As
filed with the Securities and Exchange Commission on August 28,
2006
Registration
No. 333-117655
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_________________
Amendment
No. 2 to
FORM
S-3
REGISTRATION
STATEMENT
Under
THE
SECURITIES ACT OF 1933
_____________________________
OMEGA
HEALTHCARE INVESTORS, INC.
(Exact
name of registrant as specified in its charter)
MARYLAND 38-3041398
(State
or other
jurisdiction of (I.R.S.
Employer Identification No.)
incorporation
or
organization)
9690
Deereco Road, Suite 100
Timonium,
Maryland 21093
(410)
427-1700
(Address,
including zip code, and telephone number, including
area
code, of registrant's principal executive offices)
C.
Taylor Pickett
Chief
Executive Officer
Omega
Healthcare Investors, Inc.
9690
Deereco Road, Suite 100
Timonium,
Maryland 21093
(410)
427-1700
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies
of communications to:
Richard
H. Miller, Esq.
Michael
J. Delaney, Esq.
Powell
Goldstein LLP
Fourteenth
Floor
1201
West Peachtree Street NW
Atlanta,
Georgia 30309
(404)
572-6600
Approximate
date of commencement of proposed sale to the public:
From
time to time or at one time after the effective date of this registration
statement.
If
the
only securities being registered on this Form are being offered pursuant
to
dividend or interest reinvestment plans, please check the following box.
[
]
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If
this
Form is filed to register additional securities for an offering pursuant
to Rule
462(b) under the Securities Act, please check the following box and list
the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the
same
offering. [ ]
If
this
Form is a registration statement pursuant to General Instruction I.D. or
a
post-effective amendment thereto that shall become effective upon filing
with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. [ ]
If
this
Form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. [ ]
Explanatory
Note
Omega
Healthcare Investors, Inc. has filed this post-effective amendment in order
to
reflect and document our return to Form S-3 eligibility and to ensure the
incorporation by reference into this Form S-3 registration statement of our
most
recent periodic reports under the Securities Exchange Act of 1934.
_____________________________________________________________________________________________________________________
Pursuant
to Rule 429 under the Securities Act of 1933, as amended, the prospectus
included in this Post-Effective Amendment to Registration Statement is a
combined prospectus that also relates to the Registration Statement on Form
S-3,
Registration No. 333-69675, filed by the Registrant on December 23, 1998, and
amended by Post-Effective Amendment No. 1 filed by the Registrant on January
26,
2004. Of the dollar amount of the securities initially registered pursuant
to
Registration Statement No. 333-69675, $45,538,801 remain unsold. Pursuant to
Rule 429, this Registration Statement shall act, upon effectiveness, as
Post-Effective Amendment No. 3 to Registration Statement No.
333-69675.
The
Registrant hereby amends this Registration Statement on such date or dates
as
may be necessary to delay its effective date until the Registrant shall file
a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
The
information contained in this prospectus is not complete and may be changed.
We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
SUBJECT
TO COMPLETION, DATED AUGUST
28, 2006
PROSPECTUS
$390,796,000
______________
Debt
Securities
Preferred
Stock
Common
Stock
Warrants
______________
We
may
from time to time offer and sell in one or more series:
| · |
debt
securities;
|
| · |
warrants
to purchase debt securities;
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| · |
shares
of our preferred stock;
|
| · |
warrants
to purchase shares of our preferred
stock;
|
| · |
shares
of our common stock; and
|
| · |
warrants
to purchase shares of our common
stock.
|
The
debt
securities warrants, the preferred stock warrants and the common stock warrants
are collectively referred to herein as the securities warrants. The debt
securities, the preferred stock, the common stock and the securities warrants
are collectively referred to herein as the securities. The securities offered
by
this prospectus will have an aggregate public offering price of $390,796,000.
We
will provide the specific terms of these securities in supplements to this
prospectus prepared in connection with each offering. The debt securities may
be
convertible into preferred stock, common stock or debt securities of another
series. The preferred stock may be convertible into common stock or preferred
stock of another series. No securities may be sold under this prospectus without
delivery of the applicable prospectus supplement. You should read this
prospectus and the prospectus supplements carefully before you invest in the
securities.
Securities
may be sold directly, through agents from time to time or through underwriters
or dealers. If any of our agents or any underwriter is involved in the sale
of
the securities, the name of the agent or underwriter and
See
"Risk Factors" on page 5 for a discussion of matters that you should consider
before investing in these securities.
Our
common stock is traded on the New York Stock Exchange under the symbol "OHI".
On
August 24, 2006, the closing price of our common stock was $14.45 per
share.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is ___________________, 2006
ii
We
have not authorized any dealer, salesman or other person to give any information
or to make any representation other than those contained or incorporated by
reference in this prospectus. You must not rely upon any information or
representation not contained or incorporated by reference in this prospectus
or
the applicable prospectus supplement. This prospectus does not constitute an
offer to sell or the solicitation of an offer to buy any securities other than
the registered securities to which they relate, nor do this prospectus nor
any
applicable prospectus supplement constitute an offer to sell or the solicitation
of an offer to buy securities in any jurisdiction to any person to whom it
is
unlawful to make such offer or solicitation in such
jurisdiction.
______________
TABLE
OF CONTENTS
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31
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iii
This
prospectus is part of a registration statement that we filed with the SEC
utilizing a "shelf" registration process. Under this shelf registration process,
we may sell any combination of the securities described in this prospectus
in
one or more offerings up to a total dollar amount of $390,796,000. This
prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained
in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where You Can Find More Information."
As
allowed by SEC rules, this prospectus omits various information you can find
in
the registration statement or the exhibits to the registration statement. For
further information, we refer you to the registration statement, including
its
exhibits and schedules. Statements contained in this prospectus about the
provisions or contents of any contract, agreement or any other document referred
to are not necessarily complete. For each of these contracts, agreements or
documents filed as an exhibit to the registration statement, we refer you to
the
actual exhibit for a more complete description of the matters involved. You
should not assume that the information in this prospectus or any applicable
prospectus supplement is accurate as of any date other than the date on the
front of those documents. For further information about us or the securities
offered under this prospectus, you should refer to that registration statement,
which you can obtain from the SEC as described below under the heading "Where
You Can Find More Information."
Unless
the context requires otherwise, the words "we," "company," "us" and "our" refer
to Omega Healthcare Investors, Inc. and its majority-owned
subsidiaries.
We
file
annual, quarterly and current reports, proxy statements and other information
with the SEC. You may read and copy any document we file with the SEC at its
public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can
call the SEC at 1-800-SEC-0330 for further information on the operation of
the
public reference room. Our SEC filings are also available to the public at
the
web site maintained by the SEC at http://www.sec.gov, as well as on our website
at http://www.omegahealthcare.com. You may inspect information that we file
with
The New York Stock Exchange at the offices of The New York Stock Exchange at
20
Broad Street, New York, New York 10005. Information on our website is not
incorporated by reference herein and our web address is included as an inactive
textual reference only.
The
SEC
allows us to "incorporate by reference" the information we file with the SEC,
which means that we can disclose important information to you by referring
to
the other information we have filed with the SEC. The information that we
incorporate by reference is considered a part of this prospectus and information
that we file later with the SEC will automatically update and supersede the
information contained in this prospectus. We incorporate by reference the
following documents (File No. 1-11316) we filed with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended, other than information in these documents that is not deemed to
be
filed with the SEC:
| · |
our
Annual Report on Form 10-K for the year ended December 31, 2005,
filed on February 17, 2006;
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our
Current Report on Form 8-K filed on January 4,
2006;
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our
Current Report on Form 8-K filed on January 5,
2006;
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our
Current Report on Form 8-K filed on January 20,
2006;
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our
Current Report on Form 8-K filed on January 27,
2006*;
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1
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our
Current Report on Form 8-K filed on April 5,
2006;
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our
Current Report on Form 8-K filed on May 9,
2006*;
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our
Quarterly Report on Form 10-Q for the quarter ended March 31,
2006, filed on May 9, 2006;
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our
Current Report on Form 8-K filed on August 3,
2006*;
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our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006,
filed on August 4, 2006;
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the
description of our common stock contained in our Registration Statement
on
Form 8-A, filed on August 4, 2002, and any amendments or reports
filed for
the purpose of updating that description;
and
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| · |
the
description of our Preferred Stock Purchase Rights contained in our
Registration Statement on Form 8-A, filed on May 14, 1999, and any
amendments or reports filed for the purpose of updating that
description.
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______________________
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*
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This
report contains information furnished to the SEC under Items 2.02
and/or
7.01 of Form 8-K which, pursuant to General Instruction B(2) of Form
8-K,
is not deemed to be "filed" for purposes of Section 18 of the Exchange
Act
and we are not subject to the liabilities imposed by that section.
We are
not incorporating and will not incorporate by reference into this
prospectus past or future information or reports furnished or that
will be
furnished under Items 2.02 and/or 7.01 of Form
8-K.
|
All
documents we file later with the SEC pursuant to Sections 13(a), 13(c), 14
or
15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the
date
of this prospectus and prior to the termination of the offering of the
securities will be deemed to be incorporated by reference into this prospectus,
other than information in the documents that is not deemed to be filed with
the
SEC. A statement contained in this prospectus or in a document incorporated
or
deemed to be incorporated by reference into this prospectus will be deemed
to be
modified or superseded to the extent that a statement contained in any
subsequently filed document that is incorporated by reference into this
prospectus, modifies or supersedes that statement. Any statements so modified
or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
We
will
provide without charge to each person to whom this prospectus is delivered,
on
the request of any person, a copy of any or all the documents incorporated
herein by reference, other than exhibits to the documents, unless the exhibits
are specifically incorporated by reference into the documents that this
prospectus incorporates. Requests for copies in writing or by telephone should
be directed to:
Omega
Healthcare Investors, Inc.
9690
Deereco Road
Suite
100
Timonium,
Maryland 21093
Attn:
Chief Financial Officer
(410) 427-1700
2
This
prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included in this prospectus may constitute
forward-looking statements. These
statements relate to our expectations, beliefs, intentions, plans, objectives,
goals, strategies, future events, performance and underlying assumptions and
other statements other than statements of historical facts. In some cases,
you
can identify forward-looking statements by the use of forward-looking
terminology including, but not limited to, terms such as “may,” “will,”
“anticipates,” “expects,” “believes,” “intends,” “should” or comparable terms or
the negative thereof. These statements are based on information available on
the
date of this filing and only speak as to the date hereof and no obligation
to
update such forward-looking statements should be assumed. Our actual results
may
differ materially from those reflected in the forward-looking statements
contained herein as a result of a variety of factors, including, among other
things:
| · |
those
items
discussed under “Risk Factors” in Item 1 to our annual report on Form 10-K
for the year ended December 31, 2005;
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uncertainties
relating to the business operations of the operators of our assets,
including those relating to reimbursement by third party payors,
regulatory matters and occupancy
levels;
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the
ability of any operators in bankruptcy to reject unexpired lease
obligations, modify the terms of our mortgages, and impede our ability
to
collect unpaid rent or interest during the process of a bankruptcy
proceeding and retain security deposits for the debtors'
obligations;
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| · |
our
ability to sell closed assets on a timely basis and on terms that
allow us
to realize the carrying value of these
assets;
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our
ability to negotiate appropriate modifications to the terms of our
credit
facility;
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our
ability to manage, re-lease, or sell any owned and operated
facility;
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the
availability and cost of capital;
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competition
in the financing of healthcare
facilities;
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regulatory
and other changes in the healthcare
sector;
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the
effect of economic and market conditions generally and, particularly,
in
the healthcare industry;
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changes
in interest rates;
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the
amount and yield of any additional
investments;
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changes
in tax laws and regulations affecting real estate investment trusts;
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changes
in the ratings of our debt and preferred securities;
and
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Any
subsequent written or oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements set forth or referred to above, as well as the risk
factors contained in this prospectus. Except as required by law, we disclaim
any
obligation to update such statements or to publicly announce the result of
any
revisions to any of the forward-looking statements contained in this prospectus
to reflect future events or developments.
3
We
were
incorporated in the State of Maryland on March 31, 1992. We are a
self-administered real estate investment trust, or REIT, investing in
income-producing healthcare facilities, principally long-term care facilities
located in the United States. We provide lease or mortgage financing to
qualified operators of skilled nursing facilities and, to a lesser extent,
assisted living facilities, rehabilitation and acute care facilities. We have
historically financed investments through borrowings under our revolving credit
facilities, private placements or public offerings of debt or equity securities,
the assumption of secured indebtedness, or a combination of these
methods.
At
June
30, 2006, our portfolio of domestic investments consisted of 209 healthcare
facilities, located in 27 states and operated by 34 third-party operators.
Our
gross investment in these facilities, net of impairments and before reserve
for
uncollectible loans, totaled approximately $1.1 billion at June 30, 2006, with
approximately 98% of our real estate investments related to long-term care
facilities. This portfolio is made up of:
| · |
196
long-term healthcare facilities,
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two
rehabilitation hospitals owned and leased to third parties,
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fixed
rate mortgages on 10 long-term healthcare facilities and
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one
long-term healthcare facility that is currently held for sale.
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At
June
30, 2006, we also held other investments of approximately $29 million,
consisting primarily of secured loans to third-party operators of our
facilities.
New
Investments
We
entered into a contract of sale (the “Litchfield Contract”), dated as of May 5,
2006, between Laramie Associates, LLC, Casper Associates, LLC, North
12th
Street
Associates, LLC, North Union Boulevard Associates, LLC, Jones Avenue Associates,
LLC, Litchfield Investment Company, L.L.C., Ustick Road Associates, LLC, West
24th
Street
Associates, LLC, North Third Street Associates, LLC, Midwestern Parkway
Associates, LLC, North Francis Street Associates, LLC, West Nash Street
Associates, LLC (as sellers) and OHI Asset (LA), LLC, NRS Ventures, L.L.C.
and
OHI Asset (CO), LLC (as buyers).
The
Litchfield Contract provides for the purchase of thirty skilled nursing
facilities and one independent living center from Litchfield Companies for
approximately $171 million (the “Litchfield Transaction”). The facilities total
3,847 beds and are located in the states of Colorado (5), Florida (7), Idaho
(1), Louisiana (13), and Texas (5). The facilities were subject to master leases
with three national healthcare providers, which are our existing tenants. The
tenants are Home Quality Management, Inc., Nexion Health, Inc., and Peak Medical
Corporation, which was acquired by Sun Healthcare Group, Inc. in December of
2005. The total incremental annualized rent from the 31 facility transaction
is
approximately $17.1 million.
We
closed
the Litchfield Transaction on August 1, 2006.
We
used a
combination of cash on hand and $150 million of borrowings under our $200
million revolving senior secured credit facility (the “New Credit Facility”),
drawn on August 1, 2006, to finance the Litchfield transaction.
Our
principal executive offices are located at 9690 Deereco Road, Suite 100,
Timonium, Maryland 21093, and our telephone number is (410) 427-1700.
Additional information regarding our company is set forth in our
4
Certain
of the securities to be offered hereby may involve a high degree of risk. Such
risks will be set forth in the prospectus supplement relating to such offered
securities.
The
ratios of earnings to fixed charges, and the ratio of earnings to combined
fixed
charges and preferred stock dividends are set forth below. We have calculated
the ratio of earnings to fixed charges by adding net income (loss) from
continuing operations to fixed charges and dividing that sum by such fixed
charges. Fixed charges consist of interest expense and amortization of deferred
financing costs. We have calculated the ratio of earnings to combined fixed
charges and preferred stock dividends by adding net income (loss) from
continuing operations to fixed charges and dividing that sum by such fixed
charges plus preferred dividends, irrespective of whether or not such dividends
were actually paid.
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RATIO
OF EARNINGS TO
FIXED
CHARGES
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Year
Ended December 31,
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For
the Six Months Ended June 30,
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2001
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2002
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2003
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2004
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2005
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2006
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Unaudited
(in thousands, except ratios)
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(Loss)
income from continuing operations
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$(22,253)
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$(4,335)
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$27,396
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$10,069
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$30,151
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$18,657
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Interest
expense
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33,204
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34,381
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23,388
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44,008
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34,771
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23,615
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Income
before fixed charges
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$10,951
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$30,046
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$50,784
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$54,077
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$64,922
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$42,272
|
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Interest
expense
|
$33,204
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$34,381
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$23,388
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$44,008
|
$34,771
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$23,615
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Total
fixed charges
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$33,204
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$34,381
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$23,388
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$44,008
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$34,771
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$23,615
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Earnings/fixed
charge coverage ratio
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*
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*
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2.2x
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1.2x
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1.9x
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1.8x
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| · |
Our
earnings were insufficient to cover our fixed charges by $22,253
and
$4,335 in 2001 and 2002, respectively. In addition, our ratio of
earnings
to fixed charges has been revised to reflect the impact of the
implementation of Statement of Financial Accounting Standards No.
144,
Accounting
for the Impairment and Disposal of Long-Lived Assets.
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5
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RATIO
OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS
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Year
Ended December 31,
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For
the Six Months Ended June 30,
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2001
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2002
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2003
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2004
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2005
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2006
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|
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Unaudited
(in thousands, except ratios)
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||||||
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(Loss)
income from continuing operations
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$(22,253)
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$(4,335)
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$27,396
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$10,069
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$30,151
|
$18,657
|
|
Interest
expense
|
33,204
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34,381
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23,388
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44,008
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34,771
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23,615
|
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Income
before fixed charges
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$10,951
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$30,046
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$50,784
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$54,077
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$64,922
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$42,272
|
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Interest
expense
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$33,204
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$34,381
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$23,388
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$44,008
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$34,771
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$23,615
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Preferred
stock dividends
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19,994
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20,115
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20,115
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15,807
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11,385
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4,962
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Total
fixed charges and preferred dividends
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$53,198
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$54,496
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$43,503
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$59,815
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$46,156
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$28,577
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Earnings/combined
fixed charges and preferred dividends coverage ratio
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*
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*
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1.2x
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*
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1.4x
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1.5x
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___________
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*
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Our
earnings were insufficient to cover combined fixed charges and preferred
stock dividends by $42,247, $24,450 and $5,738 in 2001, 2002 and
2004,
respectively. In addition, our ratio of earnings to combined fixed
charges
and preferred dividends has been revised to reflect the impact of
the
implementation of Statement of Financial Accounting Standards No.
144,
Accounting
for the Impairment and Disposal of Long-Lived
Assets.
|
In
February 2004, we issued 4,739,500 shares of Series D preferred stock, which
are
entitled to receive dividends at the rate of 8.375% per year, or $2.09375 per
share.
Unless
otherwise specified in the applicable prospectus supplement, the net proceeds
from the sale of the securities offered hereby will be used for the repayment
of
outstanding debt, to fund additional investments and for general corporate
purposes.
We
may
refer in this prospectus to one or more of the following categories of our
securities:
| · |
shares
of our common stock, par value $0.10 per share ("common
stock");
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shares
of our preferred stock, par value $1.00 per share, in one or more
series
(the "preferred stock");
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debt
securities, in one or more series ("debt
securities");
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common
stock warrants (the "common stock
warrants");
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preferred
stock warrants (the "preferred stock
warrants");
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debt
securities warrants (the "debt securities warrants");
and
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any
combination of the foregoing, either individually or as
units.
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6
The
terms
of any specific offering of securities, including the terms of any units
offered, will be set forth in a prospectus supplement relating to such
offering.
As
of
August 23, 2006, our authorized capital stock consisted of 100,000,000 shares
of
common stock, par value $0.10 per share, and 20,000,000 shares of preferred
stock, par value $1.00 per share, of which 4,739,500 shares
were designated as Series D preferred stock. As of August 23, 2006, we had
59,171,873 shares of our common stock and 4,739,500 shares
of
our Series D preferred stock issued and outstanding.
Our
common stock and Series D preferred stock are listed on the New York Stock
Exchange. We intend to apply to list for trading on the New York Stock Exchange
any additional shares of our common stock that are issued and sold hereunder.
We
may also apply to list on the New York Stock Exchange any debt securities,
any
additional series of preferred stock, and any securities warrants that are
offered and sold hereunder, as described in the prospectus supplement relating
to any such securities.
Unless
otherwise indicated in a prospectus supplement relating thereto, Computershare
Trust Company, N.A. is the transfer agent and registrar of the common stock
and
preferred stock.
Common
Stock
All
shares of our common stock participate equally in dividends payable to
stockholders of our common stock when and as declared by our board of directors
and in net assets available for distribution to stockholders of our common
stock
on liquidation or dissolution, 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 our common stock
are, and our common stock offered hereby will be upon issuance, validly issued,
fully paid and nonassessable. Holders of our common stock do not have
preference, conversion, exchange or preemptive rights. Our common stock is
listed on the New York Stock Exchange under the symbol "OHI."
Preferred
Stock
The
terms
of any series of the preferred stock offered by any prospectus supplement will
be as described in such prospectus supplement. The following description of
the
terms of the preferred stock, except as modified in a prospectus supplement,
sets forth certain general terms and provisions of the preferred stock. 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 company's articles of
incorporation, as amended, and the board of directors' resolution or articles
supplementary relating to each series of the preferred stock which will be
filed
with the Securities and Exchange Commission and incorporated by reference as
an
exhibit to the registration statement of which this prospectus is a part at
or
prior to the time of the issuance of such series of the preferred
stock.
General
Under
the
articles of incorporation, the board of directors of the company is authorized
without further stockholder action to provide for the issuance of shares of
preferred stock of the company, up to the amount of shares of preferred stock
authorized under the articles of incorporation but not issued or reserved for
issuance thereunder, in one or more series, with such designations, preferences,
powers and relative participating, optional or other special rights and
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), redemption
price or prices, and 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.
7
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:
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the
designation and stated value per share of such preferred stock and
the
number of shares offered;
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| · |
the
amount of liquidation preference per
share;
|
| · |
the
initial public offering price at which such preferred stock will
be
issued;
|
| · |
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;
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any
redemption or sinking fund
provisions;
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| · |
any
conversion rights; and
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any
additional voting, dividend, liquidation, redemption, sinking fund
and
other rights, preferences, privileges, limitations and
restrictions.
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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.
Dividend
Rights
Holders
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.
Dividends
on any series of preferred stock may be cumulative or noncumulative, as provided
in the applicable prospectus supplement. 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.
So
long
as the shares of any series of the preferred stock shall be outstanding,
unless
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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
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8
| · |
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),
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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 is made to the holders of common
stock or any other shares of stock of the company ranking junior as to such
distribution 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
liquidating distributions 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 junior stock, 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 time
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 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
distribution of assets with such series of the preferred stock
9
Conversion
Rights
The
terms
and conditions, if any, upon which shares of any series of preferred stock
are
convertible into common stock will be set forth in the applicable prospectus
supplement relating thereto. Such terms will include the number of shares of
common stock into which the preferred stock is convertible, the conversion
price
(or manner of calculation thereof), the conversion period, provisions as to
whether conversion will be at the option of the holders of preferred stock
or
the company, the events requiring an adjustment of the conversion price and
provisions affecting conversion.
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 the preferred stock of a series remain outstanding, the consent
or the affirmative vote of the holders of at least 80% of the votes entitled
to
be cast with respect to the then outstanding shares of such series of the
preferred stock together with any "parity preferred" (as defined below), voting
as one class, either expressed in writing or at a meeting called for that
purpose, will be necessary (i) to permit, effect or validate the
authorization, or any increase in the authorized amount, of any class or series
of shares of the company ranking prior to the preferred stock of such series
as
to dividends, and (ii) to repeal, amend or otherwise change any of the
provisions applicable to the preferred stock of such series in any manner which
adversely affects the powers, preferences, voting power or other rights or
privileges of such series of the preferred stock. In case any series of the
preferred stock would be so affected by any such action referred to in
clause (ii) above in a different manner than one or more series of the
parity preferred then outstanding, the holders of shares of the preferred stock
of such series, together with any series of the parity preferred which will
be
similarly affected, will be entitled to vote as a class, and the company will
not take such action without the consent or affirmative vote, as above provided,
of at least 80% of the total number of votes entitled to be cast with respect
to
each such series of the preferred stock and the parity preferred, then
outstanding, in lieu of the consent or affirmative vote hereinabove otherwise
required.
With
respect to any matter as to which the preferred stock of any series is entitled
to vote, holders of the preferred stock of such series and any other series
of
preferred stock of the company ranking on a parity with such series of the
preferred stock as to dividends and distributions of assets and which by its
terms provides for similar voting rights (the "parity preferred") will be
entitled to cast the number of votes set forth in the prospectus supplement
with
respect to that series of preferred stock. As a result of the provisions
described in the preceding paragraph requiring the holders of shares of a series
of the preferred stock to vote together as a class with the holders of shares
of
one or more series of parity preferred, it is possible that the holders of
such
shares of parity preferred could approve action that would adversely affect
such
series of preferred stock, including the creation of a class of capital stock
ranking prior to such series of preferred stock as to dividends, voting or
distributions of assets.
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.
Redemption
and Business Combination Provisions
If
our
board of directors is, at any time and in good faith, of the opinion that actual
or constructive ownership of at least 9.9% or more of the value of our
outstanding capital stock has or may become concentrated in the hands of one
owner, our board of directors will have the power:
10
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by
means deemed equitable by it, to call for the purchase from any of
our
stockholders a number of voting shares sufficient, in the opinion
of our
board of directors, to maintain or bring the actual or constructive
ownership of such owner to a level of no more than 9.9% of the value
of
our outstanding capital stock; and
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to
refuse to transfer or issue voting shares of our capital stock to
any
person whose acquisition of such voting shares would, in the opinion
of
our board of directors, result in the actual or constructive ownership
by
that person of more than 9.9% of the value of our outstanding capital
stock.
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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
value of our outstanding capital stock will be deemed void ab initio and the
intended transferee will be deemed never to have had an interest therein.
Subject to the rights of the preferred stock described below, the purchase
price
for any voting shares of our capital stock so redeemed will be equal to the
fair
market value of the shares reflected in the closing sales prices 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 we send notices of such acquisitions, 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 our board of directors in accordance
with the provisions of applicable law. The purchase price for shares of
Series D preferred stock will 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 if the shares are not then listed on a national
securities exchange, the purchase price will be equal to the liquidation
preference of such shares of Series D preferred stock. From and after the
date fixed for purchase by our board of directors, the holder of any shares
so
called for purchase will 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.
Our
articles of incorporation require that, except in certain circumstances,
business combinations between us and a beneficial holder of 10% or more of
our
outstanding voting stock, a related person, be approved by the affirmative
vote
of at least 80% of our outstanding voting shares.
A
"business combination" is defined in the articles of incorporation
as:
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any
merger or consolidation of our company with or into a related
person;
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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 our assets including, without
limitation, any voting securities of a subsidiary to a related
person;
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any
merger or consolidation of a related person with or into our
company;
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any
sale, lease, exchange, transfer or other disposition of all or any
substantial part of the assets of a related person to our
company;
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the
issuance of any securities (other than by way of pro rata distribution
to
all stockholders) of our company to a related person;
and
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any
agreement, contract or other arrangement providing for any of the
transactions described in the definition of business
combination.
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The
term
"substantial part" is defined as more than 10% of the book value of our total
assets as of the end of our most recent fiscal year ending prior to the time
the
determination is being made.
11
The
80%
voting requirement described above will not be applicable if (i) our board
of directors has unanimously approved in advance the acquisition of our stock
that caused a related person to become a related person, or (ii) the
business combination is solely between us and a wholly owned subsidiary.
Under
the
terms of our articles of incorporation, as amended, our board of directors
is
classified into three classes. Each class of directors serves for a term of
three years, with one class being elected each year.
The
foregoing provisions of the articles of incorporation and certain other matters
may not be amended without the affirmative vote of at least 80% of our
outstanding voting shares.
The
foregoing provisions may have the effect of discouraging unilateral tender
offers or other takeover proposals which certain stockholders might deem in
their interests or in which they might receive a substantial premium. Our 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. The 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 accumulation
of shares, deprive stockholders of opportunities to sell at a temporarily higher
market price. However, our board of directors believes that inclusion of the
business combination provisions in the articles of incorporation may help assure
fair treatment of stockholders and preserve our assets.
The
foregoing summary of certain provisions of the articles of incorporation 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 articles of
incorporation, a copy of which is incorporated by reference as an exhibit to
the
registration statement of which this prospectus is a part.
Stockholder
Rights Plan
On
May 12, 1999, our board of directors authorized the adoption of a
stockholder rights plan. The plan is designed to require a person or group
seeking to gain control of our company to offer a fair price to all of our
stockholders. The rights plan will not interfere with any merger, acquisition
or
business combination that our board of directors finds is in our best interest
and the best interests of our stockholders.
In
connection with the adoption of the stockholder rights plan, our board of
directors declared a dividend distribution of one right for each common share
outstanding on May 24, 1999. The stockholder protection rights will not
become exercisable unless a person acquires 10% or more of our common stock,
or
begins a tender offer that would result in the person owning 10% or more of
our
common stock. At that time, each stockholder protection right would entitle
each
stockholder other than the person who triggered the rights plan to purchase
either our common stock or stock of an acquiring entity at a discount to the
then market price. The plan was not adopted in response to any specific attempt
to acquire control of our company.
Debt
Securities
The
terms
of any debt securities offered by any prospectus supplement will be as described
in such prospectus supplement, and as provided herein to the extent not modified
in the prospectus supplement. Debt securities may be issued from time to time
in
series under an Indenture (the "Indenture") to be entered into between the
company and a trustee to be identified in the applicable prospectus supplement
(the "Trustee"). As used under this caption, unless the context otherwise
requires, offered debt securities shall mean the debt securities offered by
this
prospectus and the accompanying prospectus supplement. The statements under
this
caption are brief summaries of certain provisions contained in the Indenture,
do
not purport to be complete and are qualified in their entirety by reference
to
the Indenture, including the definition therein of certain terms, a copy of
which is incorporated by reference as an exhibit to the registration statement
of which this prospectus is a part. The following sets forth certain general
terms and provisions of the debt securities. Further terms of the offered debt
securities will be set forth in the prospectus supplement.
12
General
The
Indenture provides for the issuance of debt securities in series, and does
not
limit the principal amount of debt securities which may be issued
thereunder.
Reference
is made to the prospectus supplement for the following terms of the offered
debt
securities:
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the
specific title of the offered debt
securities;
|
| · |
the
aggregate principal amount of the offered debt
securities;
|
| · |
the
percentage of the principal amount at which the offered debt securities
will be issued;
|
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the
date on which the offered debt securities will
mature;
|
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the
rate or rates per annum or the method for determining such rate or
rates,
if any, at which the offered debt securities will bear
interest;
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the
times at which any such interest will be
payable;
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any
provisions relating to optional or mandatory redemption of the offered
debt securities at the option of the company or pursuant to sinking
fund
or analogous provisions;
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the
denominations in which the offered debt securities are authorized
to be
issued if other than $100,000;
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any
provisions relating to the conversion or exchange of the offered
debt
securities into common stock or into debt securities of another
series;
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the
portion of the principal amount, if less than the principal amount,
payable on acceleration;
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the
place or places at which the company will make payments of principal
(and
premiums, if any) and interest, if any, and the method of
payment;
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whether
the offered debt securities will be issued in whole or in part in
global
form;
|
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any
additional covenants and events of default and the remedies with
respect
thereto not currently set forth in the
Indenture;
|
| · |
the
identity of the Trustee for the debt securities, and if not the Trustee,
the identity of each paying agent and the debt securities
Registrar;
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the
currency or currencies other than United States Dollars in which
any
series of debt securities will be issued;
and
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any
other specific terms of the offered debt
securities.
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One
or
more series of the debt securities may be issued as discounted debt securities
(bearing no interest or bearing interest at a rate which at the time of issuance
is below market rates) to be sold at a substantial discount below their stated
principal amount. Tax and other special considerations applicable to any such
discounted debt securities will be described in the prospectus supplement
relating thereto.
13
Status
of Debt Securities
The
status and ranking of the debt securities will be as set forth in the prospectus
supplement. Except as otherwise set forth in the prospectus supplement, the
debt
securities will be unsecured obligations of the company ranking on a parity
with
all other unsecured and unsubordinated indebtedness.
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 beneficial 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 person would then be deemed to
beneficially own, directly or indirectly, 9.9% or more of the company's shares
of common stock.
Absence
of Restrictive Covenants
Except
as
noted below under "Dividends, Distributions and Acquisitions of Capital Stock,"
the company is not restricted by the Indenture from paying dividends or from
incurring, assuming or becoming liable for any type of debt or other obligations
or from creating liens on its property for any purpose. The Indenture does
not
require the maintenance of any financial ratios or specified levels of net
worth
or liquidity. Except as may be set forth in the prospectus supplement, there
are
no provisions of the Indenture which afford holders of the debt securities
protection in the event of a highly leveraged transaction involving the
company.
Optional
Redemption
The
debt
securities will be subject to redemption, in whole or from time to time in
part,
at any time for certain reasons intended to protect the company's status as
a
REIT, at the option of the company in the manner specified in the Indenture
at a
redemption price equal to 100% of the principal amount, premium, if any, plus
interest accrued to the date of redemption. The Indenture does not contain
any
provision requiring the company to repurchase the debt securities at the option
of the holders thereof in the event of a leveraged buyout, recapitalization
or
similar restructuring of the company.
Dividends,
Distributions and Acquisitions of Capital Stock
The
Indenture provides that the company will not (i) declare or pay any
dividend or make any distribution on its capital stock or to holders of its
capital stock (other than dividends or distributions payable in its capital
stock or other than as the company determines is necessary to maintain its
status as a REIT), or (ii) purchase, redeem or otherwise acquire or retire
for value any of its capital stock, or any warrants, rights or options or other
securities to purchase or acquire any shares of its capital stock (other than
the debt securities) or permit any subsidiary to do so, if at the time of such
action an event of default (as defined in the Indenture) has occurred and is
continuing or would exist immediately after giving effect to such
action.
Events
of Default
An
event
of default with respect to debt securities of any series is defined in the
Indenture as being:
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failure
to pay principal of or any premium on any debt security of that series
when due;
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| · |
failure
to pay any interest on any debt security of that series when due,
continued for 30 days;
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| · |
failure
to deposit any sinking fund payment when due, in respect of any debt
security of that series;
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14
| · |
failure
to perform any other covenant of the company in the Indenture (other
than
a covenant 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 as provided in the
Indenture;
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| · |
certain
events of bankruptcy, insolvency, conservatorship, receivership or
reorganization; and
|
| · |
any
other event of default provided with respect to the debt securities
of
that series.
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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 (or, if the debt securities of that series are
original issue discount debt securities, such portion of the principal amount
as
may be specified in the terms of that series) 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 provides that, subject to the duty of the Trustee during 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 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 proceeding
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 is 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.
Modifications
and Waiver
Modifications
and amendments of the Indenture may be made by the company and the Trustee
without the consent of any holders to, among other things,
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evidence
the succession of another corporation to the
company;
|
| · |
add
to the covenants of the company or surrender any right or power conferred
upon the company;
|
| · |
establish
the form or terms of debt securities, including any subordination
provisions;
|
| · |
cure
any ambiguity, correct or supplement any provision which may be defective
or inconsistent or make any other provisions with respect to matters
or
questions arising under the Indenture, provided that such action
does not
adversely affect the interests of the holders of debt securities
of any
series in any material respect;
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| · |
to
add to, delete, or revise conditions, limitations and restrictions
on the
authorized amounts, terms or purpose of debt securities, as set forth
in
the Indenture; or
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| · |
evidence
and provide for a successor
Trustee.
|
Modifications
and amendments of the Indenture may be made by the company and the Trustee
with
the consent of the holders of a majority 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:
15
| · |
change
the stated maturity date of the principal of, or any installment
of
principal of or interest, if any, on any debt
security;
|
| · |
reduce
the principal amount of, or premium or interest if any, on any debt
security;
|
| · |
reduce
the amount of principal of an original issue discount debt security
payable upon acceleration of the maturity
thereof;
|
| · |
change
the currency of payment of the principal of, or premium or interest,
if
any, on any debt security;
|
| · |
impair
the right to institute suit for the enforcement of any payment on
or with
respect to any debt security;
|
| · |
modify
the conversion provisions, if any, of any debt security in a manner
adverse to the holder of that debt security;
or
|
| · |
reduce
the percentage in principal amount of the outstanding debt security
of any
series, the consent of whose holders is required for modification
or
amendment of that Indenture or for waiver of compliance with certain
provisions of that Indenture or for waiver of certain
defaults.
|
The
holders of a majority in aggregate principal amount of the outstanding debt
security of each series may, on behalf of all holders of the debt securities
of
that series, waive, insofar as that series is concerned, compliance by the
company with certain restrictive provisions of the Indenture. The holders of
a
majority in aggregate principal amount of the outstanding debt securities of
each series may, on behalf of all holders of the debt securities of that series,
waive any past default under the Indenture with respect to the debt securities
of that series, except a default in the payment of principal or premium or
interest, if any, or a default in respect of a covenant or provision which
under
the terms of the Indenture cannot be modified or amended without the consent
of
the holder of each outstanding debt security of the series
affected.
Consolidation,
Merger and Sale of Assets
The
Indenture provides that the company, without the consent of the holders of
any
of the debt securities, may consolidate or merge with or into or transfer its
assets substantially as an entirety to, any entity organized under the laws
of
the United States or any state, provided that the successor entity assumes
the
company's obligations under the Indenture, that after giving effect to the
transaction no event of default, and no event which, after notice or lapse
of
time, would become an event of default, shall have occurred and be continuing,
and that certain other conditions are met.
Global
Securities
The
debt
securities of a series may be issued in whole or in part in global form (the
"Global Securities"). Except as set forth in a prospectus supplement, the terms
and provisions with respect to any Global Securities will be as set forth in
this section captioned "Global Securities." The Global Securities will be
deposited with a depositary (the "Depositary"), or with a nominee for a
Depositary, identified in the prospectus supplement. In such case, one or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding debt
securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for debt
securities in definitive form, a Global Security may not be transferred except
as a whole by the Depositary for such Global 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.
16
The
specific material terms of the depositary arrangement with respect to any
portion of a series of debt securities to be represented by a Global Security
will be described in the prospectus supplement. The company anticipates that
the
following provisions will apply to all depositary arrangements.
Upon
the
issuance of a Global Security, the Depositary for such Global Security will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the debt securities represented by such Global Security
to
the accounts of persons that have accounts with such Depositary
("participants"). The accounts to be credited shall be designated by any
underwriters or agents participating in the distribution of such debt
securities. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Security will be shown on,
and
the transfer of that ownership will be effected only through, records maintained
by the Depositary for such Global Security (with respect to interests of
participants) or by participants or persons that hold through participants
(with
respect to interests of persons other than participants). So long as the
Depositary for a Global Security, or its nominee, is the registered owner of
such 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 Global Security for all purposes under the Indenture; provided, however,
that for the purposes of obtaining any consents or directions required to be
given by the holders of the debt securities, the company, the Trustee and its
agents will treat a person as the holder of such principal amount of debt
securities as specified in a written statement of the Depositary. Except as
set
forth herein or otherwise provided in the prospectus supplement, owners of
beneficial interests in a Global Security will not be entitled to have the
debt
securities represented by such Global Security registered in their names, will
not receive physical delivery of such debt securities in definitive form and
will not be considered the registered owners or holders thereof under the
Indenture, but the beneficial owners and holders only.
Principal,
premium, if any, and interest payments on debt securities represented by a
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 Global Security. None of the company, the Trustee or any Paying
Agent for such debt securities 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 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
Global Security, upon receipt of any payment of principal, premium, if any,
or
interest will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of such Depositary. The company
also expects that payments by participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names" and will be
the
responsibility of such participants.
If
the
Depositary for any debt securities represented by a Global Security is at any
time unwilling or unable to continue as Depositary and a successor Depositary
is
not appointed by the company within 90 days, the company will issue such
debt securities in definitive form in exchange for such 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 Global
Securities and, in such event, will issue debt securities of such series in
definitive form in exchange for all of the Global Security or securities
representing such debt securities.
The
laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in debt securities represented by Global
Securities.
Securities
Warrants
The
terms
of any securities warrants offered by any prospectus supplement will be as
described in such prospectus supplement, and as provided herein to the extent
not modified in the prospectus supplement. The company may issue securities
warrants for the purchase of common stock, preferred stock or debt securities.
securities warrants may be issued independently or together with common stock,
preferred stock or debt securities offered by any prospectus supplement and
may
be attached to or separate from such common stock, preferred stock, or debt
securities. Each series of securities warrants will be issued under a separate
warrant agreement (a "Securities
17
In
the
case of securities warrants for the purchase of common stock or preferred stock,
the applicable prospectus supplement will describe the terms of such securities
warrants, including the following where applicable:
| · |
the
offering price;
|
| · |
the
aggregate number of shares purchasable upon exercise of such securities
warrants, the exercise price, and in the case of securities warrants
for
preferred stock the designation, aggregate number and terms of the
series
of preferred stock purchasable upon exercise of such securities
warrants;
|
| · |
the
designation and terms of any series of preferred stock with which
such
securities warrants are being offered and the number of such securities
warrants being offered with such preferred
stock;
|
| · |
the
date, if any, on and after which such securities warrants and the
related
series of preferred stock or common stock will be transferable
separately;
|
| · |
the
date on which the right to exercise such securities warrants shall
commence and the Expiration Date;
|
| · |
any
special United States Federal income tax consequences;
and
|
| · |
any
other terms of such securities
warrants.
|
If
securities warrants for the purchase of debt securities are offered, the
applicable prospectus supplement will describe the terms of such securities
warrants, including the following where applicable:
| · |
the
offering price;
|
| · |
the
denominations and terms of the series of debt securities purchasable
upon
exercise of such securities
warrants;
|
| · |
the
designation and terms of any series of debt securities, with which
such
securities warrants are being offered with each such debt
securities;
|
| · |
the
date, if any, on and after which such securities warrants and the
related
series of debt securities will be transferable
separately;
|
| · |
the
principal amount of the series of debt securities purchasable upon
exercise of each such securities warrant and the price at which such
principal amount of debt securities of such series may be purchased
upon
such exercise;
|
| · |
the
date on which the right shall expire (the "Expiration
Date");
|
| · |
whether
the securities warrants will be issued in registered or bearer
form;
|
18
| · |
any
special United States Federal income tax
consequences;
|
| · |
the
terms, if any, on which the company may accelerate the date by which
the
securities warrants must be exercised;
and
|
| · |
any
other terms of such securities
warrants.
|
Securities
warrant certificates may be exchanged for new securities warrant certificates
of
different denominations, may (if in registered form) be presented for
registration of transfer, and may be exercised at the corporate trust office
of
the securities warrant agent or any other office indicated in the applicable
prospectus supplement. Prior to the exercise of any securities warrant to
purchase debt securities, holders of such securities warrants will not have
any
of the rights of holders of the debt securities purchasable upon such exercise,
including the right to receive payments of principal or premium, if any, or
interest, if any, on such debt securities or to enforce covenants in the
applicable indenture. Prior to the exercise of any securities warrants to
purchase common stock or preferred stock, holders of such securities warrants
will not have any rights of holders of such common stock or preferred stock,
including the right to receive payments of dividends, if any, on such common
stock or preferred stock, or to exercise any applicable right to
vote.
Exercise
of Securities Warrants
Each
securities warrant will entitle the holder thereof to purchase a number of
shares of common stock, preferred stock or such principal amount of debt
securities, as the case may be, at such exercise price as shall in each case
be
set forth in, or calculable from, the prospectus supplement relating to the
offered securities warrants. After the close of business on the Expiration
Date
(or such later date to which such Expiration Date may be extended by the
company), unexercised securities warrants will become void.
Securities
warrants may be exercised by delivering to the securities warrant agent payment
as provided in the applicable prospectus supplement of the amount required
to
purchase the common stock, preferred stock or debt securities, as the case
may
be, purchasable upon such exercise together with certain information set forth
on the reverse side of the securities warrant certificate. securities warrants
will be deemed to have been exercised upon receipt of payment of the exercise
price, subject to the receipt within five (5) business days, of the
securities warrant certificate evidencing such securities warrants. Upon receipt
of such payment and the securities warrant certificate properly completed and
duly executed at the corporate trust office of the securities warrant agent
or
any other office indicated in the applicable prospectus supplement, the company
will, as soon as practicable, issue and deliver the common stock, preferred
stock or debt securities, as the case may be, purchasable upon such exercise.
If
fewer than all of the securities warrants represented by such securities warrant
certificate are exercised, a new securities warrant certificate will be issued
for the remaining amount of securities warrants.
Amendments
and Supplements to Securities Warrant Agreement
The
Securities Warrant Agreements may be amended or supplemented without the consent
of the holders of the securities warrants issued thereunder to effect changes
that are not inconsistent with the provisions of the securities warrants and
that do not adversely affect the interests of the holders of the securities
warrants.
Common
Stock Warrant Adjustments
Unless
otherwise indicated in the applicable prospectus supplement, the exercise price
of, and the number of shares of common stock covered by a common stock warrant
are subject to adjustment in certain events, including:
| · |
payment
of a dividend on the common stock payable in capital stock and stock
splits, combinations or reclassifications of the common
stock;
|
19
| · |
issuance
to all holders of common stock of rights or warrants to subscribe
for or
purchase shares of common stock at less than their current market
price
(as defined in the Securities Warrant Agreement for such series of
common
stock warrants); and
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| · |
certain
distributions of evidences of indebtedness or assets (including cash
dividends or distributions paid out of consolidated earnings or retained
earnings or dividends payable in common stock) or of subscription
rights
and warrants (excluding those referred to
above).
|
No
adjustment in the exercise price of, and the number of shares of common stock
covered by a common stock warrant will be made for regular quarterly or other
periods of recurring cash dividends or distributions or for cash dividends
or
distributions to the extent paid from consolidated earnings or retained
earnings. No adjustment will be required unless such adjustment would require
a
change of at least 1% in the exercise price then in effect. Except as stated
above, the exercise price of, and the number of shares of common stock covered
by, a common stock warrant will not be adjusted for the issuance of common
stock
or any securities convertible into or exchangeable for common stock, or carrying
the right or option to purchase or otherwise acquire the foregoing in exchange
for cash, other property or services.
In
the
event of any (i) consolidation or merger of the company with or into any
entity (other than a consolidation or a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares
of
common stock), (ii) sale, transfer, lease or conveyance of all or
substantially all of the assets of the company, or (iii) reclassification,
capital reorganization or change of the common stock (other than solely a change
in par value or from par value to no par value), then any holder of a common
stock warrant will be entitled, on or after the occurrence of any such event,
to
receive on exercise of such common stock warrant the kind and amount of shares
of stock or other securities, cash or other property (or any combination
thereof) that the holder would have received had such holder exercised such
holder's common stock warrant immediately prior to the occurrence of such event.
If the consideration to be received upon exercise of the common stock warrant
following any such event consists of common stock of the surviving entity,
then
from and after the occurrence of such event, the exercise price of such common
stock warrant will be subject to the same anti-dilution and other adjustments
described in the second preceding paragraph, applied as if such common stock
of
the surviving entity were common stock.
Consequences
of an Investment in Our Securities
The
following is a general summary of material U.S. federal income tax
considerations applicable to us, and to the purchasers of our securities and
our
election to be taxed as a REIT. It is not tax advice. The summary is not
intended to represent a detailed description of the U.S. federal income tax
consequences applicable to a particular stockholder in view of any person's
particular circumstances, nor is it intended to represent a detailed description
of the U.S. federal income tax consequences applicable to stockholders subject
to special treatment under the federal income tax laws such as insurance
companies, tax-exempt organizations, financial institutions, securities
broker-dealers, investors in pass-through entities, expatriates and taxpayers
subject to alternative minimum taxation.
The
following discussion relating to an investment in our securities was based
on
consultations with Powell Goldstein LLP, our special counsel. In the opinion
of
Powell Goldstein LLP, the following discussion, to the extent it constitutes
matters of law or legal conclusions (assuming the facts, representations, and
assumptions upon which the discussion is based are accurate), accurately
represents the material U.S. federal income tax considerations relevant to
purchasers of our securities. Powell Goldstein LLP has not rendered any opinion
regarding any effect of such issuance on purchasers of our securities. The
sections of the Code relating to the qualification and operation as a REIT
are
highly technical and complex. The following discussion sets forth the material
aspects of the Code sections that govern the federal income tax treatment of
a
REIT and its stockholders. The information in this section is based on the
Code;
current, temporary, and proposed Treasury regulations promulgated under the
Code; the legislative history of the Code; current administrative
interpretations and practices of the Internal Revenue Service,
20
Taxation
of Omega
General.
We
have
elected to be taxed as a real estate investment trust, or a REIT, under Sections
856 through 860 of the Code beginning with our taxable year ended
December 31, 1992. We believe that we have been organized and operated in
such a manner as to qualify for taxation as a REIT under the Code and we intend
to continue to operate in such a manner, but no assurance can be given that
we
have operated or will be able to continue to operate in a manner so as to
qualify or remain qualified as a REIT.
The
sections of the Code that govern the federal income tax treatment of a REIT
are
highly technical and complex. The following sets forth the material aspects
of
those sections. This summary is qualified in its entirety by the applicable
Code
provisions, rules and regulations promulgated thereunder, and administrative
and
judicial interpretations thereof.
In
the
opinion of Powell Goldstein LLP, which opinion has been filed as an exhibit
to
the registration statement of which this prospectus is a part, we are organized
in conformity with the requirements for qualification as a REIT, and our current
and proposed method of operation will enable us to continue to meet the
requirements for continued qualification and taxation as a REIT under the Code.
This opinion is based on various assumptions and is conditioned upon certain
representations made by us as to factual matters concerning our business and
properties. Moreover, such qualification and taxation as a REIT depends upon
our
ability to meet, through actual annual operating results, distribution levels
and diversity of stock ownership, the various qualification tests imposed under
the Code discussed below, the results of which will not be reviewed by Powell
Goldstein LLP on an ongoing basis. Accordingly, no assurance can be given that
the various results of our operation for any particular taxable year will
satisfy such requirements. Further, such requirements may be changed, perhaps
retroactively, by legislative or administrative actions at any time. We have
neither sought nor obtained any formal ruling from the IRS regarding our
qualification as a REIT and presently have no plan to apply for any such ruling.
See "—Failure
to Qualify."
If
we
qualify for taxation as a REIT, we generally will not be subject to federal
corporate income taxes on our net income that is currently distributed to
stockholders. This treatment substantially eliminates the "double taxation"
(i.e., taxation at both the corporate and the stockholder level) that generally
results from investment in a corporation. However, we will be subject to federal
income tax as follows: First, we will be taxed at regular corporate rates on
any
undistributed REIT taxable income, including undistributed net capital gains;
provided, however, that if we have a net capital gain, we will be taxed at
regular corporate rates on our undistributed REIT taxable income, computed
without regard to net capital gain and the deduction for capital gains
dividends, plus a 35% tax on undistributed net capital gain, if our tax as
thus
computed is less than the tax computed in the regular manner. Second, under
certain circumstances, we may be subject to the "alternative minimum tax" on
our
items of tax preference that we do not distribute or allocate to our
stockholders. Third, if we have (i) net income from the sale or other
disposition of "foreclosure property" which is held primarily for sale to
customers in the ordinary course of business, or (ii) other nonqualifying
income from foreclosure property, we will be subject to tax at the highest
regular corporate rate on such income. Fourth, if we have net income from
prohibited transactions (which are, in general, certain sales or other
dispositions of property (other than foreclosure property) held primarily for
sale to customers in the ordinary course of business by us, (i.e., when we
are
acting as a dealer)), such income will be subject to a 100% tax. Fifth, if
we
should fail to satisfy the 75% gross income test or the 95% gross income test
(as discussed below), but have nonetheless maintained our qualification as
a
REIT because certain other requirements have been met, we will be subject to
a
100% tax on an amount equal to (a) the gross income attributable to the
greater of the amount by which we fail the 75% or 95% test, multiplied by
(b) a fraction intended to reflect our profitability. Sixth, if we should
fail to distribute by the end of each year at least the sum of (i) 85% of
our REIT ordinary income for such year, (ii) 95% of our REIT capital gain
net income for such year, and (iii) any undistributed taxable income from
prior periods, we will be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. Seventh, we will
be
subject to a 100% excise on transactions with a taxable REIT subsidiary, or
TRS,
that are not conducted on an arm's-length basis. Eighth, if we acquire any
asset, which is defined as a "built-in gain asset" from a C corporation that
is
not a REIT (i.e., generally a corporation subject to full corporate-level tax)
in a transaction in which the basis of the built-in gain asset in our hands
is
21
Requirements
for Qualification. The
Code
defines a REIT as a domestic corporation, trust or association: (1) which
is managed by one or more trustees or directors; (2) the beneficial
ownership of which is evidenced by transferable shares, or by transferable
certificates of beneficial interest; (3) which would be taxable as a
domestic corporation, but for Sections 856 through 859 of the Code;
(4) which is neither a financial institution nor an insurance company
subject to the provisions of the Code; (5) the beneficial ownership of
which is held by 100 or more persons; (6) during the last half year of each
taxable year not more than 50% in value of the outstanding stock of which is
owned, actually or constructively, by five or fewer individuals (as defined
in
the Code to include certain entities); and (7) which meets certain other
tests, described below, regarding the nature of its income and assets and the
amount of its annual distributions to stockholders. The Code provides that
conditions (1) to (4), inclusive, must be met during the entire taxable
year and that condition (5) must be met during at least 335 days of a
taxable year of twelve months, or during a proportionate part of a taxable
year
of less than twelve months. For purposes of conditions (5) and (6), pension
funds and certain other tax-exempt entities are treated as individuals, subject
to a "look-through" exception in the case of condition (6). We may avoid
disqualification as a REIT for a failure to satisfy any of these tests if such
failure is due to reasonable cause and not willful neglect, and we pay a penalty
of $50,000 for each such failure.
Income
Tests. In
order
to maintain our qualification as a REIT, we annually must satisfy two gross
income requirements. First, at least 75% of our gross income (excluding gross
income from prohibited transactions) for each taxable year must be derived
directly or indirectly from investments relating to real property or mortgages
on real property (including generally "rents from real property," interest
on
mortgages on real property and gains on sale of real property and real property
mortgages, other than property described in Section 1221 of the Code) and
income derived from certain types of temporary investments. Second, at least
95%
of our gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived from such real property investments,
dividends, interest and gain from the sale or disposition of stock or securities
other than property held for sale to customers in the ordinary course of
business.
Rents
received by us will qualify as "rents from real property" in satisfying the
gross income requirements for a REIT described above only if several conditions
are met. First, the amount of the rent must not be based in whole or in part
on
the income or profits of any person. However, any amount received or accrued
generally will not be excluded from the term "rents from real property" solely
by reason of being based on a fixed percentage or percentages of receipts or
sales. Second, the Code provides that rents received from a tenant will not
qualify as "rents from real property" in satisfying the gross income tests
if
we, or an owner (actually or constructively) of 10% or more of the value of
our
stock, actually or constructively owns 10% or more of such tenant, which is
defined as a related party tenant. Third, if rent attributable to personal
property, leased in connection with a lease of real property, is greater than
15% of the total rent received under the lease, then the portion of rent
attributable to such personal property will not qualify as "rents from real
property." Finally, for rents received to qualify as "rents from real property,"
we generally must not operate or manage the property or furnish or render
services to the tenants of such property, other than through an independent
contractor from which we derive no revenue. We, however, directly perform
certain services that are "usually or customarily rendered" in connection with
the rental of space for occupancy only and are not otherwise considered
"rendered to the occupant" of the property. In addition, we may provide a
minimal amount of "non-customary" services to the tenants of a property, other
than through an independent contractor, as long as our income from the services
does not exceed 1% of our income from the related property. Furthermore, we
may
own up to 100% of the stock of a TRS, which may provide customary and
noncustomary services to our tenants without tainting our rental income from
the
related properties.
The
term
"interest" generally does not include any amount received or accrued (directly
or indirectly) if the determination of such amount depends in whole or in part
on the income or profits of any person. However, an amount received or accrued
generally will not be excluded from the term "interest" solely by reason of
being based
22
If
a loan
contains a provision that entitles us to a percentage of the borrower's gain
upon the sale of the real property securing the loan or a percentage of the
appreciation in the property's value as of a specific date, income attributable
to that loan provision will be treated as gain from the sale of the property
securing the loan, which generally is qualifying income for purposes of both
gross income tests.
Interest
on debt secured by mortgages on real property or on interests in real property
generally is qualifying income for purposes of the 75% gross income test.
However, if the highest principal amount of a loan outstanding during a taxable
year exceeds the fair market value of the real property securing the loan as
of
the date we agreed to originate or acquire the loan, a portion of the interest
income from such loan will not be qualifying income for purposes of the 75%
gross income test, but will be qualifying income for purposes of the 95% gross
income test. The portion of the interest income that will not be qualifying
income for purposes of the 75% gross income test will be equal to the portion
of
the principal amount of the loan that is not secured by real
property.
Prohibited
Transactions. We
will
incur a 100% tax on the net income derived from any sale or other disposition
of
property, other than foreclosure property, that we hold primarily for sale
to
customers in the ordinary course of a trade or business. We believe that none
of
our assets is held for sale to customers and that a sale of any of our assets
would not be in the ordinary course of our business. Whether a REIT holds an
asset primarily for sale to customers in the ordinary course of a trade or
business depends, however, on the facts and circumstances in effect from time
to
time, including those related to a particular asset. Nevertheless, we will
attempt to comply with the terms of safe-harbor provisions in the federal income
tax laws prescribing when an asset sale will not be characterized as a
prohibited transaction. We cannot assure you, however, that we can comply with
the safe-harbor provisions or that we will avoid owning property that may be
characterized as property that we hold primarily for sale to customers in the
ordinary course of a trade or business.
Foreclosure
Property. We
will
be subject to tax at the maximum corporate rate on any income from foreclosure
property, other than income that otherwise would be qualifying income for
purposes of the 75% gross income test, less expenses directly connected with
the
production of that income. However, gross income from foreclosure property
will
qualify for purposes of the 75% and 95% gross income tests. Foreclosure property
is any real property, including interests in real property, and any personal
property incident to such real property:
| · |
that
is acquired by a REIT as the result of the REIT having bid in such
property at foreclosure, or having otherwise reduced such property
to
ownership or possession by agreement or process of law, after there
was a
default or default was imminent on a lease of such property or on
indebtedness that such property
secured;
|
| · |
for
which the related loan or lease was acquired by the REIT at a time
when
the default was not imminent or anticipated;
and
|
| · |
for
which the REIT markets a proper election to treat the property as
foreclosure property.
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Property
generally ceases to be foreclosure property at the end of the third taxable
year
following the taxable year in which the REIT acquired the property, or longer
if
an extension is granted by the Secretary of the Treasury. This grace period
terminates and foreclosure property ceases to be foreclosure property on the
first day:
| · |
on
which a lease is entered into for the property that, by its terms,
will
give rise to income that does not qualify for purposes of the 75%
gross
income test, or any amount is received or accrued, directly or indirectly,
pursuant to a lease entered into on or after such day that will give
rise
to income that does not qualify for purposes of the 75% gross income
test;
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23
| · |
on
which any construction takes place on the property, other than completion
of a building or any other improvement, where more than 10% of the
construction was completed before default became imminent;
or
|
| · |
which
is more than 90 days after the day on which the REIT acquired the
property and the property is used in a trade or business which is
conducted by the REIT, other than through an independent contractor
from
whom the REIT itself does not derive or receive any
income.
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Beginning
on January 1, 2001, foreclosure property also includes any "qualified
health care property," as defined in Code Section 856(e)(6) acquired by us
as the result of the termination or expiration of a lease of such property.
We
may operate a qualified healthcare facility, acquired in this manner for two
years or longer if an extension is granted. At present, we do not own property
with respect to which we have made foreclosure property elections. Properties
that are taken back in a foreclosure or bankruptcy and operated for our own
account are treated as foreclosure properties for income tax purposes, pursuant
to Internal Revenue Code Section 856(e). Gross income from foreclosure
properties is "good income" for purposes of the annual REIT income tests. Once
this election is made on the tax return, it is "good" for a period of three
years, or until the properties are no longer operated for our own account.
An
election to extend the foreclosure status period for an additional three years
can be made. In all cases of the foreclosure property, we utilize an independent
contractor to conduct day-to-day operations in order to maintain REIT status.
In
certain cases we operate facilities through a taxable REIT subsidiary. For
those
properties operated through the taxable REIT subsidiary, we utilize an eligible
independent contractor to conduct day-to-day operations to maintain REIT status.
As a result of the foregoing, we do not believe that our participation in the
operation of nursing homes will increase the risk that we will fail to qualify
as a REIT. Through our 2005 taxable year, we have not paid any tax on our
foreclosure property because those properties have been producing losses.
However, in the future, our income from foreclosure property could be
significant and we could be required to pay a significant amount of tax on
that
income.
Hedging
Transactions. From
time
to time, we enter into hedging transactions with respect to one or more of
our
assets or liabilities. Our hedging activities may include entering into interest
rate swaps, caps, and floors, options to purchase these items, and futures
and
forward contracts. To the extent that we enter into an interest rate swap or
cap
contract, option, futures contract, forward rate agreement, or any similar
financial instrument to hedge our indebtedness incurred to acquire or carry
"real estate assets," any periodic income or gain from the disposition of that
contract will be excluded from gross income (both the numerator and the
denominator) for purposes of the 95% gross income test, but will not be
qualifying gross income (not included in the numerator but included in the
denominator) for purposes of the 75% gross income test. To the extent that
we
hedge with other types of financial instruments, or in other situations, it
is
not entirely clear how the income from those transactions will be treated for
purposes of the gross income tests. We have structured and intend to continue
to
structure any hedging transactions in a manner that does not jeopardize our
status as a REIT.
TRS
Income. A
TRS may
earn income that would not be qualifying income if earned directly by the parent
REIT. Both the subsidiary and the REIT must jointly elect to treat the
subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns
more than 35% of the voting power or value of the stock will automatically
be
treated as a TRS. Overall, no more than 20% of the value of a REIT's assets
may
consist of securities of one or more TRSs. However, a TRS does not include
a
corporation which directly or indirectly (i) operates or manages a health
care (or lodging) facility, or (ii) provides to any other person (under a
franchise, license, or otherwise) rights to any brand name under which a health
care (or lodging) facility is operated. A TRS will pay income tax at regular
corporate rates on any income that it earns. In addition, the new rules limit
the deductibility of interest paid or accrued by a TRS to its parent REIT to
assure that the TRS is subject to an appropriate level of corporate taxation.
The rules also impose a 100% excise tax on transactions between a TRS and its
parent REIT or the REIT's tenants that are not conducted on an arm's-length
basis. We have made TRS elections with respect to Bayside Street II, Inc.
and Omega TRS I, Inc., which previously owned all of the preferred stock of
Omega Worldwide. Those entities will pay corporate income tax on their taxable
income and their after-tax next income will be available for distribution to
us.
Failure
to Satisfy Income Tests. If
we
fail to satisfy one or both of the 75% or 95% gross income tests for any taxable
year, we may nevertheless qualify as a REIT for such year if we are entitled
to
relief under certain provisions of the Code. These relief provisions will be
generally available if our failure to meet such tests was due to
24
Asset
Tests. At
the
close of each quarter of our taxable year, we must also satisfy the following
tests relating to the nature of our assets. First, at least 75% of the value
of
our total assets must be represented by real estate assets (including
(i) our allocable share of real estate assets held by partnerships in which
we own an interest and (ii) stock or debt instruments held for not more
than one year purchased with the proceeds of a stock offering or long-term
(at
least five years) debt offering of our company), cash, cash items and government
securities. Second, of our investments not included in the 75% asset class,
the
value of our interest in any one issuer's securities may not exceed 5% of the
value of our total assets. Third, we may not own more than 10% of the voting
power or value of any one issuer's outstanding securities. Fourth, no more
than
20% of the value of our total assets may consist of the securities of one or
more TRSs. Fifth, no more than 25% of the value of our total assets may consist
of the securities of TRSs and other non-TRS taxable subsidiaries and other
assets that are not qualifying assets for purposes of the 75% asset
test.
For
purposes of the second and third asset tests, the term "securities" does not
include any security in another REIT, debt or equity securities of a qualified
REIT subsidiary or TRS, any loan to an individual or an estate, any Code Section
467 rental agreement, any obligation to pay rents from real property, certain
government issued securities, certain debt securities of a partnership, or
equity interest in any partnership. The term "securities," however, generally
includes debt securities issued by another REIT or a partnership, except that
debt securities of a partnership are not treated as securities for purposes
of
the 10% value test if we own at least a 20% profits interest in the
partnership.
We
may
own up to 100% of the stock of one or more TRSs. However, overall, no more
than
20% of the value of our assets may consist of securities of one or more TRSs,
and no more than 25% of the value of our assets may consist of the securities
of
TRSs and other non-TRS taxable subsidiaries (including stock in non-REIT C
Corporations) and other assets that are not qualifying assets for purposes
of
the 75% asset test.
If
the
outstanding principal balance of a mortgage loan exceeds the fair market value
of the real property securing the loan, a portion of such loan likely will
not
be a qualifying real estate asset under the federal income tax laws. The
non-qualifying portion of that mortgage loan will be equal to the portion of
the
loan amount that exceeds the value of the associated real property.
After
initially meeting the asset tests at the close of any quarter, we will not
lose
our status as a REIT for failure to satisfy any of the asset tests at the end
of
a later quarter solely by reason of changes in asset values. If the failure
to
satisfy the asset tests results from an acquisition of securities or other
property during a quarter, the failure can be cured by disposition of sufficient
nonqualifying assets within 30 days after the close of that quarter. We
have maintained and intend to continue to maintain adequate records of the
value
of our assets to ensure compliance with the asset tests and to take such other
action within 30 days after the close of any quarter as may be required to
cure any noncompliance.
Failure
to Satisfy Asset Tests. Subject
to certain deminimis exceptions, we may avoid disqualification as a REIT in
the
even of certain failures to satisfy the asset tests provided that our failure
to
meet such tests was due to reasonable cause and not due to willful neglect,
we
attach a schedule with our return that contains a description of each asset
that
caused the failure, we dispose of the assets generally within six (6) months
of
the last day of the quarter in which identification of the failure occurred,
and
we pay a tax on the failure equal to the greater of (a) $50,000, and (b) the
product of the net income for the period beginning on the date of the failure
and ending generally on the date of disposition of the asset that was generated
by the assets that caused the failure multiplied by the highest applicable
corporate tax rate.
25
Annual
Distribution Requirements. In
order
to qualify as a REIT, we are required to distribute dividends (other than
capital gain dividends) to our stockholders in an amount at least equal to
(A) the sum of (i) 90% of our "REIT taxable income" (computed without
regard to the dividends paid deduction and our net capital gain) and
(ii) 90% of the net income (after tax), if any, from foreclosure property,
minus (B) the sum of certain items of noncash income. Such distributions
must be paid in the taxable year to which they relate, or in the following
taxable year if declared before we timely file our tax return for such year
and
paid on or before the first regular dividend payment after such declaration.
In
addition, such distributions are required to be made pro rata, with no
preference to any share of stock as compared with other shares of the same
class, and with no preference to one class of stock as compared with another
class except to the extent that such class is entitled to such a preference.
To
the extent that we do not distribute all of our net capital gain or do
distribute at least 90%, but less than 100% of our "REIT taxable income," as
adjusted, we will be subject to tax thereon at regular ordinary and capital
gain
corporate tax rates.
Furthermore,
if we fail to distribute during a calendar year, or by the end of January
following the calendar year in the case of distributions with declaration and
record dates falling in the last three months of the calendar year, at least
the
sum of:
| · |
85%
of our REIT ordinary income for such
year;
|
| · |
95%
of our REIT capital gain income for such year;
and
|
| · |
any
undistributed taxable income from prior
periods,
|
we
will
incur a 4% nondeductible excise tax on the excess of such required distribution
over the amounts we actually distribute. We may elect to retain and pay income
tax on the net long-term capital gain we receive in a taxable year. If we so
elect, we will be treated as having distributed any such retained amount for
purposes of the 4% excise tax described above. We have made, and we intend
to
continue to make, timely distributions sufficient to satisfy the annual
distribution requirements. We may also be entitled to pay and deduct deficiency
dividends in later years as a relief measure to correct errors in determining
our taxable income. Although we may be able to avoid income tax on amounts
distributed as deficiency dividends, we will be required to pay interest to
the
IRS based upon the amount of any deduction we take for deficiency
dividends.
Our
ability to make distributions in amounts sufficient to meet the requirements
set
forth in the previous paragraph may be dependent, in part, on our ability to
claim,, among other things, depreciation deductions with respect to owned
facilities. This treatment for federal income tax purposes depends upon
classification of the leases with respect to such owned facilities as "true
leases" rather than financing arrangements. The question of whether we are
the
owner of such facilities and whether the leases are true leases for federal
tax
purposes is essentially based upon factual matters. We believe that we will
be
treated as the owner of each of the facilities that we lease, and such leases
will be treated as “true leases” for federal income tax purposes. However, no
assurances can be given that the IRS will not successfully challenge our status
as the owner of our facilities subject to leases, and the status of such leases
as true leases, asserting that the purchase of the facilities by us and the
leasing of such facilities merely constitute steps in secured financing
transactions in which the lessees are owners of the facilities and we are merely
a secured creditor. In such event, we would not be entitled to claim
depreciation deductions with respect to any of the affected facilities. As
a
result, we might fail to meet the 90% distribution requirement or, if such
requirement is met, we might be subject to corporate income tax or the 4% excise
tax.
Failure
to Qualify
If
we
fail to qualify as a REIT in any taxable year, and the relief provisions do
not
apply, we will be subject to tax (including any applicable alternative minimum
tax) on our taxable income at regular corporate rates. Distributions to
stockholders in any year in which we fail to qualify will not be deductible
and
our failure to qualify as a REIT would reduce the cash available for
distribution by us to our stockholders. In addition, if we fail to qualify
as a
REIT, all distributions to stockholders will be taxable as ordinary income,
to
the extent of current and accumulated earnings and profits, and, subject to
certain limitations of the Code, corporate distributees may be eligible for
the
dividends received deduction. Unless entitled to relief under specific statutory
provisions, we would also be disqualified from taxation as a REIT for the four
taxable years following the year during which qualification
26
Other
Tax Matters
We
own
and operate a number of properties through qualified REIT subsidiaries, "QRSs".
The QRSs are treated as qualified REIT subsidiaries under the Code. Code
Section 856(i) provides that a corporation which is a qualified REIT
subsidiary shall not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction, and credit of a qualified REIT
subsidiary shall be treated as assets, liabilities and such items (as the case
may be) of the REIT. Thus, in applying the tests for REIT qualification
described in this prospectus under the heading "Taxation of Omega," the QRSs
will be ignored, and all assets, liabilities and items of income, deduction,
and
credit of such QRSs will be treated as our assets, liabilities and items of
income, deduction, and credit.
In
the
case of a REIT that is a partner in a partnership, the REIT is treated as owning
its proportionate share of the assets of the partnership and as earning its
allocable share of the gross income of the partnership for purposes of the
applicable REIT qualification tests. Thus, our proportionate share of the
assets, liabilities, and items of income of any partnership, joint venture,
or
limited liability company that is treated as a partnership for federal income
tax purposes in which we own an interest, directly or indirectly, will be
treated as our assets and gross income for purposes of applying the various
REIT
qualification requirements.
Taxation
of Stockholders
Taxation
of Domestic Stockholders. As
long
as we qualify as a REIT, if you are a taxable U.S. stockholder, distributions
made to you out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by you as
ordinary income and will not be eligible for the dividends received deduction
for corporations or the special 15% tax rate applicable to individuals and
certain other taxpayers in the case of dividends paid by a regular C
corporation. However, to the extent that any of our income represents income
on
which we have paid tax at corporate income tax rates or dividend income from
a
regular C corporation, including dividend income from a TRS that we own, your
proportionate share of such dividend income will be eligible for such special
15% tax rate. Distributions that are designated as capital gain dividends will
be taxed as long-term capital gains (to the extent they do not exceed our actual
net capital gain for the taxable year) and eligible for the special 15% maximum
tax rate on capital gain income (unless such capital gain income is attributable
to unrecaptured Section 1250 gain, in which case the applicable maximum tax
rate
will be 25%, instead of 15%), without regard to the period for which you have
held our stock. However, if you are a corporation, you may be required to treat
up to 20% of certain capital gain dividends as ordinary income. Further, if
we
designate a dividend as a capital gain dividend to you and you dispose of your
shares in a sale or exchange in which you recognize a loss, and have held those
shares for six (6) months or less, you will be required to treat the loss from
the sale of your shares as long-term (instead of short-term) capital loss to
the
extent of the of the dividend distributions you received from us that were
designated as capital gain distributions that were permitted to treat as
long-term capital gains.
Distributions
in excess of current and accumulated earnings and profits will not be taxable
to
you to the extent that they do not exceed the adjusted basis of your shares,
but
rather will reduce the adjusted basis of those shares. To the extent that
distributions in excess of current and accumulated earnings and profits exceed
the adjusted basis of your shares, you will include the distributions in income
as long-term capital gain (or short-term capital gain if you have held the
shares for one year or less) assuming the shares are a capital asset in your
hands. In addition, any distribution declared by us in October, November or
December of any year payable to you as a stockholder of record on a specified
date in any of these months shall be treated as both paid by us and received
by
you on December 31 of that year, provided that the distribution is actually
paid by us during January of the following calendar year. You may not include
in
your individual income tax returns any of our net operating losses or capital
losses.
27
Backup
Withholding
Assuming
that you are a U.S. stockholder, we will report to you and the IRS the amount
of
distributions paid during each calendar year, and the amount of tax withheld,
if
any. Under the backup withholding rules, you may be subject to backup
withholding with respect to distributions paid unless you:
| · |
are
a corporation or come within certain other exempt categories and
when
required, demonstrate this fact; or
|
| · |
provide
a taxpayer identification number, certify as to no loss of exemption
from
backup withholding, and otherwise comply with applicable requirements
of
the backup withholding rules.
|
If
you do
not provide us with your correct taxpayer identification number, you may also
be
subject to penalties imposed by the IRS. Any amount paid as backup withholding
will be creditable against your income tax liability. In addition, we may be
required to withhold a portion of capital gain distributions to you, if you
fail
to certify your nonforeign status to us. See "—Taxation
of Stockholders—Taxation
of Foreign Stockholders."
Treatment
of Tax-Exempt Stockholders. If
you
are a tax-exempt employee pension trust or other domestic tax-exempt
stockholder, our distributions to you generally will not constitute "unrelated
business taxable income," or UBTI, unless you have borrowed to acquire or carry
our common stock. However, qualified trusts that hold more than 10% (by value)
of certain REITs may be required to treat a certain percentage of that REIT's
distributions as UBTI. This requirement will apply only if:
| · |
the
REIT would not qualify for federal income tax purposes but for the
application of a "look-through" exception to the "five or fewer"
requirement applicable to shares held by qualified trusts;
and
|
| · |
the
REIT is "predominantly held" by qualified
trusts.
|
A
REIT is
predominantly held if either:
| · |
a
single qualified trust holds more than 25% by value of the REIT interests;
or
|
| · |
one
or more qualified trusts, each owning more than 10% by value of the
REIT
interests, hold in the aggregate more than 50% by value of the REIT
interests.
|
The
percentage of any REIT dividend treated as UBTI is equal to the ratio of the
UBTI earned by the REIT (treating the REIT as if it were a qualified trust
and
therefore subject to tax on UBTI) to the total gross income (less certain
associated expenses) of the REIT.
A
de
minimis exception applies where the ratio set forth in the preceding sentence
is
less than 5% for any year. For those purposes, a qualified trust is any trust
described in section 401(a) of the Internal Revenue Code and exempt from
tax under section 501(a) of the Internal Revenue Code. The provisions
requiring qualified trusts to treat a portion of REIT distributions as UBTI
will
not apply if the REIT is able to satisfy the "five or fewer" requirement without
relying upon the "look-through" exception. The restrictions on ownership of
our
common stock in our Amended and Restated Articles of Incorporation, as amended,
will prevent application of the provisions treating a portion of REIT
distributions as UBTI to tax-exempt entities purchasing our common stock, absent
approval by our board of directors.
Taxation
of Foreign Stockholders. The
rules
governing U.S. federal income taxation of nonresident alien individuals, foreign
corporations, foreign partnerships and other foreign stockholders (collectively,
Non-U.S. Stockholders) are complex and no attempt will be made herein to provide
more than a summary of these rules. Prospective Non-U.S. Stockholders should
consult with their own tax advisors to determine the impact of federal, state
and local income tax laws with regard to an investment in shares, including
any
reporting requirements.
28
If
you
are a Non-U.S. Stockholder, the following discussion will apply to you.
Distributions that are not attributable to gain from our sales or exchanges
of
U.S. real property interests and not designated by us as capital gains dividends
will be treated as dividends of ordinary income to the extent that they are
made
out of our current or accumulated earnings and profits. Such distributions
will
ordinarily be subject to a withholding tax equal to 30% of the gross amount
of
the distribution unless an applicable tax treaty reduces or eliminates that
tax.
However,
if income from the investment in the shares is treated as effectively connected
with your conduct of a U.S. trade or business, you generally will be subject
to
a tax at graduated rates, in the same manner as U.S. stockholders are taxed
with
respect to the distributions (and may also be subject to the 30% branch profits
tax if you are a foreign corporation). We expect to withhold U.S. income tax
at
the rate of 30% on the gross amount of any distributions made to you
unless:
| · |
a
lower treaty rate applies, you file an IRS Form W-8BEN with us and
other conditions are met; or
|
| · |
you
file an IRS Form W-8ECI with us claiming that the distribution is
effectively connected income, and other conditions are
met.
|
Distributions
in excess of our current and accumulated earnings and profits will not be
taxable to you to the extent that the distributions do not exceed the adjusted
basis of your shares, but rather will reduce the adjusted basis of the shares.
To the extent that distributions in excess of current accumulated earnings
and
profits exceed the adjusted basis of your shares, these distributions will
give
rise to tax liability if you would otherwise be subject to tax on any gain
from
the sale or disposition of your shares in us, as described below. If it cannot
be determined at the time a distribution is made whether or not the distribution
will be in excess of current and accumulated earnings and profits, the
distributions will be subject to withholding at the same rate as dividends.
However, amounts thus withheld are refundable if it is subsequently determined
that a distribution was, in fact, in excess of our current and accumulated
earnings and profits.
For
any
year in which we qualify as a REIT, distributions that are attributable to
gain
from our sales or exchanges of U.S. real property interests will be taxed to
you
under the provisions of the Foreign Investment in Real Property Tax Act of
1980,
or FIRPTA. Under FIRPTA, distributions attributable to gain from sales of U.S.
real property interests are taxed to you as if the gain were effectively
connected with a U.S. business. You would thus be taxed at the normal capital
gain rates applicable to U.S. stockholders (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals). Also, distributions subject to FIRPTA may be subject to
a
30% branch profits tax in the hands of a foreign corporate stockholder not
entitled to a treaty exemption. We are required by applicable Treasury
Regulations to withhold 35% of any distribution that could be designated by
us
as a capital gains dividend. This amount is creditable against your FIRPTA
tax
liability. Notwithstanding the foregoing, in the case of any distribution
attributable to gain from a sale by us of U.S. real property interests, if
the
distribution is with respect to a class of our stock that is regularly traded
on
an established securities market, you do not own more than 5% of that class
of
stock at any time during the one-year period ending on the date of the
distribution, and we are a “domestically controlled REIT” as defined below, then
the distribution will be exempted from the application of the FIRPTA rules
and
the distribution will be subject to the withholding rules for ordinary income,
i.e.,
subject
to a 30% withholding tax unless the a Form W-8BEN has been filed (indicating
that a lower treaty rate applies) or a Form W-8ECI has been filed (indicating
that the distribution is effectively connected income).
Gain
recognized by you upon a sale of shares generally will not be taxed under FIRPTA
if we are a "domestically controlled REIT," defined generally as a REIT in
which
at all times during a specified testing period less than 50% in value of the
stock was held directly or indirectly by foreign persons. It is currently
anticipated that we will be a "domestically controlled REIT," although there
can
be no assurance that we will retain that status. If we are not "domestically
controlled," gain recognized by you will continue to be exempt under FIRPTA
if
you at no time owned more than five percent of our common stock. However, gain
not subject to FIRPTA will be taxable to you if:
| · |
investment
in the shares is effectively connected with your U.S. trade or business,
in which case you will be subject to the same treatment as U.S.
stockholders with respect to the gain;
or
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29
| · |
you
are a nonresident alien individual who was present in the United
States
for more than 182 days during the taxable year and other applicable
requirements are met, in which case you will be subject to a 30%
tax on
your capital gains.
|
If
the
gain on the sale of shares were to be subject to taxation under FIRPTA, you
will
be subject to the same treatment as U.S. stockholders with respect to the gain
(subject to applicable alternative minimum tax and a special alternative minimum
tax in the case of nonresident alien individuals).
If
the
proceeds of a sale of shares by you are paid by or through a U.S. office of
a
broker, the payment is subject to information reporting and to backup
withholding unless you certify as to your name, address and non-U.S. status
or
otherwise establish an exemption. Generally, U.S. information reporting and
backup withholding will not apply to a payment of disposition proceeds if the
payment is made outside the U.S. through a non-U.S. office of a non-U.S. broker.
U.S. information reporting requirements (but not backup withholding) will apply,
however, to a payment of disposition proceeds outside the U.S. if:
| · |
the
payment is made through an office outside the U.S. of a broker that
is:
(a) a U.S. person; (b) a foreign person that derives 50% or more
of its gross income for certain periods from the conduct of a trade
or
business in the U.S.; or (c) a "controlled foreign corporation" for
U.S. federal income tax purposes;
and
|
| · |
the
broker fails to initiate documentary evidence that you are a Non-U.S.
Stockholder and that certain conditions are met or that you otherwise
are
entitled to an exemption.
|
Possible
Legislative or Other Actions Affecting Tax Consequences
Prospective
holders of our securities should recognize that the present federal income
tax
treatment of investment in our company may be modified by legislative, judicial
or administrative action at any time and that any of these actions may affect
investments and commitments previously made. The rules dealing with federal
income taxation are constantly under review by persons involved in the
legislative process and by the IRS and the Treasury Department, resulting in
revisions of regulations and revised interpretations of established concepts
as
well as statutory changes. Revisions in federal tax laws and interpretations
thereof could adversely affect the tax consequences of investment in our
company.
State
and Local Taxes
We
may be
and you may be subject to state or local taxes in other jurisdictions such
as
those in which we may be deemed to be engaged in activities or own property
or
other interests. The state and local tax treatment of us may not conform to
the
federal income tax consequences discussed above.
We
may
sell the securities to one or more underwriters for public offering and sale
by
them and may also sell the securities to investors directly or through agents.
We will name any underwriter or agent involved in the offer and sale of
securities in the applicable prospectus supplement. We have reserved the right
to sell or exchange securities directly to investors on our own behalf in those
jurisdictions where we are authorized to do so.
We
may
distribute the securities from time to time in one or more
transactions:
| · |
at
a fixed price or prices, which may be
changed;
|
| · |
at
market prices prevailing at the time of
sale;
|
| · |
at
prices related to such prevailing market prices;
or
|
30
| · |
at
negotiated prices.
|
We
may
also, from time to time, authorize dealers, acting as our agents, to offer
and
sell securities upon the terms and conditions set forth in the applicable
prospectus supplement. In connection with the sale of securities, we, or the
purchasers of securities for whom the underwriters may act as agents, may
compensate underwriters in the form of underwriting discounts or commissions.
Underwriters may sell the securities to or through dealers, and those dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they
may
act as agent. Unless otherwise indicated in a prospectus supplement, an agent
will be acting on a best efforts basis and a dealer will purchase securities
as
a principal, and may then resell the securities at varying prices to be
determined by the dealer.
When
securities are to be sold to underwriters, unless otherwise set forth in the
applicable prospectus supplement, the underwriters' obligations to purchase
those securities will be subject to certain conditions precedent. If the
underwriters purchase any of the securities, they will be obligated to purchase
all of the securities.
We
will
describe in the applicable prospectus supplement any compensation we pay to
underwriters or agents in connection with the offering of securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers. Dealers and agents participating in the distribution of securities
may
be deemed to be underwriters, and any discounts and commissions received by
them
and any profit realized by them on resale of the securities may be deemed to
be
underwriting discounts and commissions. We may enter into agreements to
indemnify underwriters, dealers and agents against certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended, and to
reimburse these persons for certain expenses.
To
facilitate the offering of securities, certain persons participating in the
offering may engage in transactions that stabilize, maintain, or otherwise
affect the price of the securities. This may include over- allotments or short
sales of the securities, which involve the sale by persons participating in
the
offering of more securities than we sold to them. In these circumstances, these
persons would cover such over-allotments or short positions by making purchases
in the open market or by exercising their over-allotment option, if any. In
addition, these persons may stabilize or maintain the price of the securities
by
bidding for or purchasing securities in the open market or by imposing penalty
bids, whereby selling concessions allowed to dealers participating in the
offering may be reclaimed if securities sold by them are repurchased in
connection with stabilization transactions. The effect of these transactions
may
be to stabilize or maintain the market price of the securities at a level above
that which might otherwise prevail in the open market. These transactions may
be
discontinued at any time.
Certain
of the underwriters, dealers or agents and their associates may engage in
transactions with and perform services for us in the ordinary course of our
business.
Certain
legal matters with respect to the securities offered hereby will be passed
upon
for us Powell Goldstein LLP.
The
consolidated financial statements of Omega Healthcare Investors, Inc. appearing
in Omega Healthcare Investors, Inc.’s Annual Report (Form 10-K) for the year
ended December 31, 2005, including schedules appearing therein, and Omega
Healthcare Investors, Inc. management’s assessment of the effectiveness of
internal control over financial reporting as of December 31, 2005 included
therein, have been audited by Ernst & Young LLP, independent registered
public accounting firm, as set forth in their reports thereon, included therein,
and incorporated herein by reference. Such consolidated financial statements
and
management’s assessment are incorporated herein by reference in reliance upon
such reports given on the authority of such firm as experts in accounting and
auditing.
31
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
The
following table sets forth the costs and expenses to be paid by the Company
in
connection with the offering of the securities registered. All amounts are
estimates except for the registration fee.
|
SEC
Registration Fee
|
$
0*
|
|
Accounting
Fees and Expenses
|
10,000
|
|
Legal
Fees and Expenses
|
10,000
|
|
Rating
Agency Fees
|
0
|
|
Listing
Fees
|
0
|
|
Transfer
Agent or Trustee Fees
|
0
|
|
Printing
and Engraving Costs
|
0
|
|
Miscellaneous
|
2,000
|
|
Total
|
$
22,000
|
*
Registration fee associated with the securities to be offered hereby has been
previously paid by the Company.
Item
15. Indemnification of Directors and Officers
The
articles of incorporation and bylaws of the registrant provide for
indemnification of directors and officers to the full extent permitted by
Maryland law.
Section
2-418 of the General Corporation Law of the State of Maryland generally permits
indemnification of any director or officer with respect to any proceedings
unless it is established that: (a) the act or omission of the director or
officer was material to the matter giving rise to the proceeding and was either
committed in bad faith or the result of active or deliberate dishonesty; (b)
the
director or officer actually received an improper personal benefit in money,
property or services; or (c) in the case of criminal proceedings, the director
or officer had reasonable cause to believe that the act or omission was
unlawful. The indemnity may include judgments, penalties, fines, settlements,
and reasonable expenses actually incurred by the director or officer in
connection with the proceedings; provided, however, that if the proceeding
is
one by, or in the right of, the corporation, indemnity is permitted only for
reasonable expenses and not with respect to any proceeding in which the director
shall have been adjudged to be liable to the corporation. The termination of
any
proceeding by judgment, order or settlement does not create a presumption that
the director did not meet the requisite standard of conduct required for
permitted indemnification. The termination of any proceeding by conviction,
or
plea of nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption that the director or officer
did not meet that standard of conduct.
The
company has entered into indemnity agreements with the officers and directors
of
the company that provide that the company will, subject to certain conditions,
pay on behalf of the indemnified party any amount which the indemnified party
is
or becomes legally obligated to pay because of any act or omission or neglect
or
breach of duty, including any actual or alleged error or misstatement or
misleading statement, which the indemnified party commits or suffers while
acting in the capacity as an officer or director of the company.
Insofar
as indemnification for liabilities arising under the Securities Act is permitted
to directors and officers of the registrant pursuant to the above-described
provisions, the registrant understands that the Commission is of the opinion
that such indemnification contravenes federal public policy as expressed in
said
act and therefore is unenforceable.
Item
16. Exhibits
|
Exhibit
Number
|
Description
|
|
1.1
|
Form
of Underwriting Agreement.*
|
|
4.1
|
Form
of Indenture.**
|
|
4.2
|
Form
of Debt Security.*
|
|
4.3
|
Form
of Articles Supplementary for Preferred Stock.*
|
|
4.4
|
Form
of Preferred Stock Certificate.*
|
|
4.5
|
Form
of Securities Warrant Agreement.*
|
|
5.1
|
Opinion
of Powell, Goldstein, Frazer & Murphy LLP as to the legality of the
securities registered hereby.**
|
|
8.1
|
Opinion
of Powell, Goldstein, Frazer & Murphy LLP regarding certain tax
matters.**
|
|
12.1
|
Statement
Regarding Computation of Ratio of Earnings to Fixed
Charges.
|
|
12.2
|
Statement
Regarding Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends.
|
|
23.1
|
Consent
of Ernst & Young LLP, independent registered public accounting
firm.
|
|
23.2
|
Consent
of Powell, Goldstein, Frazer & Murphy LLP (included in Exhibit 5.1 and
Exhibit 8.1 filed herewith).**
|
|
24.1
|
Power
of Attorney (included on signature page).**
|
|
25.1
|
Statement
of Eligibility of Trustee on Form
T-1***
|
________________________
* To
be
filed by amendment or incorporated by reference in connection with any offering
of Securities.
** Previously
filed.
*** To
be
filed separately pursuant to Section 305(b)(2) of the Trust Indenture Act of
1939, as amended.
Item
17. Undertakings
(a)
The
undersigned registrant hereby undertakes:
(1)
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i)
To
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii)
To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no
II-2
(iii)
To
include any material information with respect to the plan of distribution not
previously disclosed in this registration statement or any material change
to
such information in the registration statement.
provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that are incorporated by reference
in the registration statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration statement.
(2)
That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide
offering
thereof.
(3)
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4)
That,
for the purpose of determining liability under the Securities Act of 1933 to
any
purchaser:
(i)
If
the registrant is relying on Rule 430B:
(A)
Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed
to
be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
(B)
Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7)
as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose
of
providing the information required by Section 10(a) of the Securities Act of
1933 shall be deemed to be part of and included in the registration statement
as
of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an underwriter,
such
date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall
be
deemed to be the initial bona fide offering thereof. Provided, however, that
no
statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of
the
registration statement will, as to a purchaser with a time of contract of sale
prior to such effective date, supersede or modify any statement that was made
in
the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such effective
date;
or
(5)
That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities:
The
undersigned registrant undertakes that in a primary offering of securities
of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if
the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i)
Any
preliminary prospectus or prospectus of the undersigned registrant relating
to
the offering required to be filed pursuant to Rule 424;
II-3
(ii)
Any
free writing prospectus relating to the offering prepared by or on behalf of
the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii)
The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv)
Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(b)
The
undersigned registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act
of
1934) that is incorporated by reference in the registration statement shall
be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be
the initial bona
fide
offering
thereof.
(c)
The
undersigned registrant hereby undertakes to deliver or cause to be delivered
with the prospectus, to each person to whom the prospectus is sent or given,
the
latest annual report to security holders that is incorporated by reference
in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to
be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d)
Insofar as indemnification for liabilities arising under the Securities Act
of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of
such issue.
(e)
The
undersigned registrant hereby undertakes to file an application determining
the
eligibility of the trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act in accordance with the rules and regulations prescribed
by
the Commission under Section 305(b)(2) of the Trust Indenture Act.
II-4
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
for
filing on Form S-3 and has duly caused this Post-Effective Amendment No. 2
to registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Timonium, State of Maryland, on this
28th
day of
August, 2006.
OMEGA
HEALTHCARE INVESTORS, INC.
By: /s/
C.
Taylor Pickett
C.
Taylor Pickett
Chief
Executive Officer
Pursuant
to the requirements of the Securities Act of 1933, this Post-Effective Amendment
No. 2 to registration statement has been signed by the following persons in
the
capacities indicated on August 28, 2006.
|
Signature
|
Title
|
|
|
/s/
C. Taylor Pickett
|
Chief
Executive Officer and Director
|
|
|
C.
Taylor Pickett
|
(Principal
Executive Officer)
|
|
|
/s/
Robert O. Stephenson
|
Chief
Financial Officer
|
|
|
Robert
O. Stephenson
|
(Principal
Financial and Accounting Officer)
|
|
|
*
|
Director
|
|
|
Thomas
F. Franke
|
||
|
*
|
Director
|
|
|
Harold
J. Kloosterman
|
||
|
*
|
Director
|
|
|
Bernard
J. Korman
|
||
|
*
|
Director
|
|
|
Edward
Lowenthal
|
||
|
*
|
Director
|
|
|
Stephen
D. Plavin
|
II-5
*
By:
/s/
ROBERT O. STEPHENSON
Robert
O.
Stephenson
Attorney
in Fact
II-6
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
|
|
1.1
|
Form
of Underwriting Agreement.*
|
|
4.1
|
Form
of Indenture.**
|
|
4.2
|
Form
of Debt Security.*
|
|
4.3
|
Form
of Articles Supplementary for Preferred Stock.*
|
|
4.4
|
Form
of Preferred Stock Certificate.*
|
|
4.5
|
Form
of Securities Warrant Agreement.*
|
|
5.1
|
Opinion
of Powell, Goldstein, Frazer & Murphy LLP as to the legality of the
securities registered hereby.**
|
|
8.1
|
Opinion
of Powell, Goldstein, Frazer & Murphy LLP regarding certain tax
matters.*
|
|
12.1
|
Statement
Regarding Computation of Ratio of Earnings to Fixed
Charges.
|
|
12.2
|
Statement
Regarding Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends.
|
|
23.1
|
Consent
of Ernst & Young LLP, independent registered public accounting
firm.
|
|
23.2
|
Consent
of Powell, Goldstein, Frazer & Murphy LLP (included in Exhibit 5.1 and
Exhibit 8.1 previously filed).**
|
|
24.1
|
Power
of Attorney (included on signature page).**
|
|
25.1**
|
Statement
of Eligibility of Trustee on Form
T-1***
|
________________________
* To
be
filed by amendment or incorporated by reference in connection with any offering
of Securities.
** Previously
filed.
*** To
be
filed separately pursuant to Section 305(b)(2) of the Trust Indenture Act of
1939, as amended.