519).
"Reuters Screen NYMF Page" means the display designated as page "NYMF" on the
Reuters Monitor Money Rates Service (or such other page as may replace the NYMF
page on that service for the purpose of displaying prime rates or base lending
rates of major United States banks).
Treasury Rate. Treasury Rate Notes will bear interest at the rates
(calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any) specified in such Treasury Rate Notes and in any applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note or any Floating Rate Note for which the interest rate is
determined by reference to the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate applicable to the most recent auction of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified in the applicable Pricing Supplement, as such rate is published in
H.15(519) under the heading "Treasury Bills-auction average (investment)" or,
if not published by 3:00 P.M., New York City time, on the related Calculation
Date, the auction average rate (expressed as a bond equivalent on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury Bills having the Index
Maturity designated in the applicable Pricing Supplement are not reported as
provided by 3:00 P.M., New York City time, on such Calculation Date, or if no
such auction is held in a particular week, then the Treasury Rate will be
calculated by the Calculation Agent and will be a yield to maturity (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on such Treasury
Rate Interest Determination Date, of three leading primary United States
government securities dealers (which may include one or both of the Agents)
selected by the Calculation Agent (after consultation with the Company), for
the issue of Treasury Bills with a remaining maturity closest to the Index
Maturity designated in the applicable Pricing Supplement; provided, however,
that if the dealers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate with respect to such Treasury
Rate Interest Determination Date will be the Treasury Rate in effect on such
Treasury Rate Interest Determination Date.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to Notes, including the determination of an
Interest Rate Basis, the specification of an Interest Rate Basis, calculation
of the interest rate applicable to a Floating Rate Note, its Interest Payment
Dates or any other matter relating thereto may be modified by the terms as
specified under "Other Provisions" on the face thereof or in an Addendum
relating thereto, if so specified on the face thereof and in the applicable
Pricing Supplement.
ORIGINAL ISSUE DISCOUNT NOTES
Notes may be issued at a price less than their stated redemption price at
Maturity, resulting in such Notes being treated as issued with original issue
discount for Federal income tax purposes ("Original Issue Discount Notes").
Such Original Issue Discount Notes may currently pay no interest or interest at
a rate which at the time of issuance is below market rates. See "Material
Federal Income Tax Considerations." Certain additional considerations relating
to any Original Issue Discount Notes may be described in the Pricing Supplement
relating thereto.
INDEXED NOTES
Notes also may be issued with the principal amount payable at Maturity and/or
interest to be paid thereon to be determined with reference to the price or
prices of specified commodities or stocks, the exchange
S-12
rate of one or more specified currencies (including a composite currency such
as the European Currency Unit) relative to an indexed currency, interest rate
indices, interest rate or exchange rate swap indices or such other price or
exchange rate or other financial index or indices as may be specified in such
Note ("Indexed Notes"), as set forth in an applicable Pricing Supplement.
Holders of such Notes may receive a principal amount at Maturity that is
greater than or less than the face amount of the Notes depending upon the
relative value at Maturity of the specified indexed item. Information as to the
method for determining the principal amount payable at Maturity, certain
historical information with respect to the specified indexed item or items and
tax considerations associated with investment in Indexed Notes will be set
forth in the applicable Pricing Supplement.
An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates and swap indices between
currencies), commodities or interest rate or other indices entails significant
risks that are not associated with similar investments in a conventional fixed-
rate debt security. If the interest rate of such a Note is so indexed, it may
result in an interest rate that is less than that payable on a conventional
fixed-rate debt security issued at the same time, including the possibility
that no interest will be paid, and, if the principal amount of such a Note is
so indexed, the principal amount payable at Maturity may be less than the
original purchase price of such Note if allowed pursuant to the terms of such
Note, including the possibility that no principal will be paid. The secondary
market for such Notes will be affected by a number of factors independent of
the creditworthiness of the Company and the value of the applicable currency,
commodity or interest rate index, including the volatility of the applicable
currency, commodity or interest rate index, the time remaining to the maturity
of such Notes, the amount outstanding of such Notes and market interest rates.
The value of the applicable currency, commodity or interest rate index depends
on a number of interrelated factors, including economic, financial and
political events, over which the Company has no control. Additionally, if the
formula used to determine the principal amount or interest payable with respect
to such Notes contains a multiple or leverage factor, the effect of any change
in the applicable currency, commodity or interest rate index may be increased.
The historical experience of the relevant currencies, commodities or interest
rate indices should not be taken as an indication of future performance of such
currencies, commodities or interest rate indices during the term of any Note.
The credit ratings assigned to the Company's Medium-Term Note program are
reflective of the Company's credit status, and are not in any respect
reflective of the potential impact of the factors discussed above or any other
factors on the market value of the Notes. Accordingly, prospective investors
should consult their own financial and legal advisors as to the risks entailed
by an investment in such Notes and the suitability of such Notes in light of
their particular circumstances.
Notwithstanding anything to the contrary contained herein or in the
Prospectus, for purposes of determining the rights of a Holder of a Note
indexed as to principal in respect of voting for or against amendments to the
Indenture and modifications and the waiver of rights thereunder, the principal
amount of such Indexed Note shall be deemed to be equal to the face amount
thereof upon issuance. The method for determining the amount of principal
payable at Maturity will be specified in the applicable Pricing Supplement.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes having the same Original Issue Date,
Stated Maturity Date and otherwise having identical terms and provisions will
be represented by a single global security (each, a "Registered Global
Security"); provided, however, that if by reason of the foregoing, a single
Registered Global Security would exceed $150,000,000 in aggregate principal
amount, one Registered Global Security will be issued to represent each
$150,000,000 of aggregate principal amount and an additional Registered Global
Security will be issued to represent any remaining principal amount. Each
Registered Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary. Except as set forth below, Registered
Global Securities may not be transferred except as a whole by the Depositary to
a nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any nominee to a
successor of the Depositary or a nominee of such successor.
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The Depository Trust Company, New York, New York ("DTC"), will be the initial
Depositary with respect to the Notes. DTC has advised the Company and the
Agents that it is a limited-purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Depositary was
created to hold securities of its participants and to facilitate the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers
(including the Agents), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own
DTC. Access to DTC's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may beneficially own securities held by DTC
only through participants.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain federal income tax consequences is based on
current law and is for general information only. The tax treatment of a holder
of a particular Note may vary depending upon his particular situation. Certain
holders of Notes (including insurance companies, tax-exempt organizations,
financial institutions, broker-dealers, foreign corporations and persons who
are not citizens or residents of the United States) may be subject to special
rules not discussed below. BECAUSE THE EXACT PRICING AND OTHER TERMS OF THE
NOTES VARY, NO ASSURANCE CAN BE GIVEN THAT THE CONSIDERATIONS DESCRIBED BELOW
WILL APPLY TO A PARTICULAR ISSUANCE OF NOTES. CERTAIN MATERIAL UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE OWNERSHIP OF PARTICULAR NOTES
(WHERE APPLICABLE) WILL BE SUMMARIZED IN THE PRICING SUPPLEMENT RELATING TO
SUCH NOTES. EACH PURCHASER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE TAX
CONSEQUENCES TO HIM OR HER OF HOLDING AND DISPOSING OF THE NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
Depending on the terms of a particular Note as set forth in the applicable
Pricing Supplement, some or all of the Notes may be issued with original issue
discount. Holders of Notes issued with original issue discount may be required
to include such original issue discount in gross income as interest income for
federal income tax purposes before receiving the cash to which such interest
income is attributable. In general, the amount of original issue discount, if
any, on a Note would be the excess of its "stated redemption price at maturity"
over its "issue price," subject to a statutorily-defined de minimis exception.
Holders of Notes issued with original issue discount must generally include in
gross income for federal income tax purposes the sum of the daily portions of
original issue discount with respect to such Notes for each day during the
taxable year or portion of a taxable year on which such holders hold the Notes.
Treasury Regulations provide that any Floating Rate Notes that (i) bear
interest such that the Floating Rate Notes qualify as "variable rate debt
instruments" (as defined in the Treasury Regulations), but do not provide for
"qualified stated interest" (as defined in the Treasury Regulations) or (ii)
bear interest such that the Floating Rate Notes do not qualify as "variable
rate debt instruments," may be treated as issued with original issue discount
or as contingent payment obligations. Even if the Floating Rate Notes would
otherwise qualify as "variable rate debt instruments," if the Floating Rate
Notes are subject to maximum or minimum interest rate limitations that are
expected to significantly alter the yield on the Notes (excluding maximum or
minimum rates that are fixed throughout the term of the Notes), the Floating
Rate Notes could be treated as contingent payment obligations for federal
income tax purposes.
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The Treasury Department has recently proposed regulations dealing with the
treatment of contingent payment obligations (the "Proposed Regulations"). These
Proposed Regulations supersede the proposed Treasury Regulations originally
published on April 8, 1986 dealing with contingent payment obligations and are
not proposed to be effective for debt instruments issued prior to the date that
is 60 days after the date on which the Proposed Regulations are finalized.
Because the Proposed Regulations represent the best indication of the current
view of the Treasury Department with respect to the federal income tax
treatment of contingent payment obligations, the Company intends to take the
position (absent any express authority to the contrary and unless otherwise
indicated) that the rules set forth in the Proposed Regulations will control
the tax treatment of any Floating Rate Note that is treated as a contingent
payment obligation, and the following discussion assumes such treatment. There
can be no assurance, however, that the final Treasury Regulations regarding
contingent payment obligations will not differ materially from the Proposed
Regulations. Accordingly, the ultimate federal income tax treatment of any
Floating Rate Note that is treated as a contingent payment obligation may
differ from that described herein.
Generally, if the Notes are treated as contingent payment obligations,
interest payments thereon will be treated as "contingent interest" payments.
Under the Proposed Regulations, any contingent interest payments on a Floating
Rate Note would be includible in income in a taxable year whether or not the
amount of any payment is fixed or determinable in that year. The amount of
interest included in income in any particular accrual period would be
determined by estimating a projected payment schedule (as determined under the
Proposed Regulations) for the Floating Rate Note and applying daily accrual
rules similar to those for accruing original issue discount on noncontingent
debt instruments issued with original issue discount (as discussed above). If
the actual amount of a contingent interest payment is not equal to the
projected amount, an adjustment to income at the time of the payment must be
made to reflect the difference.
A holder of Notes will be subject to backup withholding at the rate of 31%
with respect to interest paid on or original issue discount accrued on the
Notes unless (i) such holder is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact or (ii) 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. A holder of Notes who does not provide the
Company with his correct taxpayer identification number may be subject to
penalties imposed by the Internal Revenue Service (the "Service"). The Company
will report to holders of the Notes and the Service the amount of any
"reportable payments" (including any original issue discount accrued on the
Notes) and any amount withheld with respect to the Notes during the calendar
year.
Depending upon their specific terms when issued, the Notes may have tax
consequences different from those described above. Accordingly, prospective
purchasers are urged to review any tax discussion in the related Pricing
Supplement and consult their tax advisors with respect to the tax treatment of
the Notes.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company
through each of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Goldman, Sachs & Co. (collectively, the "Agents"), who will
purchase the Notes, as principal, from the Company for resale to investors and
other purchasers at varying prices relating to prevailing market prices at the
time of resale as determined by such Agent, or, if so specified in an
applicable Pricing Supplement, for resale at a fixed public offering price.
Unless otherwise specified in an applicable Pricing Supplement, any Note sold
to an Agent as principal will be purchased by such Agent at a price equal to
100% of the principal amount thereof less a percentage of the principal amount
equal to the commission applicable to an agency sale (as described below) of a
Note of identical maturity. If agreed to by the Company and the applicable
Agent, such Agent may utilize its reasonable efforts on an agency basis to
solicit offers to purchase the Notes at 100% of the principal amount thereof,
unless otherwise specified in an applicable Pricing Supplement. The Company
will pay a commission to each such Agent, ranging from .125% to .750% of the
principal amount of a Note, depending upon its Stated Maturity, sold through
such Agent.
S-15
An Agent may sell Notes it has purchased from the Company as principal to
other dealers for resale to investors, and may allow any portion of the
discount received in connection with such purchases from the Company to such
dealers. After the initial public offering of Notes, the public offering price
(in the case of Notes to be resold on a fixed public offering price basis), the
concession and the discount may be changed.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject orders in whole or in part. The Agents
will have the right, in their discretion reasonably exercised, to reject in
whole or in part any offer to purchase Notes received by them on an agency
basis.
Unless otherwise specified in an applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in New York City on the date of settlement.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market, but no Agent is obligated
to do so, and there can be no assurance that there will be a secondary market
for the Notes or liquidity in the secondary market if one develops. From time
to time, the Agents may make a market in the Notes, but the Agents are not
obligated to do so and may discontinue any market-making activity at any time.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify each of the Agents against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the Agents
may be required to make in respect thereof. The Company has agreed to reimburse
each of the Agents for certain other expenses.
Concurrently with the offering of Notes through the Agents as described
herein, the Company may issue other Debt Securities pursuant to the Indenture
referred to herein.
S-16
PROSPECTUS
HEALTH CARE PROPERTY INVESTORS, INC.
SECURITIES
Health Care Property Investors, Inc. (the "Company") may offer from time to
time, in one or more series, its unsecured debt securities (the "Debt
Securities"), shares of its Preferred Stock, par value $1.00 per share (the
"Preferred Stock") and shares of its Common Stock, par value $1.00 per share
(the "Common Stock"). The Debt Securities, the Preferred Stock and the Common
Stock are collectively referred to herein as the "Securities." The Securities
will have an aggregate offering price of $200,000,000 and will be offered on
terms to be determined at the time of offering.
In the case of Debt Securities, the specific title, the aggregate principal
amount, the purchase price, the maturity, the rate and time of payment of any
interest, any redemption or sinking fund provisions, any conversion provisions
and any other specific term of the Debt Securities will be set forth in the
accompanying supplement to this Prospectus (the "Prospectus Supplement") and/or
a related pricing supplement (the "Pricing Supplement"). In the case of
Preferred Stock, the specific number of shares, designation, stated value per
share, liquidation preference per share, issuance price, dividend rate (or
method of calculation), dividend payment dates, any redemption or sinking fund
provisions, any conversion rights and any other specific term of the series of
Preferred Stock will be set forth in the accompanying Prospectus Supplement. In
the case of Common Stock, the specific number of shares and issuance price per
share will be set forth in the accompanying Prospectus Supplement. The
Prospectus Supplement will also disclose whether the Securities will be listed
on a national securities exchange and if they are not to be listed, the
possible effects thereof on their marketability.
Securities may be sold directly, through agents from time to time or through
underwriters or dealers, which may include Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated. If any agent of the Company or any
underwriter is involved in the sale of the Securities, the name of such agent
or underwriter and any applicable commission or discount will be set forth in
the accompanying Prospectus Supplement. See "Plan of Distribution." The net
proceeds to the Company from such sale also will be set forth in the applicable
Prospectus Supplement.
The Debt Securities, if issued, will rank on parity with all other unsecured
and unsubordinated indebtedness of the Company. See "Description of Debt
Securities."
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
----------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
----------------
The date of this Prospectus is August 1, 1995.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files, reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at Room 1024 of the offices of
the Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and is available for inspection and copying at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained from the principal
offices of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Reports, proxy materials and other
information concerning the Company may also be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form S-
3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus and any accompanying Prospectus Supplement do not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, which may be examined without charge at the public reference
facilities maintained by the Commission at the Public Reference Room of the
Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies thereof may be obtained from the Commission upon payment of
the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) annual report on Form 10-K for the fiscal year ended
December 31, 1994, (ii) proxy statement dated March 17, 1995, (iii) quarterly
reports on Form 10-Q for the quarters ended March 31, 1995 and June 30, 1995,
and (iv) the description of the Common Stock contained in the Company's
Registration Statement on Form 10, dated May 7, 1985 (File No. 1-8895),
including amendments dated May 20, 1985 and May 23, 1985, in each case as filed
with the Commission pursuant to the Exchange Act, are hereby incorporated by
reference into this Prospectus and shall be deemed to be a part hereof.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Securities offered hereby shall be deemed to
be incorporated by reference into this Prospectus and to be part hereof from
the date of filing such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document, as the case may be, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
2
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Copies of this
Prospectus, as amended or supplemented from time to time, and any other
documents (or parts of documents) that constitute part of this Prospectus under
Section 10(a) of the Securities Act will also be provided without charge to
each such person, upon written or oral request. Requests for such copies should
be directed to James G. Reynolds, Executive Vice President and Chief Financial
Officer, Health Care Property Investors, Inc., 10990 Wilshire Boulevard, Suite
1200, Los Angeles, California 90024.
3
THE COMPANY
Health Care Property Investors, Inc. (the "Company"), a Maryland corporation,
was organized in March 1985 to qualify as a real estate investment trust. The
Company was organized to invest in health care related real estate located
throughout the United States, including long term care facilities, acute care
and rehabilitation hospitals, psychiatric facilities, substance abuse recovery
centers, congregate and assisted living facilities, medical office buildings
and physician clinics. At June 30, 1995, the Company owned an interest in 164
properties located in 32 states, which are leased pursuant to long-term leases
(the "Leases") to 34 health care providers (the "Lessees"). These Lessees
currently include Beverly Enterprises, Inc. ("Beverly"), Columbia/HCA
Healthcare Corp. ("HCA"), Horizon/CMS Healthcare Corp. ("Horizon"), Healthsouth
Corporation ("Healthsouth"), The Hillhaven Corporation ("Hillhaven") and Tenet
Healthcare Corporation ("Tenet"). The Company also holds mortgage loans on 23
properties that are owned and operated by 10 health care providers, including
Beverly and OrNda Healthcare ("OrNda"). Of the health care providers, Hillhaven
and Beverly account for approximately 22% and 11% respectively, of the
Company's total revenue as of June 30, 1995. The gross acquisition price of the
Company's 187 leased or mortgaged properties (the "Properties"), including
partnership acquisitions and mortgage loan acquisitions, was approximately $754
million.
The Leases provide for initial base rental rates which in the two years ended
June 30, 1995 have ranged from 8.77% to 12.34% per annum of the acquisition
price of the related Property. Rental rates vary by Lease, taking into
consideration many factors, including, but not limited to, credit of the
Lessee, operating performance of the facility, interest rates at the
commencement of the Lease and location, type and physical condition of the
facility. Most of the Leases provide for additional rents which are based upon
a percentage of increased revenue over specific base period revenue of the
leased Properties. The remainder of the Leases have annual fixed rent or
interest increases or rent increases based on inflation indices. The mortgage
loans ("Loans") held by the Company have terms ranging from nine to 20 years
and bear initial interest rates which in the two years ended June 30, 1995 have
ranged from 9.86% to 11.71% per annum. Loans originated by the Company
generally provide for annual increases in the interest rate. Additional rents
and interest received for the six months ended June 30, 1995 and the years
ended December 31, 1994, 1993 and 1992 were $9.7 million, $16.7 million, $14.7
million and $12.5 million, respectively. The primary or fixed terms of the
Leases generally range from 10 to 15 years, and generally have one or more
five-year renewal options. The average remaining base lease term on the
Company's portfolio of properties is approximately six years; the average
remaining term on the Loans is approximately 10 years. Obligations under the
Leases, in most cases, have corporate guarantees; 74 Leases and Loans covering
12 facilities are backed by irrevocable letters of credit from various
financial institutions which cover from five to 16 months of Lease or Loan
payments. The Lessees and mortgagors are required to renew such letters of
credit during the Lease or Loan term in amounts which may change based upon the
passage of time, improved operating cash flows or improved credit ratings.
Of the Company's 187 Properties, 63 are currently leased to Hillhaven, which
is the second largest long term care provider in the United States. Rental
income from these 63 Properties accounted for 23%, 24% and 27% of the Company's
total revenue for the years ended December 31, 1994, 1993 and 1992,
respectively. Based upon public reports, Hillhaven's net operating revenue and
net income for the nine months ended February 28, 1995 were approximately $1.2
billion and $39 million, respectively; and Hillhaven's total assets and
stockholders' equity as of February 28, 1995 were approximately $1.2 billion
and $405 million, respectively. For the year ended May 31, 1995, Hillhaven
reported net operating revenue and net income of approximately $1.6 billion and
$51 million, respectively. On April 24, 1995, Hillhaven and Vencor, Inc.
announced the signing of a definitive merger agreement pursuant to which
Vencor, Inc. would acquire Hillhaven. All Properties leased by the Company to
Hillhaven are unconditionally guaranteed by Tenet.
Five Properties (two acute care hospitals, two rehabilitation hospitals and
one psychiatric facility) were initially leased to subsidiaries of Tenet. In
January 1994, subsidiaries of Tenet assigned the leases for the two
rehabilitation hospitals to Healthsouth. Rental income from these five
Properties accounted for 13%, 14% and 16% of the Company's total revenue for
the years ended December 31, 1994, 1993 and 1992, respectively.
4
For the year ended December 31, 1994, the two rehabilitation hospitals and the
three remaining Properties leased to Tenet subsidiaries contributed 5% and 8%
of the Company's total revenue, respectively. In March 1995 the lease on the
psychiatric facility was assigned to a new lessee. For the six months ended
June 30, 1995, rental income from the Properties operated by Healthsouth
accounted for 5% and the two Properties operated by Tenet subsidiaries
accounted for 8% of total revenue. Tenet remains financially responsible to the
Company under its unconditional guarantee on the five Properties. Tenet is one
of the nation's largest health care services companies, providing a broad range
of services through the ownership and management of health care facilities.
Based upon public reports, Tenet's net operating revenue and net income for the
nine months ended February 28, 1995 were approximately $1.9 billion and $159
million, respectively; and Tenet's total assets and stockholders' equity as of
February 28, 1995 were approximately $3.3 billion and $1.5 billion,
respectively. For the year ended May 31, 1995, Tenet reported net operating
revenue and net income of approximately $3.3 billion and $165 million,
respectively. The following discussion is derived from public reports
distributed by Tenet: Tenet has been involved in certain significant legal
proceedings and investigations related principally to its psychiatric business
and has settled the most significant of these matters. Tenet expects that
additional lawsuits alleging malpractice at its psychiatric facilities and the
existence of a corporate-wide conspiracy to commit wrongful acts may be filed
from time to time. Tenet believes that its remaining reserves established for
these matters are adequate to cover its ultimate liability. In the event such
reserves are not adequate, the adverse determination of these matters could
have a material adverse effect on Tenet's financial condition and results of
operation. On March 1, 1995 National Medical Enterprises, Inc. (as Tenet was
then called), acquired American Medical Holdings, Inc., changed its name to
Tenet Healthcare Corporation and became the second largest investor-owned
healthcare provider in the United States.
In September 1988, the Company leased 25 long term care facilities and one
congregate care living center to subsidiaries of Beverly, which is the largest
provider of long term care in the United States. Rental income from these
leases represented approximately 12% of the Company's total revenue for the
year ended December 31, 1994. In April 1995, the Company sold 10 leased
facilities to Beverly for $43,450,000, resulting in a gain of $23,550,000.
Under the terms of the sale, the Company received net cash proceeds of
$8,387,000 and is providing a 15 year mortgage to Beverly in the amount of
$34,760,000. This transaction has changed the character of the revenue from
these 10 facilities from rental income to interest income. Based upon public
reports, Beverly's net operating revenue and net income for the three months
ended March 31, 1995 were approximately $796 million and $17 million,
respectively; and Beverly's total assets and shareholders' equity as of March
31, 1995 were approximately $2.3 billion and $842 million, respectively. For
the year ended December 31, 1994, Beverly reported net operating revenue and
net income of approximately $3 billion and $75 million, respectively. In April
1995, Beverly announced its intention to spin off to its shareholders 80% or
more of the common stock of Pharmacy Corporation of America, a wholly owned
subsidiary. The spin-off is subject to numerous conditions and events; Beverly
has announced that it anticipates the record date for determination of
shareholder participation to occur by the end of 1995 or early 1996.
The Company leases five Properties to Horizon Healthcare Corporation
("Horizon Healthcare"), and rental income from these Properties accounted for
4% of the Company's total revenue for the year ended December 31, 1994.
Continental Medical Systems, Inc. ("CMS") leases three rehabilitation hospitals
from the Company and the revenue from these leases accounted for approximately
6% of total revenue for the year ended December 31, 1994. In July 1995, Horizon
Healthcare Corporation and Continental Medical Systems, Inc. merged to form
Horizon/CMS Healthcare Corp. The merger created the largest specialty health
care provider in the United States. For the six months ended June 30, 1995, the
revenues from Horizon Healthcare and CMS represented 4% and 6%, respectively,
of the Company's total revenues. Based upon public reports, Horizon
Healthcare's total operating revenues and net income for the nine months ended
February 28, 1995 were approximately $459 million and $23 million,
respectively; and Horizon Healthcare's total assets and stockholders' equity as
of February 28, 1995 were approximately $684 million and $398 million,
respectively. For the year ended May 31, 1995, Horizon Healthcare reported
total revenues from continuing operations and net income of $566 million and
$21 million, respectively. Based upon public
5
reports, CMS's total operating revenues and net income for the nine months
ended March 31, 1995 was approximately $738 million and $4 million,
respectively; and total assets and stockholders' equity as of March 31, 1995
were approximately $722 million and $241 million, respectively.
The Company holds first mortgage loans secured by two hospitals and two
medical office buildings initially totaling $34.5 million to First Texas
Medical, Inc. and LMH Investment Company (the "Mortgage Loans"). Both hospitals
are managed by and leased to HCA Health Services of Texas, Inc., a wholly-owned
subsidiary of HCA. Based upon public reports, HCA's net operating revenue and
net income for the three months ended March 31, 1995 were approximately
$3.3 billion and $292 million, respectively; and HCA's total assets and
stockholders' equity as of March 31, 1995 were approximately $13.3 billion and
$5.3 billion, respectively. For the year ended December 31, 1994, HCA reported
net operating revenue and net income of approximately $11.1 billion and $630
million, respectively. The Company has provided or has committed to provide
approximately $42.9 million in acquisition or construction funds for seven
medical office buildings which are leased or are to be leased by HealthTrust,
Inc.-The Hospital Company ("HealthTrust"). On April 25, 1995, the completion of
the merger of Columbia/HCA Healthcare Corporation and HealthTrust was
announced.
Since 1987 the Company has committed to the development of 24 facilities,
including five rehabilitation hospitals, seven congregate care and assisted
living facilities, five long term care facilities and seven medical office
buildings representing an aggregate investment of $170.6 million. As of June
30, 1995, 20 facilities totaling $152.1 million have been completed. The
completed facilities comprise five rehabilitation hospitals, five congregate
care and assisted living facilities, four long term care facilities and six
medical office buildings. The remaining development projects are scheduled for
completion in 1995 and 1996. Simultaneously with the commencement of each of
these development programs, the Company enters into a lease agreement with the
developer/operator. The base rent under the lease is established at a rate
equivalent to a specified number of basis points over the ten-year United
States Treasury securities' yield at the conclusion of development.
The Company anticipates acquiring additional health care related facilities
and leasing them to health care operators or investing in mortgages secured by
health care facilities.
References herein to the Company include Health Care Property Investors, Inc.
and its wholly-owned subsidiaries, unless the context otherwise requires. The
Company's principal offices are located at 10990 Wilshire Boulevard, Suite
1200, Los Angeles, California 90024, and its telephone number is (310) 473-
1990.
6
SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below is selected consolidated financial data with respect to the
Company for the years ended December 31, 1992, 1993 and 1994, and for the six
months ended June 30, 1994 and 1995. The selected consolidated financial
information should be read in conjunction with the Consolidated Financial
Statements of the Company and Notes thereto included in the Company's Exchange
Act Reports which are incorporated by reference into this Prospectus. See
"Incorporation of Certain Documents by Reference."
SIX MONTHS ENDED
JUNE 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
---------------------------- ----------------------
1992 1993 1994 1994 1995
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
Revenue
Base Rental Income..... $ 58,326 $ 60,389 $ 64,811 $ 31,873 $ 33,826
Additional Rental &
Interest Income....... 12,511 14,698 16,707 8,230 9,703
Interest and Other
Income................ 10,923 15,188 15,042 7,794 8,369
Facility Operating
Revenue............... 1,967 2,274 2,436 1,109 741
-------- -------- -------- -------- --------
83,727 92,549 98,996 49,006 52,639
-------- -------- -------- -------- --------
Expenses
Interest Expense....... 19,780 19,728 20,133 10,028 9,474
Depreciation/Noncash
Charges............... 18,062 17,862 17,521 8,863 9,379
Other Expenses......... 4,950 5,147 5,185 2,610 3,047
Facility Operating
Expenses.............. 1,904 2,306 2,595 1,184 720
-------- -------- -------- -------- --------
44,696 45,043 45,434 22,685 22,620
-------- -------- -------- -------- --------
Income from Operations.. 39,031 47,506 53,562 26,321 30,019
Minority Interests...... (3,316) (3,419) (3,585) (1,861) (1,947)
Gain on Sale of Real
Estate Properties...... -- -- -- -- 23,550
-------- -------- -------- -------- --------
Net Income.............. $ 35,715 $ 44,087 $ 49,977 $ 24,460(/2/) $ 51,622(/1/)
======== ======== ======== ======== ========
Net Income Per Common
Share.................. $ 1.38 $ 1.66 $ 1.87 $ 0.92(/2/) $ 1.83(/1/)
======== ======== ======== ======== ========
Funds From Operations... $ 53,580 $ 61,427 $ 66,966 $ 33,067(/2/) $ 37,182
======== ======== ======== ======== ========
Funds From Operations
Per Common Share....... $ 2.07 $ 2.31 $ 2.51 $ 1.24(/2/) $ 1.32
======== ======== ======== ======== ========
Financial Position (at
end of Period)
Total Assets........... $509,150 $549,638 $573,826 $545,683 $607,176
Notes and Bonds
Payable............... 193,060 245,291 260,263 243,346 227,023
Bank Borrowings........ 12,700 -- 11,200 -- 10,100
Stockholders' Equity... 271,375 269,873 269,403 269,430 341,500
--------
(1) Includes $23,550,000 or $0.83 per share gain on sale of properties. See
"The Company."
(2) Favorably impacted by approximately $1,000,000 or $0.04 per share from a
non-recurring final settlement related to a partnership investment.
7
RATIO OF EARNINGS TO FIXED CHARGES
Set forth below is the ratio of earnings to fixed charges for the Company for
the periods indicated:
SIX
MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------ JUNE 30,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- --------
Ratio of Earnings to Fixed Charges............ 2.21 2.30 2.77 3.06 3.35 3.70
--------
(1) In computing the ratios of earnings to fixed charges: (a) earnings have
been based on consolidated income from operations before fixed charges
(exclusive of capitalized interest) and (b) fixed charges consist of
interest on debt including amounts capitalized and the pro rata share of
the partnerships' fixed charges.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities offered from
time to time hereby will be used for general corporate purposes, including the
repayment of outstanding indebtedness, the acquisition of health care related
properties and the construction thereof.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities are to be issued under an indenture (the "Indenture") to
be executed by the Company and a trustee (the "Trustee"), a form of which has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The following summaries of certain provisions of the Indenture and
the Debt Securities do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Indenture to which reference is hereby made for a full description of such
provisions, including the definitions therein of certain terms and for other
information regarding the Debt Securities. Whenever particular sections or
defined terms of the Indenture are referred to, it is intended that such
sections or defined terms shall be incorporated herein by reference. Copies of
the form of the Indenture are available for inspection during normal business
hours at the principal executive offices of the Company, 10990 Wilshire
Boulevard, Suite 1200, Los Angeles, California 90024.
The following sets forth certain general terms and provisions of the Debt
Securities offered by this Prospectus and the accompanying Prospectus
Supplement (the "Offered Debt Securities"). Further terms of the Offered Debt
Securities are set forth in the applicable Prospectus Supplement and/or an
applicable Pricing Supplement.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and will provide that the Debt
Securities may be issued from time to time in one or more series. All
securities issued under the Indenture will rank equally and ratably with all
other securities issued under the Indenture.
The Debt Securities will be unsecured and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company. The Debt
Securities are not, by their terms, subordinate in right of payment to any
other indebtedness of the Company.
The Prospectus Supplement and any related Pricing Supplement will describe
certain terms of the Offered Debt Securities, including (a) the title of the
Offered Debt Securities; (b) any limit on the aggregate principal amount of the
Offered Debt Securities and their purchase price; (c) the date or dates on
which the
8
Offered Debt Securities will mature; (d) the rate or rates per annum (or manner
in which interest is to be determined) at which the Offered Debt Securities
will bear interest, if any, and the date from which such interest, if any, will
accrue; (e) the dates on which such interest, if any, on the Offered Debt
Securities will be payable and the Regular Record Dates for such Interest
Payment Dates; (f) any mandatory or optional sinking fund or analogous
provisions; (g) additional provisions, if any, for the defeasance of the
Offered Debt Securities; (h) the date, if any, after which and the price or
prices at which the Offered Debt Securities may, pursuant to any optional or
mandatory redemption or repayment provisions, be redeemed and the other
detailed terms and provisions of any such optional or mandatory redemption or
repayment provisions; (i) whether the Offered Debt Securities are to be issued
in whole or in part in registered form represented by one or more registered
global securities (a "Registered Global Security") and, if so, the identity of
the depositary for such Registered Global Security or Securities; (j) any
applicable United States federal income tax consequences; and (k) any other
specific terms of the Offered Debt Securities, including any additional events
of default or covenants provided for with respect to such Debt Securities, and
any terms that may be required by or advisable under applicable laws or
regulations.
Principal of, premium, if any, and interest, if any, on the Debt Securities
will be payable at such place or places as are designated by the Company and
set forth in the applicable Prospectus Supplement. Interest, if any, on the
Debt Securities will be paid, unless otherwise provided in the applicable
Prospectus Supplement, by check mailed to the person in whose names the Debt
Securities are registered at the close of business on the record dates
designated in the applicable Prospectus Supplement at the address of the
related holder appearing on the register of Debt Securities. The Trustee will
maintain at an office in the Borough of Manhattan, The City of New York, a
register for the registration of transfers of Debt Securities, subject to any
restrictions set forth in the applicable Prospectus Supplement relating to the
Debt Securities.
Unless otherwise provided in the applicable Prospectus Supplement or Pricing
Supplement, the Debt Securities will be issued only in fully registered form
without coupons, and in denominations of $1,000 or any larger amount that is an
integral multiple of $1,000. Debt Securities may be presented for exchange and
transfer in the manner, at the places and subject to the restrictions set forth
in the Indenture, the Debt Securities and the Prospectus Supplement. Such
services will be provided without charge, other than any tax or other
governmental charge payable in connection therewith, but subject to the
limitations provided in the Indenture.
Debt Securities will bear interest at a fixed rate or a floating rate. The
Debt Securities may be issued at a price less than their stated redemption
price at maturity, resulting in such Debt Securities being treated as issued
with original issue discount for federal income tax purposes ("Original Issue
Discount Debt Securities"). Such Original Issue Discount Debt Securities may
currently pay no interest or interest at a rate which at the time of issuance
is below market rates. Special federal income tax and other considerations
applicable to any such discounted Notes will be described in the Prospectus
Supplement or Pricing Supplement relating thereto.
The Indenture will provide that all Debt Securities of any one series need
not be issued at the same time and that the Company may, from time to time,
issue additional Debt Securities of a previously issued series. In addition,
the Indenture will provide that the Company may issue Debt Securities with
terms different from those of any other series of Debt Securities and, within a
series of Debt Securities, certain terms (such as interest rate or manner in
which interest is calculated and maturity date) may differ.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock, Preferred Stock or Debt Securities of
another series will be set forth in the Prospectus Supplement relating thereto.
To protect the Company's status as a REIT, a holder may not convert any Debt
Security, and such Debt Security shall not be convertible by any holder, if as
a result of such conversion any
9
person would then be deemed to beneficially own, directly or indirectly, 9.9%
or more of the Company's Common Stock.
GLOBAL DEBT SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Securities (a "Registered Global Security")
that will be deposited with a depositary (a "Depositary") or with a nominee for
a Depositary identified in the Prospectus Supplement relating to such series
and registered in the name of the Depositary or a nominee thereof. In such
case, one or more Registered Global Securities will be issued in a denomination
or aggregate denominations equal to the portion of the aggregate principal
amount of outstanding registered Debt Securities of the series to be
represented by such Registered Global Security or Securities. Unless and until
it is exchanged in whole for Debt Securities in definitive registered form, a
Registered Global Security may not be transferred except as a whole by the
Depositary for such Registered Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will apply to all
depositary arrangements.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the Depositary
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Registered Global Security
beneficially owned by such participants. The accounts to be credited shall be
designated by any dealers, underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial interests in such
Registered Global Security will be shown on, and the transfer of such ownership
interests will be effected only through, records maintained by the Depositary
for such Registered Global Security (with respect to interests of participants)
and on the records of participants (with respect to interests of persons
holding through participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Debt Securities represented by such Registered Global Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Registered Global Security will not be entitled to have the Debt
Securities represented by such Registered Global Security registered in their
names, will not receive or be entitled to receive physical delivery of such
Debt Securities in definitive form and will not be considered the owners or
holders thereof under the Indenture. Accordingly, each person owning a
beneficial interest in a Registered Global Security must rely on the procedures
of the Depositary for such Registered Global Security and, if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder under the
Indenture. The Company understands that under existing industry practices, if
the Company requests any action of holders or if an owner of a beneficial
interest in a Registered Global Security desires to give or take any action
which a holder is entitled to give or take under the Indenture, the Depositary
for such Registered Global Security would authorize the participants holding
the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners holding through them.
10
Principal, premium, if any, and interest payments of Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as
the case may be, as the registered owner of such Registered Global Security.
None of the Company, the Trustee or any other agent of the Company or agent of
the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in such Registered Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest in respect of such Registered Global Security, will
immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in such Registered
Global Security as shown on the records of such Depositary. The Company also
expects that payments by participants to owners of beneficial interests in such
Registered Global Security held through such participants will be governed by
standing customer instructions and customary practices, as is now the case with
the securities held for the accounts of customers in bearer form or registered
in "street name," and will be responsibility of such participants.
If the Depositary for any Debt Securities represented by a Registered Global
Security is at any time unwilling or unable to continue as Depositary or ceases
to be a clearing agency registered under the Exchange Act, and a successor
Depositary registered as a clearing agency under the Exchange Act is not
appointed by the Company within 90 days, the Company will issue such Debt
Securities in definitive form in exchange for such Registered Global Security.
In addition, the Company may at any time and in its sole discretion determine
not to have any of the Debt Securities of a series represented by one or more
Registered Global Securities and, in such event, will issue Debt Securities of
such series in definitive form in exchange for the Registered Global Security
or Securities representing such Debt Securities. Any Debt Securities issued in
definitive form in exchange for a Registered Global Security will be registered
in such name or names as the Depositary shall instruct the Trustee. It is
expected that such instructions will be based upon directions received by the
Depositary from participants with respect to ownership of beneficial interests
in such Registered Global Security.
CERTAIN COVENANTS OF THE COMPANY
Limitation on Borrowing Money
The Company covenants in the Indenture that it will not create, assume,
incur, or otherwise become liable in respect of, any
(a) Senior Debt (as defined below) unless the aggregate principal amount
of Senior Debt outstanding of the Company will not, at the time of such
creation, assumption or incurrence and after giving effect thereto and to
any concurrent transactions, exceed the greater of (i) 300% of Capital Base
(as defined below), or (ii) 500% of Tangible Net Worth (as defined below);
and
(b) Non-Recourse Debt (as defined below) unless the aggregate principal
amount of Senior Debt and Non-Recourse Debt outstanding of the Company will
not, at the time of such creation, assumption or incurrence and after
giving effect thereto and to any concurrent transactions, exceed 500% of
Capital Base.
For the purpose of this limitation as to borrowing money, "Senior Debt" shall
mean all Debt other than Non-Recourse Debt and Subordinated Debt; "Debt," with
respect to any Person, shall mean (i) its indebtedness, secured or unsecured,
for borrowed money; (ii) Liabilities secured by any existing lien on property
owned by such Person; (iii) Capital Lease Obligations, and the present value of
all payments due under any arrangement for retention of title (discounted at
the implicit rate if known and at 9% otherwise) if such arrangement is in
substance an installment purchase or an arrangement for the retention of title
for security purposes; and (iv) guarantees of obligations of the character
specified in the foregoing clauses (i), (ii)
11
and (iii), to the full extent of the liability of the guarantor (discounted to
present value, as provided in the foregoing clause (iii), in the case of
guarantees of title retention arrangements); "Capital Lease" shall mean at any
time any lease of Property which, in accordance with generally accepted
accounting principles, would at such time be required to be capitalized on a
balance sheet of the lessee; "Capital Lease Obligation" shall mean at any time
the amount of the liability in respect of a Capital Lease which, in accordance
with generally accepted accounting principles, would at such time be so
required to be capitalized on a balance sheet of the lessee; "Property" shall
mean any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible; "Person" shall mean an individual,
partnership, joint venture, joint-stock company, association, corporation,
trust or unincorporated organization, or a government or agency or political
subdivision thereof; "Non-Recourse Debt" with respect to any Person, shall mean
any Debt secured by, and only by, property on or with respect to which such
Debt is incurred where the rights and remedies of the holder of such Debt in
the event of default do not extend to assets other than the property
constituting security therefor; "Subordinated Debt" shall mean any unsecured
Debt of the Company which is issued or assumed pursuant to, or evidenced by, an
indenture or other instrument which contains provisions for the subordination
of such other Debt (to which appropriate reference shall be made in the
instruments evidencing such other Debt if not contained therein) to the Debt
Securities (and, at the option of the Company, if so provided, to other Debt of
the Company, either generally or as specifically designated); "Capital Base"
shall mean, at any date, the sum of Tangible Net Worth and Subordinated Debt;
"Tangible Net Worth" shall mean, at any date, the net book value (after
deducting related depreciation, obsolescence, amortization, valuation, and
other proper reserves) of the Tangible Assets of the Company at such date,
minus the amount of its Liabilities at such date; "Tangible Assets" shall mean
all assets of the Company (including assets held subject to Capital Leases and
other arrangements pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes) except: (i) deferred
assets other than prepaid insurance, prepaid taxes and deposits; (ii) patents,
copyrights, trademarks, trade names, franchises, goodwill, experimental expense
and other similar intangibles; and (iii) unamortized debt discount and expense;
and "Liabilities" shall mean any date the items shown as liabilities on the
balance sheet of the Company, except any items of deferred income, including
capital gains.
Consolidation, Merger and Sale of Assets
The Company shall not consolidate or merge with or into, or transfer or lease
its assets substantially as an entirety to any person unless the Company shall
be the continuing corporation, or the successor corporation or person to which
such assets are transferred or leased shall be organized under the laws of the
United States or any state thereof or the District of Columbia and shall
expressly assume the Company's obligations on the Debt Securities and under
such Indenture, and after giving effect to such transaction no Event of Default
shall have occurred and be continuing, and certain other conditions are met.
Additional Covenants
Any additional covenants of the Company with respect to a series of the Debt
Securities will be set forth in the Prospectus Supplement and/or Pricing
Supplement relating thereto.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture with respect to
the Debt Securities of any series: (a) failure to pay principal of or any
premium on any Debt Security of such series when due; (b) failure to pay any
interest on any Debt Security of such series when due, continued for 30 days;
(c) failure to deposit any sinking fund payment when due in respect of any Debt
Security of such series; (d) failure to perform any other covenant or warranty
of the Company in the Indenture (other than a covenant or warranty included in
the Indenture solely for the benefit of one or more series of Debt Securities
other than that series), continued for 60 days after written notice by the
Trustee to the Company or by the holders of at least 25% in aggregate principal
amount of the Outstanding Debt Securities of such series to the Company and the
Trustee as provided in the Indenture; (e) certain events in bankruptcy,
insolvency, conservatorship, receivership or
12
reorganization of the Company; (f) an acceleration of any other indebtedness of
the Company, in an aggregate principal amount exceeding $20,000,000, not
rescinded or annulled within 10 days after written notice is given as provided
in the Indenture; and (g) the occurrence of any other Event of Default provided
with respect to the Debt Securities of that series.
If an Event of Default with respect to the Outstanding Debt Securities of any
series occurs and is continuing, either the Trustee or the holders of at least
25% in aggregate principal amount of the Outstanding Debt Securities of that
series may declare the principal amount of all the Outstanding Debt Securities
of that series to be due and payable immediately. At any time after the
declaration of acceleration with respect to the Debt Securities of any series
has been made, but before a judgment or decree based on acceleration has been
obtained, the holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration.
The Indenture will provide that the Trustee shall, within 90 days after the
occurrence of a default with respect to a series of Debt Securities, give to
the holders of the Outstanding Debt Securities of such series notice of all
uncured defaults known to it. Except in the case of default in the payment of
principal, premium, if any, or interest, if any, on any Debt Securities of a
series, the Trustee shall be protected in withholding such notice if the
Trustee in good faith determines that the withholding of such notice is in the
interest of the holders of Outstanding Debt Securities of such series.
The Indenture will provide that, subject to the duty of the Trustee during
the continuance of an Event of Default to act with the required standard of
care, the Trustee will be under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any of the holders,
unless such holders shall have offered to the Trustee reasonable indemnity.
Subject to such provisions for the indemnification of the Trustee and subject
to certain other limitations, the holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of any series will have the right to
direct the time, method and place of conducting any proceedings for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Debt Securities of that series.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
MODIFICATION, WAIVER AND AMENDMENT
The Indenture will provide that modifications and amendments may be made by
the Company and the Trustee to the Indenture with the consent of the holders of
not less than 66-2/3% in aggregate principal amount of the Outstanding Debt
Securities of each series affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
holder of each Outstanding Debt Security affected thereby, (a) change the
Stated Maturity of the principal of, or any installment of principal of,
premium, if any, or interest, if any, on any Debt Security; (b) reduce the
principal amount of, premium, if any, or interest, if any, on any Debt
Security; (c) reduce the amount of principal of an Original Issue Discount Debt
Security payable upon acceleration of the Stated Maturity thereof; (d) change
the place or currency of payment of the principal of, premium, if any, or
interest, if any, on any Debt Security; (e) impair the right to institute suit
for the enforcement of any payment on or with respect to any Debt Security; or
(f) reduce the percentage in aggregate principal amount of the Outstanding Debt
Securities of any series, the consent of whose holders is required for
modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults.
The holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of each series will be able, on behalf of all holders of the
Debt Securities of that series, to waive compliance by the Company with certain
restrictive provisions of the Indenture, or any past default under the
Indenture with respect to the Debt Securities of that series, except a default
in the payment of principal, premium, if any, or interest, if
13
any, or in respect of a provision of the Indenture which cannot be amended or
modified without the consent of the holder of each Outstanding Debt Security of
the series affected.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture, with respect to any and all series of Debt Securities (except
for certain specified surviving obligations including, among other things, the
Company's obligation to pay the principal of, premium, if any, or interest, if
any, on any Debt Securities), will be discharged and cancelled upon the
satisfaction of certain conditions, including the payment in full of the
principal of, premium, if any, and interest, if any, on all of the Debt
Securities of such series or the deposit with the Trustee of an amount of cash
sufficient for such payment or redemption, in accordance with the Indenture.
DEFEASANCE
The Company will be able to terminate certain of its obligations under the
Indenture with respect to the Debt Securities of any series on the terms and
subject to the conditions contained in the Indenture, by depositing in trust
with the Trustee cash or U.S. government obligations (or combination thereof)
sufficient to pay the principal of, premium, if any, and interest, if any, on
the Debt Securities of such series to their maturity or redemption date in
accordance with the terms of the Indenture and such Debt Securities.
GOVERNING LAW AND CONSENT TO JURISDICTION
The Debt Securities and the Indenture will be governed by and construed in
accordance with the laws of the State of California.
CONCERNING THE TRUSTEE
The Indenture will contain certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions with the Company; provided, however, that if the Trustee
acquires any conflicting interest it must eliminate such conflict or resign or
otherwise comply with the Trust Indenture Act of 1939, as amended.
The Indenture will provide that, in case an Event of Default should occur and
be continuing, the Trustee will be required to use the degree of care and skill
of a prudent person in the conduct of his or her own affairs in the exercise of
its powers.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Articles of Amendment and Restatement of the Company (the "Charter Documents"),
and the Board of Directors' resolution or articles supplementary (the "Articles
Supplementary") relating to each series of the Preferred Stock which will be
filed with the Commission and incorporated by reference to the Registration
Statement of which this Prospectus is a part at or prior to the time of the
issuance of such series of Preferred Stock.
GENERAL
The authorized capital stock of the Company consists of 100,000,000 shares of
Common Stock, $1.00 par value per share, and 50,000,000 shares of preferred
stock, $1.00 par value per share ("preferred stock of
14
the Company," which term, as used herein, includes the Preferred Stock offered
hereby). See "Description of Common Stock."
Under the Charter Documents, the Board of Directors of the Company is
authorized without further stockholder action to establish and issue, from time
to time, up to 50,000,000 shares of preferred stock of the Company, in one or
more series, with such designations, preferences, powers and relative
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereon, including, but not limited to, dividend
rights, dividend rate or rates, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price
or prices, and the liquidation preferences as shall be stated in the resolution
providing for the issue of a series of such stock, adopted, at any time or from
time to time, by the Board of Directors of the Company.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Stock will be issued;
(iv) the dividend rate (or method of calculation), the dates on which dividends
shall be payable and the dates from which dividends shall commence to cumulate,
if any; (v) any redemption or sinking fund provisions; (vi) any conversion
rights; and (vii) any additional voting, dividend, liquidation, redemption,
sinking fund and other rights, preferences, privileges, limitations and
restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. Unless otherwise stated in a Prospectus
Supplement relating to a particular series of the Preferred Stock, each series
of the Preferred Stock will rank on a parity as to dividends and distributions
of assets with each other series of the Preferred Stock. The rights of the
holders of each series of the Preferred Stock will be subordinate to those of
the Company's general creditors.
CERTAIN PROVISIONS OF THE CHARTER DOCUMENTS
See "Description of Common Stock--Redemption and Business Combination
Provisions" for a description of certain provisions of the Charter Documents,
including provisions relating to redemption rights and provisions which may
have certain anti-takeover effects.
DIVIDEND RIGHTS
Holders of shares of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds of the Company legally available therefor, cash dividends on such
dates and at such rates as will be set forth in, or as are determined by the
method described in, the Prospectus Supplement relating to such series of the
Preferred Stock. Such rate may be fixed or variable or both. Each such dividend
will be payable to the holders of record as they appear on the stock books of
the Company on such record dates, fixed by the Board of Directors of the
Company, as specified in the Prospectus Supplement relating to such series of
Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the holders of such series of Preferred Stock will have no
right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and the Company shall have no obligation to pay the
dividend accrued for such period, whether or not dividends on such series are
declared payable on any future dividend payment dates. Dividends on the shares
of each series of Preferred Stock for which dividends are cumulative will
accrue from the date on which the Company initially issues shares of such
series.
15
So long as the shares of any series of the Preferred Stock shall be
outstanding, unless (i) full dividends (including if such Preferred Stock is
cumulative, dividends for prior dividend periods) shall have been paid or
declared and set apart for payment on all outstanding shares of the Preferred
Stock of such series and all other classes and series of preferred stock of the
Company (other than Junior Stock, as defined below) and (ii) the Company is not
in default or in arrears with respect to the mandatory or optional redemption
or mandatory repurchase or other mandatory retirement of, or with respect to
any sinking or other analogous fund for, any shares of Preferred Stock of such
series or any shares of any other preferred stock of the Company of any class
or series (other than Junior Stock), the Company may not declare any dividends
on any shares of Common Stock of the Company or any other stock of the Company
ranking as to dividends or distributions of assets junior to such series of
Preferred Stock (the Common Stock and any such other stock being herein
referred to as "Junior Stock"), or make any payment on account of, or set apart
money for, the purchase, redemption or other retirement of, or for a sinking or
other analogous fund for, any shares of Junior Stock or make any distribution
in respect thereof, whether in cash or property or in obligations or stock of
the Company, other than Junior Stock which is neither convertible into, nor
exchangeable or exercisable for, any securities of the Company other than
Junior Stock.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the Company,
voluntary or involuntary, the holders of each series of the Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets or payment is
made to the holders of Common Stock or any other shares of stock of the Company
ranking junior as to such distribution or payment to such series of Preferred
Stock, the amount set forth in the Prospectus Supplement relating to such
series of the Preferred Stock. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Preferred Stock of any series and any other shares of preferred
stock of the Company (including any other series of the Preferred Stock)
ranking as to any such distribution on a parity with such series of the
Preferred Stock are not paid in full, the holders of the Preferred Stock of
such series and of such other shares of preferred stock of the Company will
share ratably in any such distribution of assets of the Company in proportion
to the full respective preferential amounts to which they are entitled. After
payment to the holders of the Preferred Stock of each series of the full
preferential amounts of the liquidating distribution to which they are
entitled, the holders of each such series of the Preferred Stock will be
entitled to no further participation in any distribution of assets by the
Company.
If such payment shall have been made in full to all holders of shares of
Preferred Stock, the remaining assets of the Company shall be distributed among
the holders of any other classes of stock ranking junior to the Preferred Stock
upon liquidation, dissolution or winding up, according to their respective
rights and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the Company with or
into any other corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series. Shares of the Preferred Stock redeemed by the Company
will be restored to the status of authorized but unissued shares of preferred
stock of the Company.
In the event that fewer than all of the outstanding shares of a series of the
Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by the
16
Company or by any other method as may be determined by the Company in its sole
discretion to be equitable. From and after the redemption date (unless default
shall be made by the Company in providing for the payment of the redemption
price plus accumulated and unpaid dividends, if any), dividends shall cease to
accumulate on the shares of the Preferred Stock called for redemption and all
rights of the holders thereof (except the right to receive the redemption price
plus accumulated and unpaid dividends, if any) shall cease.
So long as any dividends on shares of any series of the Preferred Stock or
any other series of preferred stock of the Company ranking on a parity as to
dividends and distributions of assets with such series of the Preferred Stock
are in arrears, no shares of any such series of the Preferred Stock or such
other series of preferred stock of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of such shares of Preferred Stock of such series or of shares of
such other series of preferred stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of Preferred Stock
of such series, and, unless the full cumulative dividends on all outstanding
shares of any cumulative Preferred Stock of such series and any other stock of
the Company ranking on a parity with such series as to dividends and upon
liquidation shall have been paid or contemporaneously are declared and paid for
all past dividend periods, the Company shall not purchase or otherwise acquire
directly or indirectly any shares of Preferred Stock of such series (except by
conversion into or exchange for stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of Preferred
Stock to be redeemed at the address shown on the stock transfer books of the
Company. After the redemption date, dividends will cease to accrue on the
shares of Preferred Stock called for redemption and all rights of the holders
of such shares will terminate, except the right to receive the redemption price
without interest.
CONVERSION RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock or another series of Preferred Stock will be set forth in the Prospectus
Supplement relating thereto. See "Description of Common Stock."
VOTING RIGHTS
Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as required by applicable
law, the holders of the Preferred Stock will not be entitled to vote for any
purpose.
So long as any shares of Preferred Stock remain outstanding, the Company
shall not, without the consent or the affirmative vote of the holders of a
majority of the shares of each series of Preferred Stock outstanding at the
time given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class) (i) authorize, create or issue, or
increase the authorized or issued amount of, any class or series of stock
ranking prior to such series of Preferred Stock with respect to payment of
dividends, or the distribution of assets on liquidation, dissolution or winding
up or reclassifying any authorized stock of the Company into any such shares,
or create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares and (ii) to repeal, amend or
otherwise change any of the provisions applicable to the Preferred Stock of
such series in any manner which materially and adversely affects the powers,
preferences, voting power or other rights or privileges of such series of the
Preferred Stock or the holders thereof; provided, however, that any increase in
the amount of the authorized preferred stock or the creation or issuance of
other series of preferred stock, or any increase in the amount of authorized
shares of such series or of any other series of Preferred Stock, in each case
ranking on a parity with or junior to the
17
Preferred Stock of such series, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of the Preferred Stock shall have been
redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
TRANSFER AGENT AND REGISTRAR
The transfer agent, dividend and redemption price disbursement agent and
registrar for shares of each series of the Preferred Stock will be set forth in
the Prospectus Supplement relating thereto.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Company consists of 100,000,000 shares of
Common Stock, par value $1.00 per share, and 50,000,000 shares of Preferred
Stock, par value $1.00 per share. The following description is qualified in all
respects by reference to the Charter Documents and Amended Bylaws of the
Company, copies of which were filed as exhibits to the Company's Registration
Statement on Form S-3 filed with the Commission on October 17, 1989, as
amended, and the Rights Agreement between the Company and Chemical Trust
Company of California, as Rights Agent, a copy of which was filed as an exhibit
to the Company's Registration Statement on Form 8-A filed with the Commission
on July 17, 1990.
COMMON STOCK
All shares of Common Stock participate equally in dividends payable to
holders of Common Stock when and as declared by the Board of Directors and in
net assets available for distribution to holders of Common Stock on
liquidation, dissolution, or winding up of the Company, have one vote per share
on all matters submitted to a vote of the stockholders and do not have
cumulative voting rights in the election of directors. All issued and
outstanding shares of Common Stock are, and the Common Stock offered hereby
will be upon issuance, validly issued, fully paid and nonassessable. Holders of
the Common Stock do not have preference, conversion, exchange or preemptive
rights. The Common Stock is listed on the New York Stock Exchange (NYSE Symbol:
HCP).
STOCKHOLDER RIGHTS PLAN
On July 5, 1990, the Board of Directors of the Company declared a dividend
distribution of one right (each, a "Right") for each outstanding share of
Common Stock of the Company to stockholders of record at the close of business
on July 30, 1990. When exercisable, each Right entitles the registered holder
to purchase from the Company one share of the Company's Common Stock at a price
of $47.50 per share, subject to adjustment. Initially, the Rights will be
attached to all outstanding shares of Common Stock, and no separate Rights
Certificates will be distributed. The Board also authorized the issuance of one
Right with respect to each share of Common Stock that shall become outstanding
between July 30, 1990 and the earliest of the Distribution Date, the Redemption
Date and the Final Expiration Date (all as defined in the Rights Agreement).
Each share of Common Stock offered hereby will have upon issuance one Right
attached.
The Rights will become exercisable and will detach from the Common Stock upon
the earlier of (i) the tenth day after the public announcement that any person
or group has acquired beneficial ownership of 15% or more of the Company's
Common Stock, or (ii) the tenth day after any person or group commences, or
announces an intention to commence, a tender or exchange offer which, if
consummated, would result in the beneficial ownership by a person or group of
30% or more of the Company's Common Stock (the earlier of (i) and (ii) being
the "Distribution Date"). If such person or group acquires beneficial ownership
of 15% or more of the Company's Common Stock (except pursuant to certain cash
tender offers for all outstanding
18
Common Stock approved by the Board of Directors) or if the Company is the
surviving corporation in a merger and its Common Stock is not changed or
exchanged, each Right will entitle the holder to purchase, at the Right's then
current exercise price, that number of shares of the Company's Common Stock
having a market value equal to twice the exercise price. Similarly, if after
the Rights become exercisable, the Company merges or consolidates with, or
sells 50% or more of its assets or earning power to, another person, each Right
will then entitle the holder to purchase, at the Right's then current exercise
price, that number of shares of the stock of the acquiring company which at the
time of such transaction would have a market value equal to twice the exercise
price.
The Rights may be redeemed in whole, but not in part, at a price of $0.01 per
Right by the Board of Directors at any time until ten days following the public
announcement that a person or group has acquired beneficial ownership of 15% or
more of the Company's outstanding Common Stock. The Board of Directors may,
under certain circumstances, extend the period during which the Rights are
redeemable or postpone the Distribution Date. The Rights will expire on July
30, 2000, unless earlier redeemed.
REDEMPTION AND BUSINESS COMBINATION PROVISIONS
If the Board of Directors shall, at any time and in good faith, be of the
opinion that direct or indirect ownership of more than 9.9% or more of the
voting shares of capital stock has or may become concentrated in the hands of
one beneficial owner, the Board of Directors shall have the power (i) by lot or
other means deemed equitable by it to call for the purchase from any
stockholder of the Company a number of voting shares sufficient, in the opinion
of the Board of Directors, to maintain or bring the direct or indirect
ownership of voting shares of capital stock of such beneficial owner to a level
of no more than 9.9% of the outstanding voting shares of the Company's capital
stock, and (ii) to refuse to transfer or issue voting shares of capital stock
to any person whose acquisition of such voting shares would, in the opinion of
the Board of Directors, result in the direct or indirect ownership by that
person of more than 9.9% of the outstanding voting shares of capital stock of
the Company. Further, any transfer of shares, options, warrants, or other
securities convertible into voting shares that would create a beneficial owner
of more than 9.9% of the outstanding voting shares shall be deemed void ab
initio and the intended transferee shall be deemed never to have had an
interest therein. The purchase price for any voting shares of capital stock so
redeemed shall be equal to the fair market value of the shares reflected in the
closing sales price for the shares, if then listed on a national securities
exchange, or the average of the closing sales prices for the shares if then
listed on more than one national securities exchange, or if the shares are not
then listed on a national securities exchange, the latest bid quotation for the
shares if then traded over-the-counter, on the last business day immediately
preceding the day on which notices of such acquisitions are sent by the
Company, or, if no such closing sales prices or quotations are available, then
the purchase price shall be equal to the net asset value of such stock as
determined by the Board of Directors in accordance with the provisions of
applicable law. From and after the date fixed for purchase by the Board of
Directors, the holder of any shares so called for purchase shall cease to be
entitled to distributions, voting rights and other benefits with respect to
such shares, except the right to payment of the purchase price for the shares.
The Charter Documents require that, except in certain circumstances, Business
Combinations (as defined below) between the Company and a beneficial holder of
10% or more of the Company's outstanding voting stock (a "Related Person") be
approved by the affirmative vote of at least 90% of the outstanding voting
shares of the Company.
A Business Combination is defined in the Charter Documents as (a) any merger
or consolidation of the Company with or into a Related Person, (b) any sale,
lease, exchange, transfer or other disposition, including without limitation a
mortgage or any other security device, of all or any "Substantial Part" (as
defined below) of the assets of the Company (including without limitation any
voting securities of a subsidiary) to a Related Person, (c) any merger or
consolidation of a Related Person with or into the Company, (d) any sale,
lease, exchange, transfer or other disposition of all or any Substantial Part
of the assets of a Related Person to the Company, (e) the issuance of any
securities (other than by way of pro rata distribution to all stockholders) of
19
the Company to a Related Person, and (f) any agreement, contract or other
arrangement providing for any of the transactions described in the definition
of Business Combination. The term "Substantial Part" shall mean more than 10%
of the book value of the total assets of the Company as of the end of its most
recent fiscal year ending prior to the time the determination is being made.
The foregoing provisions of the Charter Documents and certain other matters
may not be amended without the affirmative vote of at least 90% of the
outstanding voting shares of the Company.
The Rights and the foregoing provisions may have the effect of discouraging
unilateral tender offers or other takeover proposals which certain stockholders
might deem to be in their interests or in which they might receive a
substantial premium. The Board of Directors' authority to issue and establish
the terms of currently authorized Preferred Stock, without stockholder
approval, may also have the effect of discouraging takeover attempts. See
"Description of Preferred Stock." The Rights and the foregoing provisions could
also have the effect of insulating current management against the possibility
of removal and could, by possibly reducing temporary fluctuations in market
price caused by accumulations of shares of Common Stock, deprive stockholders
of opportunities to sell at a temporarily higher market price. However, the
Board of Directors believes that inclusion of the Business Combination
provisions in the Charter Documents and the Rights may help assure fair
treatment of stockholders and preserve the assets of the Company.
The foregoing summary of certain provisions of the Rights and the Charter
Documents does not purport to be complete or to give effect to provisions of
statutory or common law. The foregoing summary is subject to, and qualified in
its entirety by reference to, the provisions of applicable law and, the Charter
Documents and the Rights Agreement, copies of which are incorporated by
reference as exhibits to the Registration Statement of which this Prospectus is
a part.
TRANSFER AGENT AND REGISTRAR
Chemical Bank, New York, New York, and Chemical Trust Company of California,
Los Angeles, California, act as co-transfer agents and co-registrars of the
Common Stock.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby directly or through
agents, underwriters or dealers, which may include Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
Offers to purchase Securities may be solicited by agents designated by the
Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the
offer or sale of the Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent set forth, in the Prospectus Supplement. Unless otherwise indicated in
the applicable Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. The Company may also sell
Securities to an agent as principal. Agents may be entitled under agreements
which may be entered into with the Company to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act,
and may be customers of, engage in transactions with or perform services for
the Company in the ordinary course of business.
If any underwriters are utilized in the sale of Securities in respect of
which this Prospectus is delivered, the Company will enter into an underwriting
agreement with such underwriters and the names of the underwriters and the
terms of the transaction will be set forth in the applicable Prospectus
Supplement, which will be used by the underwriters to make resales of the
Securities in respect of which this Prospectus is delivered to the public.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The underwriters may be entitled, under the relevant
20
underwriting agreement, to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company
in the ordinary course of business.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale.
Dealers may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company
in the ordinary course of business.
Securities may also be offered and sold, if so indicated in any Prospectus
Supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, or otherwise, by one or
more firms ("remarketing firms"), acting as principals for their own accounts
or as agents for the Company. Any remarketing firm will be identified and the
terms of its agreement, if any, with the Company and its compensation will be
described in the applicable Prospectus Supplement. Remarketing firms may be
deemed to be underwriters in connection with the Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with the Company to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, and may be customers of, engage
in transactions with or perform services for the Company in the ordinary course
of business.
If so indicated in any Prospectus Supplement, the Company will authorize
agents and underwriters or dealers to solicit offers by certain purchasers to
purchase Securities from the Company at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Such contracts will be
subject to only those conditions set forth in the applicable Prospectus
Supplement, and such Prospectus Supplement will set forth the commission
payable for solicitation of such offers.
LEGAL MATTERS
Certain legal matters with respect to the Securities offered hereby will be
passed upon for the Company by Latham & Watkins, Los Angeles, California. Brown
& Wood, Los Angeles, California, will act as counsel for any agents or
underwriters. Paul C. Pringle is a partner of Brown & Wood and owns 3,000
shares of the Company's Common Stock.
EXPERTS
The financial statements incorporated by reference in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
21
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPEC-
TUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, DEALER OR
AGENT. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OF-
FER OR A SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITA-
TION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITA-
TION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET
FORTH IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Description of Notes....................................................... S-2
Material Federal Income Tax
Considerations............................................................ S-14
Plan of Distribution....................................................... S-15
PROSPECTUS
PAGE
----
Available Information...................................................... 2
Incorporation of Certain Documents by
Reference................................................................. 2
The Company................................................................ 4
Selected Consolidated Financial Data ...................................... 7
Ratio of Earnings to Fixed Charges......................................... 8
Use of Proceeds............................................................ 8
Description of the Debt Securities......................................... 8
Description of Preferred Stock............................................. 14
Description of Common Stock................................................ 18
Plan of Distribution....................................................... 20
Legal Matters.............................................................. 21
Experts.................................................................... 21
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$86,975,000
HEALTH CARE PROPERTY INVESTORS, INC.
MEDIUM-TERM NOTES, SERIES B
--------------------
PROSPECTUS SUPPLEMENT
--------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
AUGUST 1, 1995
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