<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 10, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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EQUITY OFFICE PROPERTIES TRUST
(Exact name of registrant as specified in its governing instrument)
<TABLE>
<S> <C>
MARYLAND 36-4151656
(State of Organization) (I.R.S. Employer Identification Number)
</TABLE>
TWO NORTH RIVERSIDE PLAZA, SUITE 2200
CHICAGO, ILLINOIS 60606
(Address of principal executive offices)
STANLEY M. STEVENS
CHIEF LEGAL COUNSEL
TWO NORTH RIVERSIDE PLAZA, SUITE 2200
CHICAGO, ILLINOIS 60606
(Name and address of agent for service)
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Copies to:
J. WARREN GORRELL, JR.
JAMES E. SHOWEN
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
(202) 637-5600
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Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF CLASS AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING
OF SECURITIES BEING REGISTERED REGISTERED COMMON SHARE (1) PRICE (1)
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5.25% Series B Convertible, Cumulative Preferred
Shares of Beneficial Interest, $.01 par value per
share, and the underlying Common Shares of 6,000,000
Beneficial Interest,
$.01 par value per share.......................... 8,403,360 $50.00 $300,000,000
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<CAPTION>
<S> <C>
AMOUNT OF
TITLE OF CLASS REGISTRATION
OF SECURITIES BEING REGISTERED FEE (2)
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5.25% Series B Convertible, Cumulative Preferred
Shares of Beneficial Interest, $.01 par value per
share, and the underlying Common Shares of
Beneficial Interest,
$.01 par value per share.......................... $88,500
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(a).
(2) Pursuant to Rule 457(i), the amount of the registration fee is calculated on
the basis of the proposed offering price of the 6,000,000 5.25% Series B
Convertible, Cumulative Preferred Shares of Beneficial Interest alone.
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT RELATING TO
THESE SECURITIES HAS BEEN DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE
COMMISSION. THIS PROSPECTUS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION
OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE SUCH OFFER OR
SALE IS UNLAWFUL.
SUBJECT TO COMPLETION, DATED AUGUST 10, 1998
PROSPECTUS
6,000,000 SHARES
EQUITY OFFICE PROPERTIES TRUST
5.25% SERIES B CONVERTIBLE, CUMULATIVE PREFERRED SHARES OF BENEFICIAL INTEREST
---------------------------
This Prospectus relates to the offer and sale from time to time by certain
holders (the "Selling Shareholders") of up to 6,000,000 of our 5.25% Series B
Convertible, Cumulative Preferred Shares of Beneficial Interest, $.01 par value
per share, $50.00 liquidation preference per share (the "Offered Shares" or the
"Series B Preferred Shares"). The Selling Shareholders received their Offered
Shares in a private placement in February 1998. We are registering the Offered
Shares as required under the terms of a registration rights agreement entered
into at the time of the original private placement to the Selling Shareholders
(the "Registration Rights Agreement"). The registration of the Offered Shares
does not necessarily mean that any of the Offered Shares will be offered or sold
by the Selling Shareholders. We will receive no proceeds of any sales of the
Offered Shares, but will incur expenses in connection with the offering. See "No
Proceeds to the Company," "Selling Shareholders" and "Plan of Distribution."
The Offered Shares are listed on the New York Stock Exchange (the "NYSE")
under the symbol "EOPpfB." Our common shares of beneficial interest, par value
$.01 per share (the "Common Shares"), are listed on the NYSE under the symbol
"EOP."
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THESE OFFERED SHARES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL YOU
OTHERWISE.
---------------------------
The Selling Shareholders may from time to time offer and sell all or a
portion of the Offered Shares in transactions on the NYSE, in the
over-the-counter market, on any other national securities exchange on which the
Common Shares are listed or traded, in negotiated transactions or otherwise, at
prices then prevailing or related to the then-current market price or at
negotiated prices. The Offered Shares may be sold directly or through agents or
broker-dealers acting as principal or agent, or in block trades or pursuant to a
distribution by one or more underwriters on a firm commitment or best-efforts
basis. To the extent required, the names of any agents or broker-dealers and
applicable commissions or discounts and any other required information with
respect to any particular offer will be set forth in this Prospectus under the
caption "Plan of Distribution" or any accompanying Prospectus Supplement. The
Selling Shareholders reserve the right to accept or reject, in whole or in part,
any proposed purchase of the Offered Shares to be made directly or through
agents. The Selling Shareholders and any agents or broker-dealers participating
in the distribution of the Offered Shares may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and any profit on the sale of Offered Shares by the Selling Shareholders
and any commissions received by any such agents or broker-dealers may be deemed
to be underwriting commissions or discounts under the Securities Act.
---------------------------
The date of this Prospectus is August , 1998.
<PAGE> 3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information contained in or incorporated by reference into this Prospectus
and any accompanying Prospectus Supplement contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act. We intend the
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in Section 27A of the Securities Act. These
forward-looking statements relate to, without limitation, future economic
performance, our plans and objectives for future operations and projections of
revenue and other financial items, and can be identified by the use of
forward-looking terminology such as "may," "will," "should," "expect,"
"anticipate," "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology. The cautionary statements
incorporated by reference from our Annual Report on Form 10-K for the year ended
December 31, 1997 (the "Annual Report") under the caption "Risk Factors" and
other similar statements contained in this Prospectus or any accompanying
Prospectus Supplement identify important factors with respect to such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to differ materially from those in such
forward-looking statements.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, is required to file reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the Public
Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of the reports, proxy
statements and other information can be obtained from the Public Reference
Section of the Commission, Washington, D.C. 20549, upon payment of prescribed
rates, or in certain cases by accessing the Commission's World Wide Web site at
http://www.sec.gov. The public may obtain information on the operation of the
Public Reference Room by calling the Commission at 1-800-SEC-0330. The Common
Shares are listed on the NYSE under the symbol "EOP," the Series A Preferred
Shares (as defined below) are listed on the NYSE under the symbol "EOPpfA" and
the Series B Preferred Shares are listed on the NYSE under the symbol "EOPpfB."
Such reports, proxy statements and other information concerning the Company can
be inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement"), of which this Prospectus is a part, under
the Securities Act, with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete, and
in each instance, reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and schedules
thereto. For further information regarding the Company and the Offered Shares,
reference is hereby made to the Registration Statement and such exhibits and
schedules which may be obtained from the Commission at its principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission. The
Commission maintains a "web site" that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission. The address of such site is "http://www.sec.gov."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
a. The Company's Annual Report on Form 10-K for the year ended December
31, 1997, as amended to date.
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b. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
c. The Company's Current Report on Form 8-K/A, filed with the Commission
on February 18, 1998 (amending the Company's Current Report on Form 8-K
filed with the Commission on December 17, 1997) and the Company's
Current Reports on Form 8-K, filed with the Commission on June 30, 1998
and July 10, 1998.
d. The Company's Registration Statement on Form 8-A, which incorporates
by reference a description of the Common Shares from the Company's
Registration Statement on Form S-11 (File No. 333-26629).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of all securities to which this Prospectus
relates shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in the
Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), in any
applicable Prospectus Supplement, or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus or any accompanying Prospectus Supplement. Subject to the foregoing,
all information appearing in this Prospectus and each accompanying Prospectus
Supplement is qualified in its entirety by the information appearing in the
documents incorporated by reference.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered upon written or oral request. Requests should be
directed to Equity Office Properties Trust, Two North Riverside Plaza, Suite
2200, Chicago, Illinois 60606, Attention: Diane Morefield (telephone number:
(312) 466-3300).
3
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As used herein and in any accompanying Prospectus Supplement, "Company"
means Equity Office Properties Trust, a Maryland real estate investment trust,
and one or more of its subsidiaries (including EOP Operating Limited
Partnership, a Delaware limited partnership (the "Operating Partnership")), and
predecessors thereof (the "Equity Office Predecessors") or, as the context may
require, Equity Office Properties Trust only or the Operating Partnership only.
All references to the historical activities of the Company prior to July 11,
1997 refer to the activities of the Equity Office Predecessors.
THE COMPANY
The Company was formed to continue and expand the national office property
business organized by Samuel Zell, chairman of the Board of Trustees of the
Company. The Company, a self-administered and self-managed real estate
investment trust, is the managing general partner of the Operating Partnership.
The Company owns all of its assets and conducts substantially all of its
business through the Operating Partnership and its subsidiaries.
The Company's executive offices are located at Two North Riverside Plaza,
Suite 2200, Chicago, Illinois 60606, and its telephone number is (312) 466-3300.
NO PROCEEDS TO THE COMPANY
The Company will not receive any of the proceeds from sales of Offered
Shares by the Selling Shareholders. All costs and expenses incurred in
connection with the registration under the Securities Act of the offering made
hereby will be paid by the Company, other than any brokerage fees and
commissions, fees and disbursements of legal counsel for the Selling
Shareholders and share transfer and other taxes attributable to the sale of the
Offered Shares, which will be paid by the Selling Shareholders. See "Selling
Shareholders."
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED SHARE DISTRIBUTIONS
The Company's ratios of earnings to combined fixed charges and preferred
share distributions are as follows:
<TABLE>
<CAPTION>
THREE EQUITY OFFICE
MONTHS PREDECESSORS EQUITY OFFICE PREDECESSORS
ENDED COMPANY (COMBINED (COMBINED HISTORICAL)
MARCH 31, (HISTORICAL) HISTORICAL) YEAR ENDED DECEMBER 31,
----------- JULY 11, 1997 TO JANUARY 1, 1997 TO --------------------------------
1998 1997 DECEMBER 31, 1997 JULY 10, 1997 1996 1995 1994 1993 1992
---- ---- ----------------- ------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Combined Fixed Charges
and Preferred Share
Distributions............ 1.94 1.90 2.11 1.52 1.49 1.21 1.24 1.23 1.24
</TABLE>
The ratios of earnings to combined fixed charges and preferred share
distributions were computed by dividing earnings by fixed charges. For this
purpose, earnings consist of income (loss) before gains from sales of property
and extraordinary items plus fixed charges. Fixed charges consist of interest
expense (including interest costs capitalized), the amortization of debt
issuance costs, the portion of rental expense deemed to represent interest
expense and preferred share distributions.
4
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SHARES OF BENEFICIAL INTEREST
The summary of the terms of the Company's shares of beneficial interest,
including the Series B Preferred Shares, set forth below does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Articles of Amendment and Restatement of Declaration of Trust (the
"Declaration of Trust"), Articles Supplementary to the Declaration of Trust
determining the terms of each series of preferred shares of beneficial interest
(each, "Articles Supplementary") and the Bylaws of the Company. Copies of the
Declaration of Trust, the Articles Supplementary and the Bylaws may be obtained
from the Company.
GENERAL
The Declaration of Trust of the Company provides that the Company is
authorized to issue 750 million Common Shares and 100 million preferred shares
of beneficial interest ("Preferred Shares"). As of June 30, 1998, 252,580,792
Common Shares and 14,000,000 Preferred Shares were issued and outstanding.
Under Title 8 of the Corporations and Associations Article of the Annotated
Code of Maryland, as amended from time to time (the "Maryland REIT Law"), a
shareholder is not liable for obligations of the Company. The Declaration of
Trust provides that no shareholder shall be liable for any debt or obligation of
the Company by reason of being a shareholder nor shall any shareholder be
subject to any personal liability in tort, contract or otherwise to any person
in connection with the property or affairs of the Company by reason of being a
shareholder. The Company's Bylaws further provide that the Company shall
indemnify each present or former shareholder against any claim or liability to
which the shareholder may become subject by reason of being or having been a
shareholder and that the Company shall reimburse each shareholder for all
reasonable expenses incurred by him in connection with any such claim or
liability. However, with respect to tort claims, contractual claims where
shareholder liability is not so negated, claims for taxes and certain statutory
liability, the shareholders may, in some jurisdictions, be personally liable to
the extent that such claims are not satisfied by the Company. Inasmuch as the
Company carries public liability insurance which it considers adequate, any risk
of personal liability to shareholders is limited to situations in which the
Company's assets plus its insurance coverage would be insufficient to satisfy
the claims against the Company and its shareholders.
COMMON SHARES
All Common Shares outstanding are, and all Common Shares issuable upon
conversion or redemption of the Offered Shares will be, duly authorized, fully
paid and nonassessable. Subject to the preferential rights of any other shares
of beneficial interest and to the provisions of the Declaration of Trust
regarding restrictions on transfers of shares of beneficial interest, holders of
Common Shares are entitled to receive distributions if, as and when authorized
and declared by the Company's Board of Trustees (the "Board of Trustees") out of
assets legally available therefor and to share ratably in the assets of the
Company legally available for distribution to its shareholders in the event of
its liquidation, dissolution or winding-up after payment of, or adequate
provision for, all known debts and liabilities of the Company. The Company
currently intends to continue to pay regular quarterly distributions.
Subject to the provisions of the Declaration of Trust regarding
restrictions on transfer of shares of beneficial interest, each outstanding
Common Share entitles the holder to one vote on all matters submitted to a vote
of shareholders, including the election of trustees, and except as provided with
respect to any other class or series of shares of beneficial interest, the
holders of Common Shares will possess the exclusive voting power. There is no
cumulative voting in the election of trustees, which means that the holders of a
majority of the outstanding Common Shares can elect all of the trustees then
standing for election and the holders of the remaining shares of beneficial
interest, if any, will not be able to elect any trustees.
Holders of Common Shares have no preferences, conversion, sinking fund,
redemption rights or preemptive rights to subscribe for any securities of the
Company. Subject to the exchange provisions of the Declaration of Trust
regarding restrictions on transfer, Common Shares have equal distribution,
liquidation, voting and other rights.
5
<PAGE> 7
Pursuant to the Maryland REIT Law, a Maryland real estate investment trust
generally cannot dissolve, amend its declaration of trust or merge, unless
approved by the affirmative vote or written consent of shareholders holding at
least two-thirds of the shares entitled to vote on the matter unless a lesser
percentage (but not less than a majority of all of the votes entitled to be cast
on the matter) is set forth in the trust's declaration of trust. The Declaration
of Trust provides for an amendment to increase the number of authorized shares
and provides that a merger transaction may be approved by majority vote. Under
the Maryland REIT Law, a declaration of trust may permit the trustees by a
two-thirds vote to amend the declaration of trust from time to time to qualify
as a real estate investment trust (a "REIT") under the Internal Revenue Code of
1986, as amended (the "Code"), or the Maryland REIT Law without the affirmative
vote or written consent of the shareholders. The Declaration of Trust permits
such action by the Board of Trustees.
PREFERRED SHARES GENERALLY
The Declaration of Trust authorizes the Board of Trustees to issue 100
million Preferred Shares, to classify any unissued Preferred Shares and to
reclassify any previously classified but unissued Preferred Shares of any series
from time to time, in one or more series, as authorized by the Board of
Trustees. Prior to issuance of Preferred Shares of each series, the Board of
Trustees is required by the Maryland REIT Law and the Declaration of Trust to
set, subject to the provisions of the Declaration of Trust regarding the
restriction on transfer of shares of beneficial interest, the terms,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption for each such series. Thus, the Board could authorize
the issuance of Preferred Shares with terms and conditions which could have the
effect of delaying, deferring or preventing a transaction or a change in control
of the Company that might involve a premium price for holders of Preferred
Shares or Common Shares or otherwise be in the holders' best interest. As of the
date hereof, 8,000,000 8.98% Series A Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25.00 per share, of the Company
(the "Series A Preferred Shares") are outstanding and 6,000,000 Series B
Preferred Shares are outstanding. The Offered Shares constitute all of the
Series B Preferred Shares outstanding as of the date hereof.
SERIES A PREFERRED SHARES
The Series A Preferred Shares were issued on December 19, 1997. The Series
A Preferred Shares rank senior to the Common Shares and on a parity with the
Series B Preferred Shares.
Distributions. Holders of Series A Preferred Shares are entitled to
receive, when and as authorized by the Board of Trustees, out of funds legally
available for the payment of distributions, cumulative preferential cash
distributions at the rate of 8.98% of the $25.00 liquidation preference per
annum (equivalent to a fixed annual amount of $2.245 per share). Such
distributions are cumulative from December 19, 1997 and are payable on the
fifteenth day of each March, June, September and December of each year or, if
not a business day, the next succeeding business day. Distributions are computed
on the basis of a 360-day year consisting of twelve 30-day months. Distributions
will be payable to the holders of record of Series A Preferred Shares as they
appear in the share records of the Company at the close of business on the
applicable record date, which is the first day of the calendar month in which
the applicable distribution payment date falls or such other date designated by
the Board of Trustees for the payment of distributions that is not more than 30
nor less than 10 days prior to such distribution payment date.
No distributions on the Series A Preferred Shares will be authorized by the
Board of Trustees or paid or set apart for payment if such authorization,
payment or setting apart for payment would violate any agreement of the Company
or is restricted or prohibited by law. Distributions on the Series A Preferred
Shares will, nonetheless, accrue whether or not any of the foregoing
restrictions exist, whether or not there are funds legally available for the
payment thereof and whether or not they are authorized, and accrued but unpaid
distributions will accumulate as of the distribution payment date on which they
first become payable.
Except for pro rata distributions with respect to the Series A Preferred
Shares and any other series of Preferred Shares ranking on a parity as to
distributions with the Series A Preferred Shares ("Parity Shares"), no
distributions on any Parity Shares or junior shares will be authorized, paid or
set aside for payment (other than a distribution payable in junior shares) for
any period, no other distribution on any Parity Shares or junior
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shares and no redemption, purchase or other acquisition for consideration of
Parity Shares or junior shares shall be made, in each case unless full
cumulative distributions on the Series A Preferred Shares have been or
contemporaneously are authorized and paid or authorized and a sum sufficient for
full payment thereof is set aside.
Voting. Holders of Series A Preferred Shares have no other voting rights
except as provided by law and as described below.
Whenever distributions on Series A Preferred Shares are in arrears for six
or more quarterly periods, holders of Series A Preferred Shares will be entitled
to vote separately as a class with the holders of all Parity Shares (including,
without limitation, the owners of Series B Preferred Shares) for the election of
two additional trustees of the Company. Such election will be held at a special
meeting called by the holders of record of at least 20% of the outstanding
Series A Preferred Shares or the outstanding Parity Shares or, if the request
for a special meeting is received by the Company less than 90 days prior to the
next annual or special meeting of shareholders at the next annual or such
special meeting of shareholders and at each subsequent annual meeting of
shareholders until all arrearages and the distribution for the then current
distribution period have been fully paid or a sum sufficient for the full
payment thereof has been set aside. Vacancies for trustees elected by holders of
Series A Preferred Shares and Parity Shares will be filled by the remaining
trustee so elected then in office, or there is no such remaining trustee, by
vote of holders of a majority of the outstanding Series A Preferred Shares and
the outstanding Parity Shares voting as a single class. A trustee elected by the
holders of Series A Preferred Shares and Parity Shares may be removed with or
without cause and only by vote of holders of a majority of the outstanding
Series A Preferred Shares and the outstanding Parity Shares voting as a single
class.
In addition to the foregoing voting rights, for so long as any Series A
Preferred Shares are outstanding, any authorization of, increase in the
authorized amount of or number of issued, or reclassification of, any class or
series or shares ranking prior to the Series A Preferred Shares with respect to
payment of distributions or the distribution of assets upon liquidation,
dissolution or winding up of the Company or any obligations or securities
convertible into or evidencing the right to purchase any such class or series of
shares, or any amendment of the Declaration of Trust, by merger, consolidation
or otherwise, which materially and adversely affects any right, preference,
privilege or voting power of the Series A Preferred Shares or the holders
thereof must be approved by holders of at least two thirds of the Series A
Preferred Shares outstanding at the time. For purposes of the foregoing
sentence, any amendment of the Declaration of Trust resulting in the Series A
Preferred Shares remaining outstanding with the terms thereof materially
unchanged, any increase in the authorized amount of Preferred Shares or any
creation or issuance of any Parity Shares shall not be deemed to materially and
adversely affect any right, preference, privilege or voting power of the Series
A Preferred Shares or the holders thereof.
Ownership Limit. The general restrictions on transferability and ownership
described in "--Restrictions on Ownership and Transfer" below apply to the
Series A Preferred Shares.
Preemptive Rights; Conversion; Redemption. Holders of Series A Preferred
Shares do not have any preemptive rights. The Series A Preferred Shares are not
convertible, redeemable or entitled to the benefit of any sinking fund, except
that they may be purchased by the Company under certain provisions of the
Declaration of Trust designed to enable the Company to preserve its status as a
REIT under the Code. The Series A Preferred Shares may be redeemed by the
Company as described below.
On and after June 15, 2002, the Company, at its option and upon not less
than 30 nor more than 60 days written notice, may redeem Series A Preferred
Shares, in whole or part, at any time or from time to time, for cash at a
redemption price of $25.00 per share, plus all accumulated and unpaid
distributions thereon to the date fixed for redemption subject to the following
limitations and to compliance by the Company with the procedural requirements
applicable to the redemption of Series A Preferred Shares. First, if less than
all of the outstanding Series A Preferred Shares are to be redeemed, the Series
A Preferred Shares to be redeemed shall be selected pro rata (as nearly as may
be practicable without creating fractional shares) or by any other equitable
method determined by the Company. Second, the redemption price of Series A
Preferred Shares (other than the portion thereof consisting of accumulated and
unpaid distributions) is payable solely out of the sale proceeds of other shares
of beneficial interest of the Company and any rights (other than debt securities
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convertible into or exchangeable for such shares) or options to purchase any of
the foregoing. Third, unless full cumulative distributions on all Series A
Preferred Shares have been or contemporaneously are authorized and paid and a
sum sufficient for the payment thereof set apart for all past distribution
periods and the then current distribution period, no Series A Preferred Shares
will be redeemed unless all outstanding Series A Preferred Shares are
simultaneously redeemed, and the Company will not purchase or otherwise acquire
directly or indirectly any Series A Preferred Shares (except by exchange for
junior shares); provided, however, that the foregoing shall not prevent the
purchase by the Company of Series A Preferred Shares in order to ensure that the
Company remains qualified as a REIT for federal income tax purposes or the
purchase or acquisition of Series A Preferred Shares pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding Series A
Preferred Shares.
Any Series A Preferred Shares that have been redeemed will, after such
redemption, have the status of authorized but unissued preferred shares of
beneficial interest, without designation as to series until such shares are once
more designated as part of a particular series by the Board of Trustees.
Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of any
outstanding Series A Preferred Shares will be entitled to receive out of the
assets of the Company available for distribution to shareholders remaining after
payment or provision for payment of all debts and other liabilities of the
Company other than the Company's obligations with respect to any outstanding
junior shares, a liquidation preference of $25.00 per share, plus an amount
equal to any accumulated and unpaid distributions to the date of payment. If
upon any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the assets of the Company are insufficient to make such full payments
to holders of Series A Preferred Shares and Parity Shares, then such assets will
be distributed pro rata among holders of Series A Preferred Shares and Parity
Shares. After payment of the full amount of the liquidating distribution to
which they are entitled, the holders of Series A Preferred Shares will not be
entitled to any further participation in any distribution of assets by the
Company. Neither a consolidation or merger of the Company with or into another
corporation nor a merger of another corporation with or into the Company nor a
sale, lease or conveyance of all or substantially all of the Company's property
or business will be considered a liquidation, dissolution or winding up of the
Company.
SERIES B PREFERRED SHARES
Ranking. The Series B Preferred Shares rank on a parity with the Series A
Preferred Shares and senior to the Common Shares as to priority for receiving
distributions and amounts upon liquidation, dissolution or winding up of the
Company.
Distributions. Holders of the Series B Preferred Shares are entitled to
receive, when and as authorized by the Board of Trustees, out of funds legally
available for the payment of distributions, cumulative preferential cash
distributions at the rate of 5.25% of the $50.00 liquidation preference per
annum, an amount equal to $2.625 per share per annum, payable in equal amounts
of $.65625 per share quarterly in cash. Distributions on the Series B Preferred
Shares are cumulative and are payable on the fifteenth day of each February,
May, August and November or, if not a business day, the next succeeding business
day (each, a "Distribution Payment Date"). Such distributions and any
distribution payable on the Series B Preferred Shares for any partial
distribution period will be computed on the basis of a 360-day year consisting
of twelve 30-day months. Distributions will be payable to holders of record as
they appear in the share records of the Company at the close of business on the
applicable record date, which will be the first day of the calendar month in
which the applicable Distribution Payment Date falls or such other date
designated by the Board of Trustees of the Company for the payment of
distributions that is not more than 30 nor less than 10 days prior to such
Distribution Payment Date (each, a "Distribution Record Date").
No distribution on the Series B Preferred Shares will be authorized by the
Board of Trustees if such authorization, payment or setting apart for payment
would violate any agreement of the Company or is restricted or prohibited by
law.
If any Series B Preferred Shares are outstanding, no distributions will be
authorized by the Board of Trustees or paid or set apart for payment on any
shares of beneficial interest of the Company of any other series ranking, as to
distributions or upon liquidation, on a parity with or junior to the Series B
Preferred
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<PAGE> 10
Shares for any period unless full cumulative distributions have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series B Preferred Shares for
all past distribution periods and the then current distribution period. When
distributions are not paid in full (or a sum sufficient for such full payment is
not so set apart) upon the Series B Preferred Shares and the shares of any other
series of Preferred Shares ranking on a parity as to distributions with the
Series B Preferred Shares, all distributions declared upon the Series B
Preferred Shares and any other series of equity securities ranking on a parity
as to distributions with the Series B Preferred Shares will be declared pro rata
so that the amount of distributions declared per share of Series B Preferred
Shares and such other series of equity securities shall in all cases bear to
each other the same ratio that accumulated distributions per share on the Series
B Preferred Shares and such other series of equity securities (which shall not
include any accumulation in respect of unpaid distributions for prior
distribution periods if such Preferred Shares do not have a cumulative
distribution) bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
the Series B Preferred Shares which may be in arrears.
Except as provided in the immediately preceding paragraph, unless full
cumulative distributions on the Series B Preferred Shares have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past distribution periods and the
then current distribution period, no distributions (other than in Common Shares
or other equity securities of the Company ranking junior to the Series B
Preferred Shares as to distributions and upon liquidation, dissolution or
winding up of the Company) shall be declared or paid or set aside for payment or
other distribution upon the Common Shares or any other equity securities of the
Company ranking, as to distributions or upon liquidation, dissolution or winding
up of the Company, junior to or on a parity with the Series B Preferred Shares
nor shall any Common Shares or any other series of other equity securities of
the Company ranking junior to or on a parity with the Series B Preferred Shares
as to distributions or upon liquidation, dissolution or winding up of the
Company be redeemed, purchased or otherwise acquired for any consideration (or
any monies be paid to or made available for a sinking fund for the redemption of
any such securities) by the Company (except by conversion into or exchange for
other equity securities of the Company ranking junior to the Series B Preferred
Shares as to distributions and upon liquidation, dissolution or winding up of
the Company or by redemptions for the purpose of maintaining the Company's
qualification as a REIT).
Notwithstanding the foregoing, distributions on the Series B Preferred
Shares will accumulate whether or not any of the foregoing restrictions exist in
respect thereof, whether or not there are funds legally available for the
payment thereof and whether or not such distributions are declared. Accumulated
but unpaid distributions on the Series B Preferred Shares will not bear interest
and holders of the Series B Preferred Shares will not be entitled to any
distributions in excess of full cumulative distributions as described above. Any
distribution payment made on the Series B Preferred Shares shall first be
credited against the earliest accumulated but unpaid distribution due with
respect to such shares which remains payable.
If the Company designates any portion of a dividend as a "capital gain
dividend," a holder's share of such capital gain dividend would be an amount
which bears the same ratio to the total amount of distributions paid to such
holder for the year as the aggregate amount designated as a capital gain
dividend bears to the aggregate amount of all dividends paid on all classes of
shares of beneficial interest for the year.
If (a) the Registration Statement of which this Prospectus is a part,
subject to certain exceptions, ceases to be effective or the related prospectus
ceases to be usable in connection with resales of Series B Preferred Shares or
the Common Shares issuable upon conversion or redemption of the Series B
Preferred Shares or (b) the Series B Preferred Shares or the Common Shares
issuable upon conversion or redemption of the Series B Preferred Shares are not
approved for listing on the NYSE on or prior to the date that is 90 days after
the date that is 30 days after the first anniversary of the Company's initial
public offering (each such event referred to in clauses (a) and (b) above being
a "Registration Default"), then the Company will pay additional distributions
(the "Additional Distributions") on the Series B Preferred Shares, with respect
to the first quarter immediately following the occurrence of such Registration
Default in an amount equal to 0.25% of the liquidation preference per annum and
with respect to the second quarter and all subsequent quarters
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<PAGE> 11
following the occurrence of such Registration Default in an amount equal to
0.50% of the liquidation preference per annum until all Registration Defaults
have been cured.
Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of the Series
B Preferred Shares will be entitled to receive out of the assets of the Company
available for distribution to shareholders remaining after payment or provisions
for payment of all debts and other liabilities of the Company a liquidation
preference of $50.00 per share, plus an amount equal to any accumulated and
unpaid distributions to the date of payment, before any distribution of assets
is made to holders of Common Shares or any other equity securities ranking
junior to the Series B Preferred Shares as to liquidation rights. After payment
of the full amount of the liquidating distributions to which they are entitled,
the holders of Series B Preferred Shares will have no right or claim to any of
the remaining assets of the Company. None of (i) a consolidation or merger of
the Company with or into another entity, (ii) a merger of another entity with or
into the Company, (iii) a statutory share exchange by the Company or (iv) a
sale, lease or conveyance of all or substantially all of the Company's property
or business shall be considered a liquidation, dissolution or winding up of the
Company. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the assets of the Company are insufficient to make
the full payment due to holders of the Series B Preferred Shares and the
corresponding amounts payable on all other equity securities of the Company
ranking on a parity with the Series B Preferred Shares as to liquidation rights,
then the holders of the Series B Preferred Shares and all other such classes or
series of equity securities shall share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be respectively entitled.
Redemption. Except in certain circumstances relating to the preservation
of the Company's status as a REIT for federal income tax purposes, the Series B
Preferred Shares are not redeemable prior to February 15, 2003. On and after
February 15, 2003, the Series B Preferred Shares will be redeemable by the
Company, in whole or in part, at the option of the Company, for such number of
Common Shares as equals the liquidation preference of the Series B Preferred
Shares to be redeemed divided by the Conversion Price as of the opening of
business on the date set for such redemption (equivalent initially to a
conversion rate of 1.40056 Common Shares per each Series B Preferred Share) (the
"Share Redemption Right"). The Company may exercise the Share Redemption Right
only if for 20 trading days within any period of 30 consecutive trading days,
including the last day of such period, the closing price of the Common Shares on
the NYSE exceeds $41.055 per share, subject to adjustment under the
circumstances described below under "--Conversion Price Adjustments." To
exercise the Share Redemption Right, the Company must issue a press release
announcing the redemption and the number of Series B Preferred Shares to be
redeemed prior to the opening of business on the second trading day after the
conditions described in the preceding sentence have, from time to time, been
met, but may not issue a press release prior to December 15, 2002.
Notice of redemption pursuant to the Share Redemption Right will be given
by mail or by publication (with subsequent prompt notice by mail) to the holders
of the Series B Preferred Shares not more than four business days after the
Company issues the press release announcing its intention to redeem the Series B
Preferred Shares. The redemption date will be a date selected by the Company not
less than 30 nor more than 60 days after the date on which the Company issues
such press release.
On and after February 15, 2003, the Series B Preferred Shares may be
redeemed at the option of the Company, upon giving notice as provided below, in
whole or from time to time in part, at the following redemption prices per
Series B Preferred Share if redeemed during the twelve-month period beginning
February 15 of the year indicated below, plus, in each case, all distributions
accumulated and unpaid on the Series B Preferred Shares to the date of such
redemption (the "Cash Redemption Right"):
<TABLE>
<CAPTION>
REDEMPTION PRICE PER
YEAR SERIES B PREFERRED SHARE
---- ------------------------
<S> <C>
2003........................................................ $51.1667
2004........................................................ 50.8750
2005........................................................ 50.5833
2006........................................................ 50.2917
2007 and thereafter......................................... 50.0000
</TABLE>
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<PAGE> 12
The Company will not exercise its option to redeem the Series B Preferred
Shares pursuant to the Cash Redemption Right unless the redemption price (other
than the portion thereof consisting of accumulated and unpaid distributions) for
the exercise of the Cash Redemption Right is paid solely out of the sale
proceeds of other equity securities of the Company, which may include other
series of Preferred Shares, and from no other source.
Notice of redemption pursuant to the Cash Redemption Right will be mailed,
not less than 30 nor more than 60 days prior to the Series B Preferred Share
Redemption Date, to each holder of record of Series B Preferred Shares to be
redeemed, notifying such holder of the Company's election to redeem such shares,
stating (i) the date fixed for redemption thereof, (ii) the redemption price,
(iii) the number of shares to be redeemed (and, if fewer than all of the Series
B Preferred Shares are to be redeemed, the number of shares to be redeemed from
such holder), (iv) the place(s) where the Series B Preferred Shares are to be
surrendered for payment, (v) that distributions on the shares to be redeemed
will cease to accumulate on such redemption date and (vi) the date upon which
the holder's conversion rights, if any, as to such shares shall terminate.
The Series B Preferred Shares will be subject to mandatory redemption on
February 15, 2008 at a price of $50.00 per Series B Preferred Share, plus
accumulated and unpaid distributions to such date.
Any date fixed for redemption pursuant to the foregoing provisions is
referred to as a "Series B Preferred Share Redemption Date."
If fewer than all of the outstanding Series B Preferred Shares are to be
redeemed or exchanged pursuant to the Share Redemption Right or the Cash
Redemption Right, the Series B Preferred Shares to be redeemed or exchanged will
be determined pro rata or by lot or in such other manner as prescribed by the
Company's Board of Trustees. If such redemption or exchange is to be by lot and
as a result of such redemption or exchange any holder of Series B Preferred
Shares would become a holder of a number of Series B Preferred Shares in excess
of the Ownership Limit because such holder's Series B Preferred Shares were not
redeemed or exchanged, or were only redeemed or exchanged in part, then, except
in certain instances, the Company will redeem or exchange the requisite number
of Series B Preferred Shares of such holder such that he will not hold in excess
of the Ownership Limit subsequent to such redemption or exchange. In addition,
the Company may redeem or exchange Series B Preferred Shares in certain
circumstances relating to the maintenance of its ability to qualify as a REIT
for federal income tax purposes.
On or after the Series B Preferred Share Redemption Date, each holder of
Series B Preferred Shares to be redeemed or exchanged must present and surrender
the certificates representing his Series B Preferred Shares to the Company at
the place designated in the applicable notice and thereupon the redemption price
of such shares will be paid to or on the order of the person whose name appears
on such certificate representing Series B Preferred Shares as the owner thereof
and each surrendered certificate will be canceled. If fewer than all the shares
represented by any such certificate representing Series B Preferred Shares are
to be redeemed or exchanged, a new certificate will be issued representing the
unredeemed or unexchanged shares. From and after the Series B Preferred Share
Redemption Date (unless the Company defaults in payment of the redemption
price), all distributions on the Series B Preferred Shares called for redemption
or exchange will cease to accumulate and all rights of the holders thereof,
except the right to receive the redemption price thereof (including all
accumulated and unpaid distributions to the Series B Preferred Share Redemption
Date), will cease and terminate and such shares will not thereafter be
transferred (except with the consent of the Company) on the Company's books, and
such shares shall not be deemed to be outstanding for any purpose whatsoever. At
its election, the Company, prior to a Series B Preferred Share Redemption Date
relating to its Cash Redemption Right, may irrevocably deposit the redemption
price of the Series B Preferred Shares so called for redemption (including
accumulated and unpaid distributions thereon) in trust for the holders thereof
with a bank or trust company, in which case the notice to holders of the Series
B Preferred Shares to be redeemed or exchanged will (i) state the date of such
deposit, (ii) specify the office of such bank or trust company as the place of
payment of the redemption price and (iii) require such holders to surrender the
certificates representing such shares at such place on or about the date fixed
in such redemption notice (which may not be later than such Series B Preferred
Share Redemption Date) against payment of the redemption price (including all
accumulated and unpaid distributions to such Series B Preferred Share Redemption
Date). Any money so deposited which remains unclaimed by the holders of the
Series B
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<PAGE> 13
Preferred Shares at the end of two years after the Series B Preferred Share
Redemption Date will be returned by such bank or trust company to the Company.
Notwithstanding the foregoing, unless full cumulative distributions on all
Series B Preferred Shares have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for payment
for all past distribution periods and the current distribution period, no Series
B Preferred Shares will be redeemed or exchanged unless all outstanding Series B
Preferred Shares are simultaneously redeemed or exchanged; provided, however,
that the foregoing will not prevent the purchase or acquisition of Series B
Preferred Shares pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding Series B Preferred Shares. In addition, unless
full cumulative distributions on all outstanding Series B Preferred Shares have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for all past distributions periods
and the then current distribution period, the Company will not purchase or
otherwise acquire directly or indirectly any Series B Preferred Shares or any
other equity securities of the Company ranking junior to or on a parity with the
Series B Preferred Shares as to distributions or upon liquidation, dissolution
or winding up of the Company (except by conversion into or exchange for equity
securities of the Company ranking junior to the Series B Preferred Shares as to
distributions and upon liquidation, dissolution or winding up of the Company or
by redemptions for the purposes of maintaining the Company's qualification as a
REIT).
Fractional Common Shares are not to be issued upon redemption of the Series
B Preferred Shares pursuant to the Share Redemption Right, but, in lieu thereof,
the Company will pay a cash adjustment based on the current market price of the
Common Shares on the trading day prior to the Series B Preferred Share
Redemption Date.
Voting Rights. Holders of Series B Preferred Shares will not have any
voting rights, except as provided by law and as described below.
Whenever distributions on any Series B Preferred Shares are in arrears for
six or more quarterly periods (whether or not consecutive), the holders of
Series B Preferred Shares (voting separately as a class with all other equity
securities ranking on a parity with the Series B Preferred Shares as to
distributions and liquidation rights upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of two
additional trustees of the Company who will be elected for a one year term. Such
election shall be held at a special meeting of the shareholders and at each
subsequent annual meeting until all arrearages and the distributions on the
Series B Preferred Shares and such other series of Preferred Shares upon which
like voting rights have been conferred and are exercisable for the then current
distribution period have been fully paid or a sum sufficient for the full
payment thereof has been set aside. Vacancies for trustees elected by holders of
Series B Preferred Shares and any other such series of Preferred Shares shall be
filled by the remaining trustee so elected then in office or, if there is no
such remaining trustee, by vote of holders of a majority of the outstanding
Series B Preferred Shares and any other such series of Preferred Shares voting
as a single class. A trustee elected by the holders of Series B Preferred Shares
and any other such series of Preferred Shares may be removed with or without
cause and only by vote of holders of a majority of the outstanding Series B
Preferred Shares and any other such series of Preferred Shares voting as a
single class.
So long as any Series B Preferred Shares remain outstanding, the Company
will not, without the affirmative vote or consent of the holders of at least
two-thirds of Series B Preferred Shares outstanding at the time, given in person
or by proxy, either in writing or at a meeting (voting separately as a class),
(i) authorize or create, or increase the authorized or issued amount of, any
class or series of shares of beneficial interest of the Company ranking prior to
Series B Preferred Shares with respect to the payment of distributions or the
distribution of assets upon liquidation, dissolution or winding up of the
Company, or reclassify any authorized shares of beneficial interest of the
Company into such shares, or create, authorize or issue any obligation or
security convertible or exchangeable into or evidencing the right to purchase
any such shares; or (ii) amend, alter or repeal the provisions of the
Declaration of Trust or the Articles Supplementary for the Series B Preferred
Shares, whether by merger or consolidation (an "Event") or otherwise, so as to
materially and adversely affect any right, preference, privilege or voting power
of such Series B Preferred Shares or the holders thereof; provided, however,
with respect to the occurrence of any of the Events set forth in (ii) above, so
long as Series B Preferred Shares remain outstanding with the terms thereof
materially unchanged, taking
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<PAGE> 14
into account that upon the occurrence of an Event, the Company may not be the
surviving entity, the occurrence of any such Event will not be deemed to
materially adversely affect such rights, preferences, privileges or voting
powers of holders of Series B Preferred Shares; and provided further that (x)
any increase in the amount of the authorized Preferred Shares or the creation or
issuance of any other series of Preferred Shares, or (y) any increase in the
amount of authorized Series B Preferred Shares or any other series of Preferred
Shares, in each case ranking on a parity with or junior to the Series B
Preferred Shares with respect to payment of distributions and the distribution
of assets upon liquidation, dissolution or winding up of the Company, will not
be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required will be
effected, all outstanding Series B Preferred Shares have been converted,
redeemed or called for redemption and sufficient funds shall have been deposited
in trust to effect such redemption.
Conversion Rights. Subject to the restrictions on transfer and ownership
described below in "--Restrictions on Ownership and Transfer," the Series B
Preferred Shares will be convertible in whole or in part at any time, at the
option of the holders thereof, into Common Shares at a conversion price of
$35.70 per Common Share (equivalent to a conversion rate of 1.40056 Common
Shares for each Series B Preferred Shares), subject to adjustment as described
below (the "Conversion Price"). The right to convert Series B Preferred Shares
called for redemption will terminate at the close of business on a Series B
Preferred Share Redemption Date. For information as to notices of redemption,
see "--Redemption" above.
Conversion of Series B Preferred Shares, or a specified portion thereof,
may be effected by delivering certificates representing Series B Preferred
Shares together with written notice of conversion and a proper assignment of
such certificates to the office of Boston EquiServe LLP, the conversion agent
for the Series B Preferred Shares. Currently, such office is the principal
corporate trust office of First National Bank of Boston, Boston, Massachusetts.
Each conversion will be deemed to have been effected immediately prior to
the close of business on the date on which the certificates representing Series
B Preferred Shares shall have been surrendered and notice shall have been
received by the Company as aforesaid (and if applicable, payment of any amount
equal to the distribution payable on such shares shall have been received by the
Company as described below) and the conversion shall be at the Conversion Price
in effect at such time and on such date.
Holders of Series B Preferred Shares at the close of business on a
Distribution Record Date will be entitled to receive the distribution payable on
such shares on the corresponding Distribution Payment Date notwithstanding the
conversion of such shares following such Distribution Record Date and prior to
such Distribution Payment Date. However, certificates representing Series B
Preferred Shares surrendered for conversion during the period between the close
of business on any Distribution Record Date and ending with the opening of
business on the corresponding Distribution Payment Date (except shares converted
after the issuance of a notice of redemption with respect to a Series B
Preferred Share Redemption Date during such period or coinciding with such
Distribution Payment Date) must be accompanied by payment of an amount equal to
the distribution payable on such shares on such Distribution Payment Date. A
holder of Series B Preferred Shares on a Distribution Record Date who (or whose
transferee) tenders any such shares for conversion into Common Shares on such
Distribution Payment Date will receive the distribution payable by the Company
on such Series B Preferred Shares on such date, and the converting holder need
not include payment of the amount of such distribution upon surrender of
certificates representing such Series B Preferred Shares for conversion. Except
as provided above, the Company will make no payment or allowance for unpaid
distributions, whether or not in arrears, on converted shares or for
distribution on the Common Shares that are issued upon such conversion.
Fractional Common Shares will not be issued upon conversion but, in lieu
thereof, the Company will pay a cash adjustment based on the current market
price of the Common Shares at the close of business on the trading day prior to
the conversion date.
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<PAGE> 15
Conversion Price Adjustments. The Conversion Price is subject to
adjustment upon certain events, including (i) the payment of distributions
payable in Common Shares on any class or series of shares of beneficial interest
of the Company, (ii) the issuance to all holders of Common Shares of certain
rights or warrants entitling them to subscribe for or purchase Common Shares (or
securities convertible into or exchangeable for Common Shares) at a price per
share less than the fair market value per share of Common Shares, (iii)
subdivisions, combinations and reclassifications of Common Shares, (iv)
distributions to all holders of Common Shares of evidences of indebtedness of
the Company or assets (including securities, but excluding those rights,
warrants and distributions referred to above and distributions paid in cash out
of equity, including revaluation equity, applicable to Common Shares), (v)
distributions consisting exclusively of cash (excluding any cash portion of
distributions referred to in clause (iv)) to all holders of Common Shares to the
extent such distributions, combined with (A) all such all-cash distributions
made within the preceding 12 months in respect of which no adjustment has been
made plus (B) any cash and the fair market value of other consideration payable
in respect of any tender offers by the Company for Common Shares concluded
within the preceding 12 months in respect of which no adjustment has been made,
but only to the extent that the consideration payable in respect of such tender
offers exceeds the current market price of the Common Shares acquired in such
tender offers, exceeds 15% of the Company's market capitalization (being the
product of the then current market price of the Common Shares times the number
of Common Shares then outstanding) on the record date for such distribution and
(vi) a tender offer made by the Company or any Subsidiary for all or any portion
of the Common Shares shall expire and such tender offer shall require payment to
shareholders of aggregate consideration having a fair market value that combined
with (Y) the aggregate of the cash plus the fair market value, as of the
expiration of such tender offer, of consideration payable in respect of any
other tender offer by the Company or any Subsidiary for all or any portion of
the Common Shares expiring within 12 months preceding the expiration of such
tender offer and in respect of which no adjustment to this section (vi) has been
made, but only to the extent that the consideration payable in respect of such
expired tender offer exceeds the current market price of the Common Shares
acquired in such tender offer, and (Z) the aggregate amount of any distributions
to all holders of Common Shares made exclusively in cash within the 12 months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to section (v) has been made, exceeds 15% of the product of
the current market price per share of the Common Shares as of the last time
tenders could have been made pursuant to such tender offer times the number of
Common Shares outstanding (including tendered shares). In addition to the
foregoing adjustments, the Company will be permitted to make such reductions in
the Conversion Price as it considers to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock or stock rights
will not be taxable to the holders of the Common Shares.
In case the Company shall be a party to any transactions (including,
without limitation, a merger, consolidation, statutory share exchange, tender
offer for all or substantially all of the Common Shares or sale of all or
substantially all of the Company's assets), in each case as a result of which
Common Shares will be converted into the right to receive shares of common stock
or beneficial interest, securities or other property (including cash or any
combination thereof), each Series B Preferred Share will thereafter be
convertible into the kind and amount of shares of stock or beneficial interest,
securities and other property receivable (including cash or any combination
thereof) upon the consummation of such transaction by a holder of that number of
Common Shares or faction thereof into which one Series B Preferred Share was
convertible immediately prior to such transaction, assuming such holder of
Common Shares failed to exercise any rights of election (provided that if the
kind and amount of stock or beneficial interest, securities and other property
so receivable is not the same for each non-electing share, the kind and amount
so receivable by each non-electing share shall be deemed to be the kind and
amount received per share by a plurality of non-electing shares). The Company
may not become a party to any such transaction unless the terms thereof are
consistent with the foregoing.
No adjustment of the Conversion Price is required to be made in any case
until cumulative adjustments amount to 1% or more of the Conversion Price. Any
adjustments not so required to be made will be carried forward and taken into
account in subsequent adjustments.
Ownership Limit. The restrictions on transferability and ownership
described in "--Restrictions on Ownership and Transfer" below apply to the
Series B Preferred Shares.
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<PAGE> 16
POWER TO ISSUE ADDITIONAL COMMON SHARES AND PREFERRED SHARES
The Company believes that the power of the Board of Trustees to issue
additional authorized but unissued Common Shares or Preferred Shares and to
classify or reclassify unissued Common Shares or Preferred Shares and thereafter
to cause the Company to issue such classified or reclassified shares of
beneficial interest will provide the Company with increased flexibility in
structuring possible future financings and acquisitions and in meeting other
needs which might arise. The additional classes or series, as well as the Common
Shares, will be available for issuance without further action by the Company's
shareholders, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which the Company's
securities may be listed or traded. Although the Board of Trustees has no
intention at the present time of doing so, it could authorize the Company to
issue a class or series that could, depending upon the terms of such class or
series, delay, defer or prevent a transaction or a change in control of the
Company that might involve a premium price for holders of Common Shares or
otherwise be in their best interest.
RESTRICTIONS ON OWNERSHIP AND TRANSFER
For the Company to qualify as a REIT under the Code, no more than 50% in
value of its outstanding shares of beneficial interest may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of a taxable year (other than the first
year for which an election to be treated as a REIT has been made) or during a
proportionate part of a shorter taxable year. In addition, if the Company, or an
owner of 10% or more of the Company, actually or constructively owns 10% or more
of a tenant of the Company (or a tenant of any partnership in which the Company
is a partner), the rent received by the Company (either directly or through any
such partnership) from such tenant will not be qualifying income for purposes of
the REIT gross income tests of the Code. A REIT's shares also must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year of 12 months or during a proportionate part of a shorter taxable year
(other than the first year for which an election to be treated as a REIT has
been made).
Because the Board of Trustees believes it is desirable for the Company to
qualify as a REIT, the Declaration of Trust, subject to certain exceptions,
provides that no holder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than the Ownership Limit. The ownership
attribution rules under the Code are complex and may cause Common Shares or any
series of Preferred Shares owned actually or constructively by a group of
related individuals and/or entities to be owned constructively by one individual
or entity. As a result, the acquisition of less than 9.9% of the Common Shares
or any series of Preferred Shares (or the acquisition of an interest in an
entity that owns, actually or constructively, Common Shares or any series of
Preferred Shares) by an individual or entity, could, nevertheless cause that
individual or entity, or another individual or entity, to own constructively in
excess of 9.9% of the outstanding Common Shares (or such series of Preferred
Shares) and thus subject such Common Shares (or such series of Preferred Shares)
to the Ownership Limit. The Board of Trustees will grant an exemption from the
Ownership Limit with respect to one or more persons who would not be treated as
"individuals" for purposes of the Code if it is satisfied, based upon the advice
of counsel or a ruling from the IRS, that such ownership will not cause a person
who is an individual to be treated as owning Common Shares in excess of the
Ownership Limit, applying the applicable constructive ownership rules, and will
not otherwise jeopardize the Company's status as a REIT. As a condition of such
waiver, the Board of Trustees may require undertakings or representations from
the applicant with respect to preserving the REIT status of the Company. Under
certain circumstances, the Board of Trustees may, in its sole and absolute
discretion, grant an exemption for individuals to acquire Preferred Shares in
excess of the Ownership Limit, provided that certain conditions are met and any
representations and undertakings that may be required by the Board of Trustees
are made.
The Declaration of Trust permits the Board of Trustees to increase the
Ownership Limit with respect to any class or series of shares of beneficial
interest of the Company; provided, however, that, after giving effect to such
increase, five beneficial owners of Common Shares may not beneficially own in
the aggregate more than 49.5% of the outstanding Common Shares. Pursuant to this
provision, the Board of Trustees established the Ownership Limit with respect to
the Series B Preferred Shares as the greater of (i) 9.9% of the Series B
Preferred Shares (in value or number, whichever is more restrictive) or (ii)
such number of Series B
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<PAGE> 17
Preferred Shares such that five Persons who are considered individuals pursuant
to Section 542 of the Code, as modified by Section 856(h) (3) of the Code
(taking into account all Excepted Holders (as defined in the Declaration of
Trust), could not Beneficially Own (as defined in the Declaration of Trust), in
the aggregate, more than 49.5% of the value of the outstanding shares of
beneficial interest of the Company.
The Declaration of Trust further prohibits (a) any person from actually or
constructively owning shares of beneficial interest of the Company that would
result in the Company being "closely held" under Section 856(h) of the Code or
otherwise cause the Company to fail to qualify as a REIT and (b) any person from
transferring shares of beneficial interest of the Company if such transfer would
result in shares of beneficial interest of the Company being owned by fewer than
100 persons.
Any person who acquires or attempts or intends to acquire actual or
constructive ownership of shares of beneficial interest of the Company that will
or may violate any of the foregoing restrictions on transferability and
ownership is required to give notice immediately to the Company and provide the
Company with such other information as the Company may request in order to
determine the effect of such transfer on the Company's status as a REIT.
If any purported transfer of shares of beneficial interest of the Company
or any other event would otherwise result in any person violating the Ownership
Limit or the other restrictions in the Declaration of Trust, then any such
purported transfer will be void and of no force or effect with respect to the
purported transferee (the "Prohibited Transferee") as to that number of shares
that exceeds the Ownership Limit (referred to as "excess shares") and the
Prohibited Transferee will acquire no right or interest (or, in the case of any
event other than a purported transfer, the person or entity holding record title
to any such shares in excess of the Ownership Limit (the "Prohibited Owner")
will cease to own any right or interest) in such excess shares. Any such excess
shares described above will be transferred automatically, by operation of law,
to a trust, the beneficiary of which will be a qualified charitable organization
selected by the Company (the "Beneficiary"). Such automatic transfer will be
deemed to be effective as of the close of business on the Business Day (as
defined in the Declaration of Trust) prior to the date of such violating
transfer. Within 20 days of receiving notice from the Company of the transfer of
shares to the trust, the trustee of the trust (who will be designated by the
Company and be unaffiliated with the Company and any Prohibited Transferee or
Prohibited Owner) will be required to sell such excess shares to a person or
entity who could own such shares without violating the Ownership Limit, and
distribute to the Prohibited Transferee an amount equal to the lesser of the
price paid by the Prohibited Transferee for such excess shares or the sales
proceeds received by the trust for such excess shares. In the case of any excess
shares resulting from any event other than a transfer, or from a transfer for no
consideration (such as a gift), the trustee will be required to sell such excess
shares to a qualified person or entity and distribute to the Prohibited Owner an
amount equal to the lesser of the fair market value of such excess shares as of
the date of such event or the sales proceeds received by the trust for such
excess shares. In either case, any proceeds in excess of the amount
distributable to the Prohibited Transferee or Prohibited Owner, as applicable,
will be distributed to the Beneficiary. Prior to a sale of any such excess
shares by the trust, the trustee will be entitled to receive, in trust for the
Beneficiary, all dividends and other distributions paid by the Company with
respect to such excess shares, and also will be entitled to exercise all voting
rights with respect to such excess shares. Subject to Maryland law, effective as
of the date that such shares have been transferred to the trust, the trustee
will have the authority (at the trustee's sole discretion and subject to
applicable law) (i) to rescind as void any vote cast by a Prohibited Transferee
prior to the discovery by the Company that such shares have been transferred to
the trust and (ii) to recast such vote in accordance with the desires of the
trustee acting for the benefit of the Beneficiary. However, if the Company has
already taken irreversible corporate action, then the trustee will not have the
authority to rescind and recast such vote. Any dividend or other distribution
paid to the Prohibited Transferee or Prohibited Owner (prior to the discovery by
the Company that such shares had been automatically transferred to a trust as
described above) will be required to be repaid to the trustee upon demand for
distribution to the Beneficiary. If the transfer to the trust as described above
is not automatically effective (for any reason) to prevent violation of the
Ownership Limit, then the Declaration of Trust provides that the transfer of the
excess shares will be void.
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<PAGE> 18
In addition, shares of beneficial interest of the Company held in the trust
shall be deemed to have been offered for sale to the Company, or its designee,
at a price per share equal to the lesser of (i) the price per share in the
transaction that resulted in such transfer to the trust (or, in the case of a
devise or gift, the market value at the time of such devise or gift) and (ii)
the market value of such shares on the date of the Company, or its designee,
accepts such offer. The Company shall have the right to accept such offer until
the trustee has sold the shares of beneficial interest held in the Company. Upon
such a sale to the Company, the interest of the Beneficiary in the shares sold
shall terminate and the trustee shall distribute the net proceeds of the sale to
the Prohibited Owner.
The foregoing restrictions on transferability and ownership will not apply
if the Board of Trustees determines that it is no longer in the best interests
of the Company to attempt to qualify, or to continue to qualify, as a REIT.
All certificates representing shares of beneficial interest shall bear a
legend referring to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions of
the Code, more than 5% (or such other percentage between 1/2 of 1% and 5% as
provided in the rules and regulations promulgated under the Code) of the lesser
of the number or value of the outstanding shares of beneficial interest of the
Company must give a written notice to the Company by January 31 of each year. In
addition, each shareholder will, upon demand, be required to disclose to the
Company in writing such information with respect to the direct, indirect and
constructive ownership of shares of beneficial interest as the Board of Trustees
deems reasonably necessary to comply with the provisions of the Code applicable
to a REIT, to comply with the requirements of any taxing authority or
governmental agency or to determine any such compliance.
These ownership limitations could have the effect of delaying, deferring or
preventing a takeover or other transaction in which holders of some, or a
majority, of the Company's shares of beneficial interest might receive a premium
for their shares over the then prevailing market price or which such holders
might believe to be otherwise in their best interest.
TRANSFER AGENT, REGISTRAR, CONVERSION AGENT AND DISTRIBUTION DISBURSING AGENT
The transfer agent, registrar and distribution disbursing agent for the
Common Shares, the Series A Preferred Shares and the Series B Preferred Shares
is Boston EquiServe LLP, an affiliate of First National Bank of Boston. In
addition, Boston EquiServe LLP is the conversion agent for the Series B
Preferred Shares.
GLOBAL SECURITIES
The Series B Preferred Shares are evidenced by one or more global
certificates (the "Global Securities"), which are deposited with, or on behalf
of, The Depository Trust Company, New York, New York ("DTC"), and registered in
the name of Cede & Co. ("Cede"), as DTC's nominee.
Holders may hold their interests in any of the Global Securities directly
through DTC, or indirectly through organizations which are participants in DTC
("Participants"). Transfers between Participants will be effected in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds.
Holders who are not Participants may beneficially own interests in a Global
Security held by DTC only through Participants, including certain banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly, and have indirect access to the DTC system ("Indirect
Participants"). So long as Cede, as the nominee of DTC, is the registered owner
of any Global Security, Cede for all purposes will be considered the sole holder
of such Global Security. Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have certificates
registered in their names, will not receive or be entitled to receive physical
delivery of certificates in definitive form, and will not be considered the
holder thereof.
The Company will not have any responsibility for the performance by DTC or
their Participants or Indirect Participants of their respective obligations
under the rules and procedures governing their operations. DTC has advised the
Company that it will take any action permitted to be taken by a holder of Series
B
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<PAGE> 19
Preferred Shares only at the direction of one or more Participants whose
accounts are credited with DTC interests in a Global Security.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
Securities for its Participants and to facilitate the clearance and settlement
of securities transactions, such as transfers and pledges, among Participants in
deposited securities through electronic book-entry changes to accounts of its
Participants, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. Certain of
such Participants (or their representatives), together with other entities, own
DTC. The rules applicable to DTC and its Participants are on file with the
Commission.
Purchases of Series B Preferred Shares under the DTC system must be made by
or through Participants, which will receive a credit for the Series B Preferred
Shares on DTC's records. The ownership interest of each actual purchaser of each
Series B Preferred Share (a "Beneficial Owner") is in turn to be recorded on the
Participant's and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
Participant or Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the Series B Preferred
Shares are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Series B Preferred
Shares, except in the event that use of the book-entry system for the Series B
Preferred Shares is discontinued.
The deposit of Series B Preferred Shares with DTC and their registration in
the name of Cede effect no change in beneficial ownership. DTC has no knowledge
of the actual Beneficial Owners of the Series B Preferred Shares; DTC's records
reflect only the identity of the Participants whose accounts such Series B
Preferred Shares are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may, and the restrictions described under "Notice to Investors" shall, impair
the ability to transfer beneficial interests in the Global Security.
Redemption notices shall be sent to Cede. If less than all of the Series B
Preferred Shares represented by the Global Securities are being redeemed, DTC's
practice is to determine by lot the amount of the interest of each Participant
therein to be redeemed.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.
Distributions and other payments in respect of the Series B Preferred
Shares will be made to DTC by wire transfer of immediately available funds.
DTC's practice is to credit Participants' accounts on the payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payable date. Payments
by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Distributions and other payments in respect of the Series B Preferred Shares to
DTC is the responsibility of the Company; disbursement of such payments to
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Participants
and Indirect Participants. The Company will not have any responsibility or
liability for any aspect of the
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<PAGE> 20
records relating to or payments made on account of beneficial ownership
interests in the Global Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
DTC may discontinue providing its services as securities depository with
respect to the Series B Preferred Shares at any time by giving reasonable notice
to the Company. If DTC notifies the Company that it is unwilling or unable to
continue as depository for any Global Security or if at any time DTC ceases to
be a clearing agency registered as such under the Exchange Act when DTC is
required to be so registered to act as such depository and no successor
depository shall have been appointed within 90 days of such notification or of
the Company becoming aware of DTC's ceasing to be so registered, as the case may
be, certificates for the Series B Preferred Shares will be printed and delivered
in exchange for interests in such Global Security. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Series
B Preferred Shares registered in such names as DTC shall direct. It is expected
that such instruction will be based upon directions received by DTC from its
Participants with respect to ownership of beneficial interests in such Global
Security.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
certificates representing the Series B Preferred Shares will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company does not take responsibility for the accuracy thereof.
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<PAGE> 21
SELLING SHAREHOLDERS
The Selling Shareholders acquired their Offered Shares in a private
placement in February 1998. The following table provides the name of each
Selling Shareholder, the number of Offered Shares owned by each Selling
Shareholder before the offering to which this Prospectus relates, and the number
of Offered Shares offered hereby each Selling Shareholder. Since the Selling
Shareholders may sell all or some of their Offered Shares, no estimate can be
made of the number of Offered Shares that will be sold by the Selling
Shareholders or that will be owned by the Selling Shareholders upon completion
of the offering. There is no assurance that the Selling Shareholders will sell
any of the Offered Shares. The Offered Shares represent all of the Series B
Preferred Shares outstanding as of the date hereof.
<TABLE>
<CAPTION>
NUMBER OF OFFERED
SHARES OWNED AND
NAME OF SELLING SHAREHOLDER OFFERED HEREBY
--------------------------- -----------------
<S> <C>
The Travelers Indemnity Company............................. 172,668
Highbridge Capital Corporation.............................. 125,000
The Travelers Insurance Company............................. 110,999
Canadian Imperial Holdings, Inc............................. 100,000
Smith Barney Inc............................................ 70,000
Teachers Insurance and Annuity Association of America....... 50,000
Commonwealth Life Insurance Comp.--(Teamsters--Camden
Non-Enhanced)............................................. 40,000
The Concordia Retirement Plan of the Lutheran
Church--Missouri Synod.................................... 40,000
JMG Convertible Investments, L.P............................ 30,000
Triton Capital Investments, Ltd............................. 30,000
CPR (USA) Inc............................................... 12,500
Libertyview Plus Fund....................................... 12,500
The Travelers Life & Annuity Company........................ 12,333
Travelers Series Managed Assets Trust....................... 6,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 3,000
Travelers Series Trust Convertible Bond Portfolio........... 2,000
SUBTOTAL............................................... 817,000
---------
Unnamed holders of Offered Shares or any future transferees,
pledgees, donees or successors of or from any such unnamed
holders(1)................................................ 5,183,000
---------
TOTAL.................................................. 6,000,000
=========
</TABLE>
- ---------------
(1) No such holder may offer Offered Shares pursuant to this Prospectus until
such holder is included as a Selling Shareholder in a supplement to this
Prospectus in accordance with the Registration Rights Agreement.
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain federal income tax
considerations relating to the acquisition, ownership and disposition of the
Series B Preferred Shares. The following description is for general information
only, is not exhaustive of all possible tax considerations, and is not intended
to be and should not be construed as tax advice. For example, this summary does
not give a detailed discussion of any state, local or foreign tax consequences.
In addition, this discussion is intended to address only those federal income
tax considerations that are generally applicable for all shareholders in the
Company. It does not discuss all aspects of federal income taxation that might
be relevant to a specific shareholder in light of its particular investment or
tax circumstances. The description does not purport to deal with aspects of
taxation that may be relevant to shareholders subject to special treatment under
the federal income tax laws. This discussion does not address the taxation of
the Company, the impact on the Company of its election to be taxed as a REIT or
the federal income tax considerations relevant to holders of Common Shares. Such
matters are addressed in the Company's Annual Report under the caption "Federal
Income Tax Considerations."
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<PAGE> 22
The information in this section is based on the Code, current, temporary
and proposed Treasury Regulations thereunder, the legislative history of the
Code, current administrative interpretations and practices of the IRS (including
its practices and policies as endorsed in private letter rulings, which are not
binding on the IRS except with respect to the taxpayer that receives such a
ruling), and court decisions, all as of the date hereof. No assurance can be
given that future legislation, Treasury Regulations, administrative
interpretations and court decisions will not significantly change current law or
adversely affect existing interpretations of current law. Any such change could
apply retroactively to transactions preceding the date of the change.
As used in this section, the term "the Company" refers solely to Equity
Office Properties Trust.
EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT WITH ITS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO IT OF THE ACQUISITION, OWNERSHIP AND
SALE OF SERIES B PREFERRED SHARES IN LIGHT OF ITS SPECIFIC TAX AND INVESTMENT
SITUATIONS AND THE SPECIFIC FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS
APPLICABLE TO IT.
TAXATION OF HOLDERS OF SERIES B PREFERRED SHARES
DIVIDENDS AND OTHER DISTRIBUTIONS; BACKUP WITHHOLDING. For a discussion of
the taxation of the Company, the treatment of dividends and other distributions
with respect to shares of the Company, and the backup withholding rules, see the
discussions in the Company's Annual Report under the captions "Federal Income
Tax Considerations--Taxation of the Company as a REIT--General" and "--Taxation
of Taxable U.S. Shareholders of the Company Generally." In determining the
extent to which a distribution on the Series B Preferred Shares constitutes a
dividend for tax purposes, the earnings and profits of the Company will be
allocated first to distributions with respect to the Series B Preferred Shares
and the Series A Preferred Shares, and second to distributions with respect to
the Company Common Shares.
TAX CONSEQUENCES UPON CONVERSION OF SERIES B PREFERRED SHARES INTO COMMON
SHARES AT THE PREFERRED HOLDER'S OPTION AND REDEMPTION OF SERIES B PREFERRED
SHARES FOR COMMON SHARES AT THE OPTION OF THE COMPANY. Generally, except with
respect to cash received in lieu of fractional shares, and except in the case of
non-U.S. holders of the Series B Preferred Shares under certain circumstances
(see the discussion in the Company's Annual Report under the caption "Federal
Income Tax Considerations--Taxation of Non-U.S. Shareholders of the Company"),
no gain or loss will be recognized upon the conversion of Series B Preferred
Shares into Common Shares or upon the Redemption of Series B Preferred Shares
for Common Shares at the option of the Company. The tax basis of a holder of
Series B Preferred Shares (a "Preferred Holder") in the Common Shares received
will equal such holder's tax basis in the Series B Preferred Shares surrendered
in the conversion, reduced by any basis attributable to fractional shares deemed
received and the holding period for the Common Shares received will include the
Preferred Holder's holding period for the Series B Preferred Shares exchanged
therefor. Based on the Service's present advance ruling policy, cash received in
lieu of a fractional Common Share upon conversion of Series B Preferred Shares
should be treated as a payment in redemption of the fractional interest in such
Common Share. See "--Redemption of Series B Preferred Shares" below.
DEEMED DIVIDENDS ON SERIES B PREFERRED SHARES. The Conversion Price of the
Series B Preferred Shares may be adjusted if the Company makes certain
distributions of stock, cash or other property to its shareholders. While the
Company does not presently contemplate making such a distribution, if the
Company does make a distribution of cash or other property that results in an
adjustment to the Conversion Price, a Preferred Holder may be viewed as having
received a "deemed distribution" that is taxable as a dividend under Sections
301 and 305 of the Code. See "Federal Income Tax Considerations--Taxation of
Taxable U.S. Shareholders of the Company Generally--Distributions by the
Company" in the Company's Annual Report.
REDEMPTION OF SERIES B PREFERRED SHARES FOR CASH. The treatment accorded
to any redemption by the Company for cash (as distinguished from a sale,
exchange or other disposition) of Series B Preferred Shares can only be
determined on the basis of particular facts as to each Preferred Holder at the
time of redemption. (For a discussion of the treatment of a redemption of Series
B Preferred Shares for Common Shares, see "Tax Consequences Upon Conversion of
Series B Preferred Shares into Common Shares at the Preferred Holder's
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<PAGE> 23
Option and Redemption of Series B Preferred Shares for Common Shares at the
Option of the Company" above.) In general, a Preferred Holder will recognize
capital gain or loss measured by the difference between the amount received by
the Preferred Holder upon the redemption and such holder's adjusted tax basis in
the Series B Preferred Shares redeemed (provided the Series B Preferred Shares
are held as a capital asset) if such redemption (i) results in a "complete
termination" of the Preferred Holder's interest in all classes of stock of the
Company under Section 302(b)(3) of the Code or (ii) is "not essentially
equivalent to a dividend" with respect to the Preferred Holder within the
meaning of Section 302(b)(1) of the Code. In applying these tests, there must be
taken into account not only any Series B Preferred Shares owned by the Preferred
Holder, but also such Preferred Holder's ownership of Common Shares, Series A
Preferred Shares, and any options (including stock purchase rights) to acquire
any of the foregoing. The Preferred Holder also must take into account any such
securities (including options) which are considered to be owned by such
Preferred Holder by reason of the constructive ownership rules set forth in
Sections 318 and 302(c) of the Code.
If a Preferred Holder owns (actually or constructively) no Common Shares or
Series A Preferred Shares or an insubstantial percentage of the outstanding
Common Shares and Series A Preferred Shares, based upon current law, it is
possible that a redemption of Series B Preferred Shares from a Preferred Holder
would be considered "not essentially equivalent to a dividend." However, whether
a distribution is "not essentially equivalent to a dividend" depends on all of
the facts and circumstances and a Preferred Holder intending to rely on any of
these tests at the time of redemption should consult its own tax adviser to
determine their application to its particular situation.
If the redemption does not meet any of the tests under Section 302 of the
Code, then the redemption proceeds received from the Series B Preferred Shares
will be treated as a distribution on the Series B Preferred Shares as described
under "Federal Income Tax Considerations--Taxation of Taxable U.S. Shareholders
of the Company Generally." If the redemption is taxed as a dividend, the
Preferred Holder's adjusted tax basis in the Series B Preferred Shares redeemed
will be transferred to any other stockholdings of the Preferred Holder in the
Company. If the Preferred Holder owns no other Stockholdings in the Company,
under certain circumstances, such basis may be transferred to a related person,
or it may be lost entirely.
REDEMPTION PREMIUM. Under Section 305 of the Code and the applicable
Treasury Regulations, if the redemption price of the Series B Preferred Shares
exceeds its issue price by more than a de minimis amount or is not solely in the
nature of a penalty for a premature redemption, the amount of such excess may be
deemed to be a constructive distribution (treated as a dividend to the extent of
the Company's current and accumulated earnings and profits) taxable to the
Preferred Holder over the period during which the Series B Preferred Shares
cannot be redeemed (as if it were original issue discount on a debt instrument)
(the "Economic Accrual Rule").
A redemption premium is considered de minimis if it is less than the
product of 0.25% multiplied by the number of years until redemption, multiplied
by the issue price of the Series B Preferred Shares. A redemption premium is
considered to be a penalty for premature redemption only if it is paid as a
result of changes in economic or market conditions over which the Company or the
Preferred Holder does not have legal or practical control. Even if the
redemption premium is greater than a de minimis amount, a Preferred Holder will
not have to take the redemption premium into income pursuant to the Economic
Accrual Rule unless the Series B Preferred Shares are (i) mandatorily
redeemable, (ii) redeemable at the Preferred Holder's option, or (iii)
redeemable at the Company's option and, at the time of issue, based on all of
the facts and circumstances, it is more likely than not that the Company will
exercise such option.
The Company believes that a Preferred Holder will not have to take the
redemption premium on the Series B Preferred Shares into income pursuant to the
Economic Accrual Rule because (i) based on all of the facts and circumstances,
at the time of issue, the Company believed that it was not more likely than not
that the Company will redeem the Series B Preferred Shares at the time when the
redemption premium is greater than a de minimis amount and (ii) at the time that
the Series B Preferred Shares are mandatorily redeemable, the Company believes
that the redemption premium will be zero.
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<PAGE> 24
SPECIAL CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS. There are several
special considerations for prospective purchasers of Series B Preferred Shares
who are Non-U.S. Shareholders for U.S. federal tax purposes.
For a description of these special considerations, see "Federal Income Tax
Considerations--Taxation of Non-U.S. Shareholders of the Company" in the
Company's Annual Report.
RECENT CHANGES TO CAPITAL GAIN TAXATION.
The Internal Revenue Service Restructuring and Reform Act of 1998, which
was signed into law on July 22, 1998, reduced the required holding period for
the application of the 20% and 25% capital gain tax rates from more than 18
months to more than 12 months for sales of capital gain assets on or after
January 1, 1998. It is expected that the IRS will issue clarifying guidance
(most likely applying the same principles set forth in IRS Notice 97-64)
regarding the application of the new holding period requirement to capital gain
dividend designations by REITs.
PLAN OF DISTRIBUTION
Any of the Selling Shareholders may from time to time, in one or more
transactions, sell all or a portion of the Offered Shares on the NYSE, in the
over-the-counter market, on any other national securities exchange on which the
Series B Preferred Shares are listed or traded, in negotiated transactions, in
underwritten transactions or otherwise, at prices then prevailing or related to
the then current market price or at negotiated prices. The offering price of the
Offered Shares from time to time will be determined by the Selling Shareholders
and, at the time of such determination, may be higher or lower than the market
price of the Series B Preferred Shares on the NYSE. In connection with an
underwritten offering, underwriters or agents may receive compensation in the
form of discounts, concessions or commissions from a Selling Shareholder or from
purchasers of Offered Shares for whom they may act as agents, and underwriters
may sell Offered Shares to or through dealers, and such 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
agents. Under agreements that may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Offered Shares may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which such underwriters, dealers or agents may be required to make
in respect thereof. The Offered Shares may be sold directly or through
broker-dealers acting as principal or agent, or pursuant to a distribution by
one or more underwriters on a firm commitment or best-efforts basis. The methods
by which the Offered Shares may be sold include: (a) a block trade in which the
broker-dealer so engaged will attempt to sell the Offered Shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this Prospectus; (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(d) an exchange distribution in accordance with the rules of the NYSE; (e)
privately negotiated transactions; and (f) underwritten transactions. The
Selling Shareholders and any underwriters, dealers or agents participating in
the distribution of the Offered Shares may be deemed to be "underwriters" within
the meaning of the Securities Act, and any profit on the sale of the Offered
Shares by the Selling Shareholders and any commissions received by an such
broker-dealers may be deemed to be underwriting commissions under the Securities
Act.
When a Selling Shareholder elects to make a particular offer of Offered
Shares, a prospectus supplement, if required, will be distributed which will
identify any underwriters, dealers or agents and any discounts, commissions and
other terms constituting compensation from such Selling Shareholder and any
other required information.
In order to comply with the securities laws of certain states, if
applicable, the Offered Shares may be sold only through registered or licensed
brokers or dealers. In addition, in certain states, the Offered Shares may not
be sold unless they have been registered or qualified for sale in such state or
an exemption from such registration or qualification requirement is available
and is complied with.
23
<PAGE> 25
The Company has agreed to pay all costs and expenses incurred in connection
with the registration under the Securities Act of the Offered Shares, including,
without limitation, all registration and filing fees, printing expenses and fees
and disbursements of counsel and accountants for the Company. The Selling
Shareholders will pay any brokerage fees and commissions, fees and disbursements
of legal counsel for the Selling Shareholders and stock transfer and other taxes
attributable to the sale of the Offered Shares. The Company also has agreed to
indemnify each of the Selling Shareholders and their respective officers,
directors and trustees and each person who controls (within the meaning of the
Securities Act) such Selling Shareholder against certain losses, claims,
damages, liabilities and expenses arising under the securities laws in
connection with this offering. Each of the Selling Shareholders has agreed to
indemnify the Company, its officers and directors and each person who controls
(within the meaning of the Securities Act) the Company, and each of the other
Selling Shareholders, against any losses, claims, damages, liabilities and
expenses arising under the securities laws in connection with this offering with
respect to written information furnished to the Company by such Selling
Shareholder; provided, however, that the indemnification obligation is several,
not joint, as to each Selling Shareholder.
EXPERTS
The consolidated financial statements of Equity Office Properties Trust
appearing in Equity Office Properties Trust's Annual Report (Form 10-K, as
amended by Form 10-K/A) for the year ended December 31, 1997 and the statements
of revenue and certain expenses for the Denver Post Tower, 301 Howard Street and
215 Fremont Street, the Mountain Properties, Millenium Plaza, Polk & Taylor,
Colonnade I, Colonnade II and the Walker Building and Columbia Seafirst Center
appearing in the Current Report of Equity Office Properties Trust on Form 8-K
dated June 26, 1998; have all been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon included therein and
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Beacon Properties Corporation,
appearing in the Current Report on Form 8-K/A of Equity Office Properties Trust
filed with the Commission on February 18, 1998, have been audited by
PricewaterhouseCoopers LLP, independent auditors, as set forth in their reports
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
The legality of the Offered Shares has been passed upon for the Company by
Hogan & Hartson L.L.P., Washington, D.C. Certain tax matters have been passed
upon by Hogan & Hartson L.L.P., Washington, D.C., special tax counsel to the
Company.
24
<PAGE> 26
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, THE OFFERED SHARES, IN
ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE ANY
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Special Note Regarding Forward-
Looking Statements................. 2
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
The Company.......................... 4
No Proceeds to the Company........... 4
Ratio of Earnings to Combined Fixed
Charges and Preferred Share
Distributions...................... 4
Shares of Beneficial Interest........ 5
Selling Shareholders................. 20
Federal Income Tax Considerations.... 20
Plan of Distribution................. 23
Experts.............................. 24
Legal Matters........................ 24
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
6,000,000 SHARES
EQUITY OFFICE
PROPERTIES TRUST
5.25% SERIES B CONVERTIBLE, CUMULATIVE SHARES OF
BENEFICIAL INTEREST
-----------------------
PROSPECTUS
-----------------------
AUGUST , 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses payable by
the Company in connection with the issuance and distribution of the securities
being registered:
<TABLE>
<S> <C>
Registration Fee............................................ $ 88,500
Printing and Duplicating Expenses........................... 50,000
Legal Fees and Expenses..................................... 50,000
Accounting Fees and Expenses................................ 50,000
Miscellaneous............................................... 50,000
--------
Total....................................................... $288,500
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Title 8 of the Corporations and Associations Article of the Annotated Code
of Maryland, as amended from time to time (the "Maryland REIT Law"), permits a
Maryland REIT to include in its declaration of trust a provision limiting the
liability of its trustees and officers to the trust and its shareholders for
money damages except for liability resulting from (a) actual receipt of an
improper benefit or profit in money, property or services or (b) active and
deliberate dishonesty established by a final judgment as being material to the
cause of action. The Company's declaration of trust, as amended from time to
time, and as filed with the State Department of Assessments and Taxation of
Maryland (the "Declaration of Trust"), contains such a provision which
eliminates such liability to the maximum extent permitted by the Maryland REIT
law.
The Declaration of Trust authorizes the Company, to the maximum extent
permitted by Maryland law, to obligate itself to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any present or former trustee or officer or (b) any individual who, while a
trustee of the Company and at the request of the company, serves or has served
as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise from and against any claim or liability to which such person
may become subject or which such person may incur by reason of his or her status
as a present or former trustee or officer of the Company. The Bylaws obligate
the Company, to the maximum extent permitted by Maryland law, to indemnify and
to pay or reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any present or former trustee or officer who is made party to
the proceeding by reason of his service in that capacity or (b) any individual
who, while a trustee or officer of the Company and at the request of the
Company, serves or has served another corporation, partnership, joint venture,
trust, employee benefit plan or any other enterprise as a trustee, director,
officer or partner of such corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise and who is made a party to the
proceeding by reason of his service in that capacity, against any claim or
liability to which he may become subject by reason of such status. The
Declaration of Trust and Bylaws also permit the Company to indemnify and advance
expenses to any person who served a predecessor of the Company in any of the
capacities described above and to any employee or agent of the Company or a
predecessor of the Company. The Bylaws require the Company to indemnify a
trustee or officer (or any former trustee or officer) who has been successful,
on the merits or otherwise, in the defense of any proceeding to which he is made
a party by reason of his service in that capacity against reasonable expenses
incurred in connection with the proceeding.
The Maryland REIT Law permits a Maryland REIT to indemnify and advance
expenses to its trustees, officers, employees and agents to the same extent as
permitted by the Maryland General Corporation Law, as amended from time to time
(the "MGCL"), for directors and officers of Maryland corporations. The MGCL
permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with
II-1
<PAGE> 28
any proceeding to which they may be made a party by reason of their service in
those or other capacities 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 (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful. The foregoing limitations on
indemnification are expressly set forth in the Bylaws. However, under the MGCL,
a Maryland corporation may not indemnify for any adverse judgment in a suit by
or in the right of the corporation or for a judgment of liability on the basis
that a personal benefit was improperly received, unless, in either case, a court
orders indemnification and then only for expenses. Under the MGCL, as a
condition to advancing expenses, as required by the Bylaws, the Company must
first receive (a) a written affirmation by the trustee or officer of his good
faith belief that he has met the standard of conduct necessary for
indemnification by the Company and (b) a written undertaking by or on his behalf
to repay the amount paid or reimbursed by the Company if it shall ultimately be
determined that the standard of conduct was not met. In addition, Mr. Dobrowski
will be indemnified by General Motors Investment Management Corporation
("GMIMCO") and will be covered by an insurance policy maintained by General
Motors Corporation, of which GMIMCO is a subsidiary, in connection with serving
on the Board.
The limited partnership agreement of the Operating Partnership (the
"Partnership Agreement") also provides for indemnification of the Company and
its officers and trustees to the same extent that indemnification is provided to
officers and trustee of the Company in its Declaration of Trust, and limits the
liability of the Company and its officers and trustees to the Operating
Partnership and its respective partners to the same extent that the Declaration
of Trust limits the liability of the officers and trustees of the Company to the
Company and its shareholders.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to trustees, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
ITEM 16. EXHIBITS
<TABLE>
<C> <C> <S>
4.1 * Amendment and Restatement of Declaration of Trust of the
Company
4.2 ** Articles Supplementary of the Company, dated February 18,
1998 and filed with the Maryland State Department of
Assessments and Taxation on December 17, 1997
5.1 Opinion of Hogan & Hartson L.L.P. regarding the legality of
the securities being registered.
8.1 Opinion of Hogan & Hartson L.L.P. regarding certain tax
matters.
12.1 *** Statement of Computation of Ratios
23.1 Consent of Hogan & Hartson L.L.P. (included as part of
Exhibit 5.1)
23.2 Consent of Hogan & Hartson L.L.P. (included as part of
Exhibit 8.1)
23.3 Consent of Ernst & Young LLP
23.4 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (included in signature page)
</TABLE>
- ---------------
* Incorporated herein by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-11 (Commission File No. 333-26629).
** Incorporated herein by reference to Exhibit 3.3 to the Company's Annual
Report on Form 10-K, as amended, for the fiscal year ended December 31,
1997.
*** Incorporated herein by reference to the same-numbered exhibit to the
Company's Registration Statement on Form S-11 (Commission File No.
333-51597).
II-2
<PAGE> 29
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 set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) above shall not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in the periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the Securities offered herein, and the
offering of such Securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the Securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby further undertakes that, for the 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 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the Securities offered herein, and the offering of such Securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to existing provisions or arrangements whereby the
Registrant may indemnify a director, officer or controlling person of the
Registrant against liabilities arising under the Securities Act of 1933, 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 Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Chicago, Illinois, on this 10th day of August, 1998.
Equity Office Properties Trust
By: /s/ TIMOTHY H. CALLAHAN
------------------------------------
Timothy H. Callahan
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned trustees and officers of Equity Office Properties
Trust, do hereby constitute and appoint Samuel Zell and Timothy H. Callahan and
each and either of them, our true and lawful attorneys-in-fact and agents, to do
any and all acts and things in our names and our behalf in our capacities as
trustees and officers and to execute any and all instruments for us and in our
name in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable said Trust to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this registration
statement, or any registration statement for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
including specifically, but without limitation, any and all amendments
(including post-effective amendments) hereto; and we hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated as of the 10th day of August, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ TIMOTHY H. CALLAHAN President, Chief Executive Officer and Trustee
- --------------------------------------------------- (principal executive officer)
Timothy H. Callahan
/s/ RICHARD D. KINCAID Chief Financial Officer (principal financial
- --------------------------------------------------- officer and principal accounting officer)
Richard D. Kincaid
/s/ SAMUEL ZELL Chairman of the Board of Trustees
- ---------------------------------------------------
Samuel Zell
/s/ SHELI Z. ROSENBERG Trustee
- ---------------------------------------------------
Sheli Z. Rosenberg
/s/ THOMAS E. DOBROWSKI Trustee
- ---------------------------------------------------
Thomas E. Dobrowski
/s/ JAMES D. HARPER, JR. Trustee
- ---------------------------------------------------
James D. Harper, Jr.
/s/ JERRY M. REINSDORF Trustee
- ---------------------------------------------------
Jerry M. Reinsdorf
/s/ WILLIAM M. GOODYEAR Trustee
- ---------------------------------------------------
William M. Goodyear
Trustee
- ---------------------------------------------------
David K. McKown
</TABLE>
II-4
<PAGE> 31
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ H. JON RUNSTAD Trustee
- ---------------------------------------------------
H. Jon Runstad
/s/ EDWIN N. SIDMAN Trustee
- ---------------------------------------------------
Edwin N. Sidman
/s/ D. J. A. DE BOCK Trustee
- ---------------------------------------------------
D. J. A. de Bock
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5.1
LETTERHEAD OF HOGAN & HARTSON L.L.P.
August 10, 1998
Board of Trustees
Equity Office Properties Trust
Suite 2200
Two North Riverside Plaza
Chicago, Illinois 60606
Ladies and Gentlemen:
We are acting as counsel to Equity Office Properties Trust, a Maryland
real estate investment trust (the "Company"), in connection with its
registration statement on Form S-3 (the "Registration Statement") filed with
the Securities and Exchange Commission relating to (i) proposed resales of up
to 6,000,000 of the Company's Series B Convertible, Cumulative Preferred Shares
of Beneficial Interest, $.01 par value per share, $50.00 liquidation preference
per share ("Series B Preferred Shares"), issued in a private placement in
February 1998, all of which Series B Preferred Shares are to be sold by or on
behalf of certain shareholders of the Company and (ii) 8,403,360 of the
Company's common shares of beneficial interest, $.01 par value per share
("Common Shares"), which are issuable by the Company upon conversion of the
Series B Preferred Shares. This opinion letter is furnished to you at your
request to enable you to fulfill the requirements of Item 601(b)(5) of
Regulation S-K, 17 C.F.R. Section 229.601(b)(5), in connection with the
Registration Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. The Articles of Amendment and Restatement of Declaration of Trust of
the Company, as certified by the Secretary of State of the State of
Maryland on August 3, 1998 and by the Assistant Secretary of the
Company on the date hereof as then being complete, accurate and in
effect.
3. The Amended and Restated Bylaws of the Company, as amended, as
certified by the Assistant Secretary of the Company on the date hereof
as then being complete, accurate and in effect.
4. Purchase Agreement, dated February 13, 1998, between the Company and
Lehman Brothers Inc.
<PAGE> 2
Board of Trustees
Equity Office Properties Trust
August 10, 1998
Page 2
5. Resolutions of the Board of Trustees of the Company adopted on
February 12, 1998 and Action of the Pricing Committee of the Board of
Trustees of the Company adopted on February 13, 1998, as certified by
the Assistant Secretary of the Company on the date hereof as then
being complete, accurate and in effect, relating to the issuance and
sale of the Series B Preferred Shares and arrangements in connection
therewith.
In our examination of the aforesaid certificates, documents and
agreements, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the accuracy and completeness of all documents
submitted to us, the authenticity of all original documents and the conformity
to authentic original documents of all documents submitted to us as copies
(including telecopies). We also have assumed the authenticity, accuracy and
completeness of the foregoing certifications (of public officials and corporate
officers) and statements of fact, on which we are relying, and have made no
independent investigations thereof. This opinion letter is given, and all
statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on Title 8 of the
Corporations and Associations Article of the Annotated Code of Maryland and
Maryland contract law. We express no opinion herein as to any other laws,
statutes, ordinances, rules or regulations.
Based upon, subject to and limited by the foregoing, we are of the opinion
that (i) assuming the receipt by the Company of the consideration specified in
the resolutions of the Board of Trustees of the Company and the Pricing
Committee of the Board of Trustees of the Company referred to in paragraph 5
above, the Series B Preferred Shares are validly issued, fully paid and
nonassessable under the laws of the State of Maryland; and (ii) the Common
Shares issuable upon conversion of the Series B Preferred Shares have been duly
and validly authorized and reserved for issuance upon such conversion by the
Company and such Common Shares, when issued upon conversion of the Series B
Preferred Shares as contemplated thereby, will be validly issued, fully paid
and nonassessable under the laws of the State of Maryland.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has
been prepared solely for your use in connection with the filing of the
Registration Statement on the date of this opinion letter and should not be
quoted in whole or in part or otherwise be referred to, nor filed with or
furnished to any governmental agency or other person or entity, without the
prior written consent of this firm.
<PAGE> 3
Board of Trustees
Equity Office Properties Trust
August 10, 1998
Page 3
We hereby consent to the filing of this opinion letter as Exhibit 5.1 to
the Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus constituting a part of the Registration
Statement. In giving this consent, we do not thereby admit that we are an
"expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ HOGAN & HARTSON L.L.P.
-------------------------------
Hogan & Hartson L.L.P.
<PAGE> 1
EXHIBIT 8.1
LETTERHEAD OF HOGAN & HARTSON L.L.P.
August 10, 1998
Equity Office Properties Trust
Two North Riverside Plaza
Chicago, Illinois 60606
Ladies and Gentlemen:
We have acted as special tax counsel to Equity Office Properties Trust
(the "Company"), a Maryland real estate investment trust, in connection with
the registration by the Company of up to 6,000,000 5.25% Series B Convertible,
Cumulative Preferred Shares of beneficial interest, par value $.01 per share,
$50.00 liquidation preference per share (the "Offered Shares") which may be
offered and sold from time to time by certain holders (the "Selling
Shareholders"), as more fully described in the Company's Registration Statement
on Form S-3 filed with the Securities and Exchange Commission on or about the
date hereof (the "Registration Statement," which includes the "Prospectus").
In connection with such registration, we have been asked to provide you with an
opinion regarding certain federal income tax matters related to the Company.
Unless otherwise defined herein or the context hereof otherwise requires, each
term used herein with initial capitalized letters has the meaning given to such
term in the Prospectus.
BASES FOR OPINIONS
The opinions set forth in this letter are based on relevant current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations thereunder (including proposed and temporary Treasury
Regulations), and interpretations of the foregoing as expressed in court
decisions, legislative history, and administrative determinations of the
Internal Revenue Service (the "IRS") (including its practices and policies in
issuing private letter rulings, which are not binding on the IRS, except with
respect to a taxpayer that receives such a ruling), all as of the date hereof.
These provisions and interpretations are subject to changes, which may or may
not be retroactive in effect, that might result in material modifications of
our opinions. Our opinion does not foreclose the possibility of a contrary
determination by the IRS or a court of competent jurisdiction or of a contrary
position by the IRS or the Treasury Department in
<PAGE> 2
Equity Office Properties Trust
August 10, 1998
Page 2
regulations or rulings issued in the future. In this regard, although we
believe that our opinions set forth herein will be sustained if challenged, an
opinion of counsel with respect to an issue is not binding on the IRS or the
courts, and is not a guarantee that the IRS will not assert a contrary position
with respect to such issue or that a court will not sustain such a position
asserted by the IRS.
In rendering the following opinions, we have examined such statutes,
regulations, records, certificates and other documents as we have considered
necessary or appropriate as a basis for such opinions, including the following:
(1) the Prospectus; (2) the Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, dated as of July 3, 1997, as amended
to the date hereof; (3) the Articles of Amendment and Restatement of
Declaration of Trust of the Company dated as of July 8, 1997, as amended to the
date hereof (the "Declaration of Trust") and, with respect to each series of
Preferred Shares of the Company, the Articles Supplementary establishing and
fixing the rights and preferences of such series of preferred shares; (4) the
agreements of limited partnership, as amended to the date hereof, of each of
the Opportunity Partnerships; (5) the form of partnership agreement or limited
liability company operating agreement, as applicable, used by Operating
Partnership and/or the Opportunity Partnerships to organize and operate the
partnerships and limited liability companies in which one or more of the
Opportunity Partnerships owns an interest (collectively, the "Partnership
Subsidiaries"); (6) the articles of organization and stock ownership records of
each corporation in which one or more of the Operating Partnership or the
Opportunity Partnerships owns stock, directly or indirectly, including
BeaMetFed, Inc., Equity Office Properties Management Corp., EOP Office Company,
Beacon Properties Management Corporation, Beacon Design Corporation and Beacon
Construction Company, Inc. (collectively, the "Corporate Entities"); (7) stock
ownership information for Tenant Services Corp.; and (8) other necessary
documents as we have deemed necessary in order to render the opinions set forth
in this letter. The opinions set forth in this letter also are premised on
certain written representations of (i) each of the ZML REITs and each of the
Opportunity Partnerships contained in a letter to us dated July 7, 1997, which
letter was reconfirmed to us by the Company, as the successor to the ZML REITs,
as of the date hereof, regarding the assets, operations and activities of each
of the ZML REITs prior to July 11, 1997 and (ii) the Company and the Operating
Partnership contained in a letter to us dated as of the date hereof, regarding
the assets, operations and activities of the Company and the Operating
Partnership in the past and as to the contemplated assets, operations and
activities of the Company in the future (collectively, the "Management
Representation Letters").
<PAGE> 3
Equity Office Properties Trust
August 10, 1998
Page 3
For purposes of rendering our opinion, we have not made an independent
investigation or audit of the facts set forth in any of the above-referenced
documents, including the Management Representation Letters. We consequently
have relied upon representations in the Management Representation Letters that
the information presented in such documents or otherwise furnished to us is
accurate and complete in all material respects. We are not, however, aware of
any material facts or circumstances contrary to, or inconsistent with, the
representations we have relied upon as described herein or other assumptions
set forth herein.
Moreover, we have assumed that, insofar as relevant to the opinions set
forth herein, (1) each of the Company, the Operating Partnership, the
Opportunity Partnerships, the Partnership Subsidiaries, and the Corporate
Entities in which an Opportunity Partnership owns an interest has been and will
be operated in the manner described in the Prospectus and in the relevant
partnership agreement, articles (or certificate) of incorporation, declaration
of trust or other organizational documents; (2) as represented by the Company,
there are no agreements or understandings between (a) the Company or the
Operating Partnership and (b) either (i) Equity Office Holdings L.L.C., the
entity that owns 100% of the voting stock of Equity Office Properties
Management Corp. and EOP Office Company, or with such corporations themselves,
that are inconsistent, or will be inconsistent, with Equity Office Holdings
L.L.C. being considered to be both the record and beneficial owner of 100% of
the outstanding voting stock of Equity Office Properties Management Corp. and
EOP Office Company, or (ii) Equity Office Properties Management Corp., the
entity that owns 100% of the voting stock of Beacon Properties Management
Corporation, Beacon Design Corporation, and Beacon Construction Company, Inc.,
or with such corporations themselves that are inconsistent or will be
inconsistent, with Equity Office Properties Management Corp. being considered
to be both the record and beneficial owner of 100% of the outstanding voting
stock of each of Beacon Properties Management Corporation, Beacon Design
Corporation, and Beacon Construction Company, Inc.; (3) as represented by the
Company, the Company will take measures to ensure that any services provided to
tenants of the Properties by Tenant Services Corp. will be considered "usually
or customarily rendered" and any other services provided to the tenants of the
Properties will be either "usually or customarily rendered" or provided by an
entity that qualifies as an "independent contractor" as defined in Section 856
of the Code and the Treasury Regulations thereunder; and (4) the Company is a
validly organized and duly incorporated real estate investment trust under the
laws of the State of Maryland, each of the Corporate Entities is a validly
<PAGE> 4
Equity Office Properties Trust
August 10, 1998
Page 4
organized and duly incorporated corporation under the laws of the state in
which it is purported to be organized, Operating Partnership is a duly
organized and validly existing limited partnership under the laws of the State
of Delaware, each of the Opportunity Partnerships is a duly organized and
validly existing limited partnership under the laws of the State of Illinois,
and each of the Partnership Subsidiaries is a duly organized and validly
existing partnership or limited liability company, as the case may be, under
the applicable laws of the state in which it is purported to be organized.
In our review, we have assumed that all of the representations and
statements set forth in the documents that we reviewed (including the
Management Representation Letters) are true and correct, and all of the
obligations imposed by any such documents on the parties thereto, including
obligations imposed under the Declaration of Trust, have been and will continue
to be performed or satisfied in accordance with their terms. We also have
assumed the genuineness of all signatures, the proper execution of all
documents, the authenticity of all documents submitted to us as originals, the
conformity to originals of documents submitted to us as copies, and the
authenticity of the originals from which any copies were made.
Opinions
Based upon, subject to, and limited by the assumptions and qualifications
set forth herein, we are of the opinion that:
1. the Company is organized, as of the date hereof, in conformity with the
requirements for qualification and taxation as a real estate investment trust
("REIT") under the Code, and the Company's proposed method of operation (as
described in the Prospectus and the Management Representation Letters) will
enable the Company to continue to meet the requirements for qualification and
taxation as a REIT for the taxable year ending December 31, 1998, and for
subsequent taxable years; and
2. the discussions in the Prospectus and in the Company's Annual Report on
Form 10-K, as amended, for the fiscal year ended December 31, 1997, as
incorporated by reference in the Prospectus, each under the caption "Federal
Income Tax Considerations," to the extent that they discuss matters of law or
legal conclusions or purport to describe certain provisions of the federal tax
laws, are correct summaries of the matters discussed therein as of the date
hereof.
<PAGE> 5
Equity Office Properties Trust
August 10, 1998
Page 5
We assume no obligation to advise you of any changes in our opinion or of
any new developments in the application or interpretation of the federal income
tax laws subsequent to the date of this letter. The Company's qualification
and taxation as a REIT depend upon both (i) the satisfaction in the past by
Beacon and the ZML REITs of the requirements for qualification and taxation as
a REIT; (ii) the Company's ability to meet on a continuing basis, through
actual annual operating and other results, the various requirements under the
Code, as described in the Prospectus with regard to, among other things, the
sources of its gross income, the composition of its assets, the level of its
distributions to shareholders, and the diversity of its stock ownership; and
(iii) the satisfaction, at all time since the Company has owned an interest in
BeaMetFed, Inc. and on a continuing basis, by BeaMetFed, Inc. of the
requirements for qualification and taxation as a REIT. Hogan & Hartson L.L.P.
will not review the Company's compliance with these requirements on a
continuing basis. Accordingly, no assurance can be given that the actual
results of the Company's operations, the sources of its income, the nature of
its assets, the level of its distributions to shareholders and the diversity of
its share ownership for any given taxable year will satisfy the requirements
under the Code for qualification and taxation as a REIT.
In rendering the opinions herein, Hogan & Hartson L.L.P. has relied upon
representations of the Company and the Operating Partnership with respect to
REIT qualification matters, including those set forth in the Management
Representation Letters. In addition, Hogan & Hartson L.L.P. has relied upon
the representations of the Company and the Operating Partnership regarding the
qualification of BeaMetFed, Inc. as a REIT.
This letter has been prepared solely for your use in connection with the
filing of the Registration Statement and should not be quoted in whole or in
part or otherwise referred to, or be filed with or furnished to any
governmental agency or other person, without the prior written consent of this
firm. We hereby consent to the filing of this opinion letter as Exhibit 8.1 to
the Registration Statement and to the reference to Hogan & Hartson L.L.P. under
the caption "Legal Matters" in the Prospectus. In giving this consent, we do
not thereby admit that we are an "expert" within the meaning of the Securities
Act of 1933, as amended.
Very truly yours,
/s/ HOGAN & HARTSON L.L.P.
-----------------------------
Hogan & Hartson L.L.P.
<PAGE> 1
EXHIBIT 23.3
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Equity Office
Properties Trust for the registration of 6,000,000 of the 5.25% Series B
Convertible, Cumulative Preferred shares of beneficial interest and 8,403,360
common shares of beneficial interest and to the incorporation by reference
therein of our reports indicated below with respect to the financial statements
indicated below included in Equity Office Properties Trust's filings as
indicated below, with the Securities and Exchange Commission.
Financial Statements Date of Auditors Report
-------------------- -----------------------
Consolidated financial statements of Equity February 23, 1998, except
Office Properties Trust included in its Annual for Note 25, as to which the
Report (Form 10-K, as amended by Form 10-K/A) date is March 18, 1998
for the year ended December 31, 1997
The following reports are included in the
Current Report of Equity Office Properties
Trust on Form 8-K dated June 26, 1998:
Statement of Revenue and Certain Expenses of
Denver Post Tower for the year ended
December 31, 1997 April 28, 1998
Combined Statement of Revenue and Certain
Expenses 301 Howard Street and 215 Fremont
Street for the year ended October 31, 1997 April 29, 1998
Combined Statement of Revenue and Certain
Expenses of the Mountain Properties for the
year ended December 31, 1997 April 28, 1998
Statement of Revenue and Certain Expenses of
Millennium Plaza for the year ended
December 31, 1997 June 22, 1998
Statement of Revenue and Certain Expenses of
Polk & Taylor for the year ended
December 31, 1997 June 18, 1998
Combined Statement of Revenue and Certain
Expenses of Colonnade I, Colonnade II, and the
Walker Building for the year ended
December 31, 1997 June 12, 1998
Statement of Revenue and Certain Expenses of
Columbia Seafirst Center for the year ended
December 31, 1997 July 1, 1998
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Chicago, Illinois
August 7, 1998
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of Equity Office Properties Trust on Form S-3 of our reports dated January 28,
1997, on our audits of the financial statements and financial statement
schedules of Beacon Properties Corporation, which reports were filed with the
Securities and Exchange Commission on the Form 8-K/A of Equity Office
Properties Trust on February 18, 1998. We also consent to the reference to our
firm under the caption "Experts."
/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
August 7, 1998
