<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 14, 1997
REGISTRATION STATEMENT NO. 333-36577
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
BRADLEY OPERATING LIMITED PARTNERSHIP
(Exact name of registrant as specified in charter)
---------------------
<TABLE>
<S> <C>
DELAWARE 04-3306041
(State of incorporation) (I.R.S. Employer Identification No.)
</TABLE>
40 SKOKIE BOULEVARD, SUITE 600
NORTHBROOK, ILLINOIS 60062-1626
(847) 272-9800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
THOMAS P. D'ARCY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BRADLEY REAL ESTATE, INC.
40 SKOKIE BOULEVARD, SUITE 600
NORTHBROOK, ILLINOIS 60062-1626
(847) 272-9800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
WITH A COPY TO:
WILLIAM B. KING, P.C.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE, BOSTON, MASSACHUSETTS 02109-2881
(617) 570-1000
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after 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, as amended, check the following box. [X]
If this form is used 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. [ ]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THIS PROSPECTUS SUPPLEMENT SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION NOVEMBER , 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1997)
BRADLEY OPERATING LIMITED PARTNERSHIP
$100,000,000 % NOTES DUE 2004
------------------------
Bradley Operating Limited Partnership (the "Operating Partnership") will
issue its % Notes due 2004 (the "Notes") offered hereby in an aggregate
principal amount of $100,000,000. Interest on the Notes is payable semi-annually
in arrears on commencing , 1998. See "Description of
Notes -- Principal and Interest." The Notes will mature on , 2004.
The Notes may be redeemed at any time at the option of the Operating
Partnership, in whole or in part, at a redemption price equal to the sum of (i)
the principal amount of the Notes being redeemed plus accrued interest to the
redemption date, and (ii) the Make-Whole Amount (as defined in "Description of
the Notes -- Optional Redemption"), if any. See "Description of
Notes -- Optional Redemption." The Notes are unsecured obligations of the
Operating Partnership and will rank equally with all unsecured and
unsubordinated indebtedness of the Operating Partnership. The Notes are not
subject to any mandatory sinking fund. The Notes contain certain restrictions on
the Operating Partnership's ability to incur additional indebtedness. See
"Description of Notes."
The Notes constitute a separate series of debt securities which will be
represented by a single fully registered global note in book-entry form without
coupons (a "Global Note") registered in the name of The Depository Trust Company
("DTC") or its nominee. Beneficial interests in the Global Note will be shown
on, and transfers thereof will be effected only through, records maintained by
DTC (with respect to beneficial interests of participants) or by participants or
persons that hold interests through participants (with respect to beneficial
interests of beneficial owners). Owners of beneficial interests in the Global
Note will be entitled to physical delivery of Notes in certificated form equal
in principal amount to their respective beneficial interests only under the
limited circumstances described under "Description of Notes -- Book-Entry
System." Settlement of the Notes will be made in immediately available funds.
The Notes will trade in DTC's Same-Day Funds Settlement System until maturity or
earlier redemption, as the case may be, or until the Notes are issued in
certificated form, and secondary market trading activity in the Notes will
therefore settle in immediately available funds. All payments of principal and
interest in respect of the Notes will be made by the Operating Partnership in
immediately available funds. See "Description of Notes -- Same-Day Settlement
and Payment."
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THE PROSPECTUS FOR CERTAIN FACTORS
RELATING TO AN INVESTMENT IN THE NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===========================================================================================================
Underwriting
Discounts Proceeds to Operating
Price to Public(1) and Commissions(2) Partnership(1)(3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.............................. % % %
- -----------------------------------------------------------------------------------------------------------
Total................................. % % %
===========================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from , 1997.
(2) The Company and the Operating Partnership have agreed to indemnify the
Underwriters (as defined herein) against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting."
(3) Before deducting expenses payable by the Operating Partnership estimated at
.
------------------------
The Notes are offered by the Underwriters subject to prior sale, when, as
and if delivered to and accepted by them, subject to approval of certain legal
matters by counsel for the Underwriters. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the Notes will be made on or about through the
book-entry facilities of DTC, against payment therefor in immediately available
funds.
------------------------
PAINEWEBBER INCORPORATED
BT ALEX. BROWN
SALOMON BROTHERS INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
------------------------
The date of this Prospectus Supplement is November , 1997
<PAGE> 3
------------------------
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY ENGAGE IN
TRANSACTIONS WHICH STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
NOTES. SPECIFICALLY, THE UNDERWRITERS MAY STABILIZE OR MAY BID FOR, AND
PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A DISCUSSION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
S-2
<PAGE> 4
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PROSPECTUS SUPPLEMENT SUMMARY
The following information contained in this Prospectus Supplement is
qualified in its entirety by the detailed information appearing elsewhere in
this Prospectus Supplement or the accompanying Prospectus or incorporated
therein by reference. As used herein, the term "Bradley Real Estate, Inc."
refers also to its predecessor Bradley Real Estate Trust, and the term "Company"
or "Bradley" as used herein refers to Bradley Real Estate, Inc. and its
subsidiaries on a consolidated basis (including Bradley Operating Limited
Partnership and its subsidiaries) or, where the context so requires, Bradley
Real Estate, Inc. only. The term "Operating Partnership" as used herein means
Bradley Operating Limited Partnership and its subsidiaries on a consolidated
basis, or, where the context so requires, Bradley Operating Limited Partnership
only.
THE OPERATING PARTNERSHIP
Bradley Operating Limited Partnership is the entity through which Bradley
Real Estate, Inc., a self-administered and self-managed real estate investment
trust ("REIT"), conducts substantially all of its business and owns (either
directly or through subsidiaries) substantially all of its assets. As of
September 30, 1997, the Operating Partnership owned, directly or indirectly, 44
properties (42 shopping centers and two office/retail properties) in 12 states,
aggregating over 8.6 million square feet of rentable space, substantially all of
which are located in Midwest markets. The portfolio of properties owned by the
Operating Partnership has approximately 1,000 tenants, with no single tenant
accounting for more than 6.0% of gross revenues. The majority of the properties
have been constructed or renovated within the past five to eight years. As of
September 30, 1997, the Operating Partnership's portfolio was approximately 93%
occupied. (Properties owned by the Operating Partnership from time to time are
hereinafter sometimes referred to individually as a "Property" and collectively
referred to as the "Properties" or the "Portfolio.")
The Operating Partnership's strategic objective is to be an owner of
grocery-anchored, open-air community and neighborhood shopping centers in the
upper Midwest, generally consisting of the states of Illinois, Indiana, Iowa,
Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South
Dakota and Wisconsin. The Operating Partnership currently owns properties in
seven states in this region. Through past experience as well as current
research, the Operating Partnership believes that this region is economically
strong and diverse and provides a favorable environment for the acquisition,
ownership and operation of retail properties. The Operating Partnership
evaluates prospects in both metropolitan statistical areas defined by the U.S.
Census Bureau ("MSAs") and secondary markets within this region that offer
opportunities for favorable investment returns and long-term cash flow growth.
The Operating Partnership favors grocery-anchored centers because, based on
its past experience, such properties offer strong and predictable daily consumer
traffic and are less susceptible to downturns in the general economy than
apparel- or leisure-anchored shopping center properties. Grocery-anchored
centers perform better through varied economic conditions because they are
usually located close to residential areas, are convenience driven, promote
repeat customer traffic and cross-shopping, and tend to be less affected by
changing demographics. The Operating Partnership intends to grow by improving
cash flows from existing Properties through innovative, proactive management and
leasing that focuses on tenant satisfaction and retention, increases in rents
and occupancy levels and the control of operating expenses. The Operating
Partnership also intends to grow through the acquisition of additional
grocery-anchored shopping centers located throughout its Midwest target market.
The Operating Partnership believes it is well positioned to achieve these
objectives given Bradley's 35 year operating history in the Midwest region of
the country, its existing management infrastructure in several key Midwestern
markets and its depth of management and management information systems.
As part of its ongoing business, the Operating Partnership regularly
evaluates, and engages in discussions with public and private entities regarding
possible portfolio or individual asset acquisitions or business combinations.
The Operating Partnership seeks to create an income stream diversity across its
Midwest markets to achieve sustainable growth through varied economic
conditions. Since January 1, 1997, the Operating Partnership has acquired 17
shopping centers which meet its investment criteria and expects to
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S-3
<PAGE> 5
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complete additional acquisitions during the remainder of the year, although
there can be no assurance that further acquisitions will be made within its
target markets. In evaluating potential acquisitions, the Operating Partnership
focuses principally on community and neighborhood shopping centers in its
Midwest target market that are anchored by strong national, regional and
independent grocery store chains.
The Company currently owns an approximately 95% economic interest in and is
the sole general partner of the Operating Partnership (this structure is
commonly referred to as an umbrella partnership REIT or "UPREIT"). The board of
directors of the Company manages the affairs of the Operating Partnership by
directing the affairs of the Company. Economic interests in the Operating
Partnership are evidenced by units of partnership interest ("Units") with the
interest of the general partner evidenced by general partner units ("GP Units").
The interests of persons who contributed direct or indirect interests in certain
properties to the Operating Partnership are evidenced by limited partner units
("LP Units").
In August 1997, Standard & Poor's Investment Services ("Standard & Poor's")
assigned a corporate rating of "BBB-" to the Operating Partnership, and on
November 4, 1997 Moody's Investors Service ("Moody's") assigned a prospective
rating of "(P)Baa3" to the unissued shelf registration of debt securities filed
by the Operating Partnership.
The Operating Partnership is organized under the laws of the State of
Delaware. Its offices are located at 40 Skokie Boulevard, Suite 600, Northbrook,
Illinois 60062-1626. Its telephone number is (847) 272-9800.
THE PROPERTIES
Set forth below are summary descriptions of the Properties owned by the
Operating Partnership as of the date of this Prospectus Supplement and rental
information for leases in effect as of September 30, 1997 or, for Properties
acquired after September 30, 1997, as of the date of acquisition.
<TABLE>
<CAPTION>
GROSS
LEASABLE
YEAR AREA (GLA) PERCENT ANNUALIZED
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1)
---------------- -------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C>
ILLINOIS
1. Commons of Chicago Ridge and Annex.......... 1996 309,000 93% $ 2,837,116
2. Commons of Crystal Lake(2).................. 1996 273,000 71 2,261,841
3. Crossroads Center........................... 1992(3) 242,000 97 1,382,014
4. Fairhills Shopping Center................... 1997 106,000 90 594,917
5. Heritage Square............................. 1996 212,000 100 2,609,091
6. High Point Centre........................... 1996 240,000 99 2,151,908
7. Parkway Pointe.............................. 1997 39,000 100 463,101
8. Rivercrest Center........................... 1994(3) 458,000 99 3,585,615
9. Rollins Crossing............................ 1996 66,000(4) 82 489,939
10. Sangamon Center North....................... 1997 140,000 98 1,002,405
11. Sheridan Village............................ 1996 296,000 98 2,246,202
12. Sterling Bazaar............................. 1997 82,000 94% 646,884
13. Wardcliffe Center........................... 1997 62,000 100% 317,196
14. Westview Center............................. 1993(3) 328,000 72 2,121,997
--------- --- -----------
TOTAL/WEIGHTED AVERAGE ILLINOIS......... 2,853,000 92% $22,710,226
INDIANA
15. Martin's Bittersweet Plaza.................. 1997 78,000 98 553,135
16. County Line Mall............................ 1997 261,000 94 1,598,100
17. Speedway SuperCenter and Outlots............ 1996 541,000 97 3,883,929
18. The Village(5).............................. 1996 356,000 86 1,651,191
19. Washington Lawndale Commons................. 1996 333,000 98 1,642,978
--------- --- -----------
TOTAL/WEIGHTED AVERAGE INDIANA.......... 1,569,000 94% $ 9,329,333
IOWA
20. Burlington Plaza West....................... 1997 88,000 94 573,685
21. Davenport Retail............................ 1997 63,000 100 604,355
22. Holiday Plaza............................... 1997 46,000 87 282,219
</TABLE>
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S-4
<PAGE> 6
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<TABLE>
<CAPTION>
GROSS
LEASABLE
YEAR AREA (GLA) PERCENT ANNUALIZED
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1)
-------------------------------------------- --------- --- -----------
<C> <S> <C> <C> <C> <C>
23. Parkwood Plaza.............................. 1997 125,000 93 1,019,873
24. Spring Village.............................. 1997 91,000 100 567,715
25. Warren Plaza................................ 1997(3) 90,000 100 660,828
--------- --- -----------
TOTAL/WEIGHTED AVERAGE IOWA............. 503,000 96% $ 3,708,675
KANSAS
26. Santa Fe Square............................. 1996(3) 134,000 94 $ 1,100,219
27. Westchester Square.......................... 1997 165,000 93 1,231,672
--------- --- -----------
TOTAL/WEIGHTED AVERAGE KANSAS............... 299,000 93% $ 2,331,891
KENTUCKY
28. Stony Brook................................. 1996 136,000 98 1,384,869
--------- --- -----------
TOTAL/WEIGHTED AVERAGE KENTUCKY......... 136,000 98% $ 1,384,869
MINNESOTA
29. Brookdale Square............................ 1996(3) 185,000 86 1,175,468
30. Burning Tree Plaza.......................... 1993(3) 139,000 93 1,165,599
31. Har Mar Mall................................ 1992(3) 430,000 92 3,797,782
32. Hub West Shopping Center.................... 1991(3) 78,000 100 839,271
33. Richfield Hub Shopping Center............... 1988(3) 138,000 98 1,262,477
34. Roseville Center............................ 1997 75,000 92 624,708
35. Sun Ray Shopping Center..................... 1961(3) 258,000 82 1,615,111
36. Terrace Mall................................ 1993(3) 137,000 94 913,871
37. Westwind Plaza.............................. 1994(3) 88,000 92 891,960
38. White Bear Hills............................ 1993(3) 73,000 100 592,781
--------- --- -----------
TOTAL/WEIGHTED AVERAGE MINNESOTA........ 1,601,000 91% $12,879,028
MISSOURI
39. Grandview Plaza............................. 1971(3) 316,000 78 2,127,323
40. Liberty Corners............................. 1997 121,000 100 720,941
--------- --- -----------
TOTAL/WEIGHTED AVERAGE MISSOURI......... 437,000 84% $ 2,848,264
NEW MEXICO
41. St. Francis Plaza........................... 1995 30,000 100 357,000
--------- --- -----------
TOTAL/WEIGHTED AVERAGE NEW MEXICO....... 30,000 100% $ 357,000
TENNESSEE
42. Williamson Square(6)........................ 1996 335,000 90 2,109,757
--------- --- -----------
TOTAL/WEIGHTED AVERAGE TENNESSEE........ 335,000 90% $ 2,109,757
WISCONSIN
43. Madison Plaza............................... 1997 128,000 100 991,131
44. Mequon Pavilions............................ 1996 212,000 98 2,269,611
--------- --- -----------
TOTAL/WEIGHTED AVERAGE WISCONSIN........ 340,000 99% $ 3,260,742
--------- --- -----------
TOTAL/WEIGHTED AVERAGE SHOPPING CENTERS..... 8,103,000 92% $60,919,785
RETAIL/OFFICE BUILDINGS
ILLINOIS
45. One North State............................. 1996 639,000 98 9,849,135
MASSACHUSETTS
46. 585 Boylston St.(5)......................... 1961 22,000 90 683,276
--------- --- -----------
TOTAL/WEIGHTED AVERAGE RETAIL/OFFICE
BUILDINGS............................ 661,000 98% $10,532,411
--------- --- -----------
GRAND TOTAL/WEIGHTED AVERAGE............ 8,764,000 93% $71,452,196
========= === ===========
</TABLE>
- ---------------
(1) Annualized base rent is calculated by multiplying base rent for September
1997 by twelve.
(2) The amount of rentable square feet at Commons of Crystal Lake does not
include approximately 81,000 square feet which is owned by Metropolitan Life
and leased to Venture Stores, Inc.
(3) Year the Property was acquired by the Company, which contributed the
Property to the Operating Partnership in August 1997.
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S-5
<PAGE> 7
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(4) The amount of rentable square feet at Rollins Crossing does not include
approximately 190,000 square feet which is owned by Kmart Corporation.
(5) This Property is held for sale.
(6) The Operating Partnership is the 60% general partner of a partnership owning
this Property, whose limited partner interests are owned by an unrelated
investor.
RISK FACTORS
An investment in the Notes involves various risks, and prospective
investors should carefully consider the matters discussed under "Risk Factors"
in the accompanying Prospectus prior to any investment in the Operating
Partnership.
- -------------------------------------------------------------------------------
S-6
<PAGE> 8
- --------------------------------------------------------------------------------
THE OFFERING
All capitalized terms used herein and not defined herein have the meaning
provided in the Indenture (as defined herein) or under "Description of Notes."
SECURITIES OFFERED......... $100,000,000 aggregate principal amount of Notes.
MATURITY................... November , 2004.
INTEREST PAYMENT DATES..... Semi-annually in arrears on commencing
, 1998.
RANKING.................... The Notes will be unsecured obligations of the
Operating Partnership and will rank equally with
the Operating Partnership's other unsecured and
unsubordinated indebtedness. The Notes will be
effectively subordinated to mortgages and other
secured indebtedness of the Operating Partnership
and to indebtedness and other liabilities of the
Operating Partnership's subsidiaries. In addition,
the Notes will be repaid solely from the assets of
the Operating Partnership; holders of the Notes
will not have recourse against any limited partner
of the Operating Partnership for the repayment of
the Notes.
USE OF PROCEEDS............ The net proceeds from the sale of the Notes will
either be used to partially prepay a $100 million
mortgage note, any accrued but unpaid interest
thereon, and a related prepayment penalty
(estimated to be $3,900,000) or to partially repay
short-term indebtedness used to prepay such
mortgage note. See "The Operating
Partnership -- The REMIC Note and Other
Indebtedness."
OPTIONAL REDEMPTION........ The Notes are redeemable at any time at the option
of the Operating Partnership, in whole or in part,
at a redemption price equal to the sum of (i) the
principal amount of the Notes being redeemed plus
accrued interest to the redemption date and (ii)
the Make-Whole Amount (as hereinafter defined), if
any. See "Description of Notes -- Optional
Redemption."
CERTAIN COVENANTS.......... The Notes contain various covenants including the
following:
- Neither the Operating Partnership nor any
Subsidiary (as hereinafter defined) may incur any
Indebtedness (as hereinafter defined) if, after
giving effect thereto, the aggregate principal
amount of all outstanding Indebtedness of the
Operating Partnership and its Subsidiaries on a
consolidated basis is greater than 60% of the sum
of (i) the Total Assets (as hereinafter defined)
of the Operating Partnership and its Subsidiaries
as of the end of the most recent calendar quarter
prior to the incurrence of such additional
Indebtedness, and (ii) the purchase price of any
real estate assets or mortgages receivable
acquired by the Operating Partnership and its
Subsidiaries since the end of such calendar
quarter, and (iii) the amount of any securities
offering proceeds received (to the extent that
such proceeds were not used to acquire real
estate assets or mortgages receivable or used to
reduce Indebtedness), by the Operating
Partnership or any Subsidiary since the end of
such calendar quarter, including those proceeds
obtained in connection with the incurrence of
such additional Indebtedness, less (iv) the
decrease, if any, in the Total Assets of the
Operating Partnership and its Subsidiaries since
the end of such quarter.
- Neither the Operating Partnership nor any
Subsidiary may incur any Indebtedness secured by
any mortgage or other lien upon any of the
- --------------------------------------------------------------------------------
S-7
<PAGE> 9
- --------------------------------------------------------------------------------
property of the Operating Partnership or any
Subsidiary if, after giving effect thereto, the
aggregate principal amount of all outstanding
Indebtedness of the Operating Partnership and its
Subsidiaries on a consolidated basis which is
secured by any mortgage or other lien on the
property of the Operating Partnership or any
Subsidiary is greater than 40% of the sum of (i)
the Total Assets of the Operating Partnership and
its Subsidiaries as of the end of the most recent
calendar quarter prior to the incurrence of such
additional Indebtedness and (ii) the purchase
price of any real estate assets or mortgages
receivable acquired by the Operating Partnership
and its Subsidiaries since the end of such
calendar quarter, and (iii) the amount of any
securities offering proceeds received (to the
extent that such proceeds were not used to
acquire real estate assets or mortgages
receivable or used to reduce Indebtedness), by
the Operating Partnership or any Subsidiary since
the end of such calendar quarter, including those
proceeds obtained in connection with the
incurrence of such additional Indebtedness, less
(iv) the decrease, if any, in the Total Assets of
the Operating Partnership and its Subsidiaries
since the end of such quarter.
- The Operating Partnership and its Subsidiaries
will maintain Total Unencumbered Assets (as
hereinafter defined) of not less than 150% of the
aggregate outstanding principal amount of the
Unsecured Indebtedness (as hereinafter defined)
of the Operating Partnership and its Subsidiaries
on a consolidated basis.
- Neither the Operating Partnership nor any
Subsidiary may incur any Indebtedness if, after
giving effect thereto, the ratio of Consolidated
Income Available for Debt Service (as hereinafter
defined) to the Annual Service Charge (as
hereinafter defined) for the four consecutive
fiscal quarters most recently ended prior to the
date on which such additional Indebtedness is to
be incurred shall have been less than 1.5:1 on a
pro forma basis after giving effect to certain
assumptions.
The foregoing covenants do not restrict the
Operating Partnership from refinancing existing
Indebtedness, provided that the outstanding
principal amount of such Indebtedness is not
increased. For a more complete description of the
terms and definitions used in the foregoing
limitations, see "Description of Notes -- Certain
Covenants."
'
- --------------------------------------------------------------------------------
S-8
<PAGE> 10
THE OPERATING PARTNERSHIP
GENERAL
Bradley Operating Limited Partnership is the entity through which Bradley
Real Estate, Inc., a self-administered and self-managed REIT, conducts
substantially all of its business and owns (either directly or through
subsidiaries) substantially all of its assets. Bradley Real Estate, Inc., has
elected to qualify as a REIT for federal income tax purposes since its
organization in 1961. The Company is the nation's oldest continuously qualified
real estate investment trust. The Operating Partnership is an owner of grocery-
anchored, open-air neighborhood and community shopping centers in the Midwestern
region of the United States and is engaged in the business of acquiring, and
actively managing and leasing such properties. As of September 30, 1997, the
Operating Partnership owned 44 properties in 12 states, aggregating
approximately 8.6 million square feet of gross leasable area.
In March 1996, the Company completed the acquisition (the "Tucker
Acquisition") of Tucker Properties Corporation ("Tucker"). The Tucker
acquisition was consummated through the issuance by the Company of approximately
7.4 million shares of its common stock valued at $13.96 per share, and was
accounted for using the purchase method of accounting. Tucker held title to all
of its properties through two partnerships; eight properties through Tucker
Operating Limited Partnership ("TOP"), in which Tucker had a 95.9% general
partnership interest, and six properties through Tucker Financing Partnership
("TFP"), a general partnership of which TOP owned 99% and a wholly-owned Tucker
corporate subsidiary owned the remaining 1%. Upon the acquisition of Tucker, the
Company succeeded to Tucker's interest in TOP, TFP and the wholly-owned Tucker
corporate subsidiary, and the name "Bradley" was substituted for "Tucker" in
each subsidiary and partnership. In August 1997, the Company contributed to the
Operating Partnership its interests in the 18 properties that it had previously
held directly. The Operating Partnership therefore succeeded Bradley as the
entity through which the Company expects to expand its ownership and operation
of properties primarily located in the Midwestern region of the country. In
addition, in August 1997, Standard & Poor's assigned a corporate rating of
"BBB-" to the Operating Partnership, and on November 4, 1997 Moody's assigned a
prospective rating of "(P)Baa3" to the unissued shelf registration of debt
securities filed by the Operating Partnership.
As of September 30, 1997, the Operating Partnership owned, directly or
indirectly, 44 Properties (42 shopping centers and two office/retail properties)
in 12 states, aggregating over 8.6 million square feet of rentable space,
substantially all of which are located in Midwest markets. Of the 44 properties
owned by the Operating Partnership at September 30, 1997, 28 were
grocery-anchored, open-air shopping centers located in the Midwestern region of
the United States. The Portfolio owned by the Operating Partnership has
approximately 1,000 tenants, with no single tenant accounting for more than 6.0%
of gross revenues. The majority of the Properties have been constructed or
renovated within the past five to eight years. As of September 30, 1997, the
Operating Partnership's Portfolio was approximately 93% occupied.
As part of its ongoing business, the Operating Partnership regularly
evaluates, and engages in discussions with public and private real estate
entities regarding possible portfolio or individual asset acquisitions or
business combinations. The Operating Partnership is in the process of actively
evaluating several properties and, accordingly, expects to complete additional
acquisitions of retail properties during 1997, although no assurance can be
given that any of these acquisitions will be consummated. However, the Operating
Partnership does not currently have any properties under agreement which
individually or in the aggregate would have a material affect on the financial
condition of the Operating Partnership. In evaluating potential acquisitions,
the Operating Partnership focuses principally on community and neighborhood
shopping centers in the upper Midwest -- generally consisting of the states of
Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North
Dakota, Ohio, South Dakota and Wisconsin -- that are anchored by strong
national, regional and independent grocery store chains. The Operating
Partnership favors grocery-anchored shopping centers because, based on its
experience and current research, such properties offer better prospects for
sustainable cash flow growth over time due to their strong and predictable daily
consumer traffic and are less susceptible to downturns in the general economy
than apparel- or leisure-anchored shopping center properties.
S-9
<PAGE> 11
The Company currently owns an approximately 95% economic interest in and is
the sole general partner of the Operating Partnership. The board of directors of
the Company manages the affairs of the Operating Partnership by directing the
affairs of the Company. Economic interests in the Operating Partnership are
evidenced by Units with the interest of the general partner evidenced by GP
Units.
The Operating Partnership is a Delaware limited partnership and the Company
is a Maryland corporation. The executive offices of both the Operating
Partnership and the Company are located at 40 Skokie Boulevard, Suite 600,
Northbrook, Illinois 60062-1626 and their telephone number is (847) 272-9800.
BUSINESS OBJECTIVES AND STRATEGIES
Philosophy:
The Operating Partnership believes grocery-anchored, open-air properties
offer risk-adjusted returns that are superior to alternative retail formats.
Grocery-anchored centers perform better through varied economic conditions
because they are usually located close to residential areas, are convenience
driven, promote repeat customer traffic and cross-shopping and tend to be less
affected by changing demographics. The Operating Partnership intends to grow by
improving cash flows from existing Properties through innovative, proactive
management and leasing that focuses on tenant satisfaction and retention,
increases in rents and occupancy levels and the control of operating expenses.
The Operating Partnership also intends to grow through the acquisition of
additional grocery-anchored shopping centers located throughout its Midwest
target market. The Operating Partnership believes it is well positioned to
achieve these objectives given Bradley's 35 year operating history in the
Midwest region of the country, its existing management infrastructure in several
key Midwestern markets and its depth of management and management information
systems.
Management Structure:
The Operating Partnership provides a full range of fully integrated real
estate services with over 80 professionals involved in management, leasing,
acquisition and financing of the Operating Partnership's 44 Properties. Senior
management consists of seven individuals with an average of 18 years of real
estate experience, ranging from 12 to 30 years in the business. The Operating
Partnership maintains regional offices in Chicago, Minneapolis, St. Louis,
Indianapolis and Milwaukee, in order that as many Properties as practicable have
a manager located within a one to two hour drive. The Operating Partnership
believes that operational success is driven by its employees and seeks to
provide a challenging and congenial work environment which offers personal and
career growth to all employees. The finance, accounting and administrative
functions for the Operating Partnership are handled by a central office staff
located in the Northbrook, Illinois headquarters.
Property Operations:
The Asset Management Department operates the Portfolio with the objective
of maximizing current cash flows while at the same time enhancing long-term
value. The Properties are operated by 13 professional property managers, all of
whom have or are working toward professional designations. Each property manager
currently manages an average of 600,000 square feet in slightly over three
Properties. Property managers all have comprehensive written goals focusing on
the following objectives:
Tenant Coverage and Retention: The Operating Partnership believes
that the maintenance of good relationships and communications is imperative
to tenant retention. Managers meet with tenants on a regular basis, with
such communication considered essential not only in the lease renewal
process but also in identifying mutual needs and expectations while
clarifying and resolving issues. In general, leases are renewed at market
rates with standard escalation clauses. The property manager negotiates the
renewal terms with tenants, in conjunction with the leasing agent assigned
to the Property.
Property Maintenance and Expense Control: Maintenance of the
Portfolio is performed by both internal and third-party contract personnel.
The Operating Partnership's construction and property management personnel
ensure each Property is maintained in optimal condition while ensuring all
S-10
<PAGE> 12
opportunities to minimize operating costs are considered. These
opportunities include property tax protestation, competitive bidding for
third party services, conducting routine preventative maintenance and
enforcing strict accounting and collection controls.
Financial Performance: Revenues from the Portfolio are maximized by
providing property managers and leasing agents with significant input in
the setting of financial goals for each Property and enabling property
managers and leasing agents to make decisions with respect to new and
renewal leases. Property managers are also required to follow strict
policies with respect to competitive bidding of contracts and the
collection procedures to be followed at each Property, as well as
aggressively to seek property tax reductions.
Leasing:
The Leasing Department is focused on attracting and retaining quality
tenants on economically favorable terms, leveraging off established tenant
relationships and capitalizing on the Operating Partnership's ability to offer
multiple locations. Each leasing representative is responsible for, on average,
1.5 million square feet of retail space or approximately five to eight shopping
centers. Leasing representatives are assigned specific Properties and are
responsible for the following objectives:
Creating an annual leasing plan including an analysis of the competition
for each center which is an integral part of the annual budget.
Managing all leasing activities including sourcing new tenants,
negotiating lease parameters, lease analysis and closing lease
transactions.
Working with property managers on lease renewals.
Monitoring and working with the construction department on tenant
improvements in order to insure that all lease occupancy requirements
are met.
Establishing tenant and industry relationships.
The Operating Partnership commits significant resources to market research
efforts. Leasing representatives have access to demographic programs detailing
existing and projected population, income and retail sales growth within a trade
area, as well as the macro and micro economic data provided by the Research
Department. In addition to this internal market data, leasing representatives
are required to prepare a site specific market analysis for each Property,
taking into consideration competitive centers, market rental rates, local tenant
concentration, traffic patterns and vacancies within competing centers.
Acquisitions:
The Operating Partnership focuses its efforts on the acquisition of
grocery-anchored, open-air neighborhood and community shopping centers in its
Midwest target area. Acquisition efforts are focused on both MSAs and secondary
markets in this area. The Operating Partnership seeks acquisitions in MSAs and
secondary markets where it can establish a strong market presence by owning
multiple properties. The Operating Partnership primarily seeks grocery-anchored,
open-air neighborhood and community shopping centers containing 60,000 to
200,000 square feet of rentable area and that have the following additional
characteristics:
Anchored by grocery stores that are operated by national or regional
Midwest chains or by top-tier independent operators with leading
positions in their trade areas.
Contain service retailer tenants, such as banks, related financial
service, brokerage, medical offices, auto service, restaurants, drug
stores, video stores and florists.
Have an appropriate balance of "small shop" space to the amount of
anchor square footage.
Have been sufficiently well-maintained so as not to have significant
deferred maintenance costs.
S-11
<PAGE> 13
The Operating Partnership seeks to acquire properties that management
believes are priced below replacement cost, are located in strong Midwestern
MSAs or secondary markets, and that are capable of producing minimum acceptable
threshold yields which management believes can be increased through the
Operating Partnership's operating and leasing experience and in certain
instances through strategic capital improvements. In conjunction with extensive
internal research and product sourcing efforts, the Operating Partnership has
established relationships with external brokers in a number of its markets,
enabling it to diversify its search throughout its Midwestern target area. Such
relationships give the Operating Partnership broad geographic coverage while
minimizing fixed general and administrative expenses.
Research:
The Research Department supports the overall strategic planning process as
well as the Acquisition, Leasing and Asset Management Departments. The Operating
Partnership maintains its own internal demographic, retailer and shopping center
databases with the assistance and support of outside consultants. Research
efforts are ongoing and focus on analyzing selected counties and MSAs throughout
the Operating Partnership's target markets in the Midwest. The research process
focuses on four major elements:
Demographic and economic trends in the Operating Partnership's trade
areas.
Detailed databases on shopping center inventory and owners.
Credit and operating information on the region's grocery operators, as
well as other national, regional and local tenants.
Supply and demand balances for retail space in the targeted markets'
trade areas.
Management Information Systems:
The Operating Partnership has integrated property management information
systems which include distributive processing features that make available next
day information to field and corporate office personnel of data and transactions
entered at each location. The system also includes a comprehensive lease
database containing all relevant economic and compliance provisions contained in
each lease. The system is designed with significant security, control and
efficiency features and includes automated billings, daily updates of
receivables and open payables, and operational reports for both leasing and
property management personnel. Management of the Operating Partnership is
committed to continued investment in information technology so that information
systems will continue to be adequate to support the growth of the Operating
Partnership.
CAPITAL STRUCTURE
Management intends to finance the Operating Partnership's future growth
through the maintenance of a flexible capital structure that management believes
will allow the Operating Partnership to take advantage of acquisition and
development opportunities while providing access to the public debt and equity
capital markets on favorable terms. The Operating Partnership intends to
maintain a strong financial position by: (i) maintaining a low level of leverage
(i.e., a ratio of debt and preferred stock to Real Estate Value of 50% or less,
with "Real Estate Value" defined as annualized net operating income of the most
recent fiscal quarter divided by 10.25%), (ii) maintaining a large pool of
unencumbered properties, (iii) managing its exposure to variable interest rates,
and (iv) extending and staggering its debt maturities. Management currently
expects that all future indebtedness will be issued by the Operating
Partnership.
Management believes the following indicators reflect the strong financial
position of the Operating Partnership:
- As of September 30, 1997, on a pro forma basis giving effect to the
offering and the application of the net proceeds therefrom, the Operating
Partnership and its Subsidiaries had $558.5 million of Total Unencumbered
Assets (as hereinafter defined) supporting Unsecured Debt (as hereinafter
defined) of the Company and its Subsidiaries of $226.4 million. (See
"Description of the Notes -- Certain Covenants" for definitions of these
capital terms.)
S-12
<PAGE> 14
- As of September 30, 1997, on a pro forma basis giving effect to the
Offering and the application of the net proceeds therefrom, the Operating
Partnership and its Subsidiaries had a ratio of Debt to Total Assets of
42.1%, a ratio of Secured Debt to Total Assets of 4.7%, a ratio of Total
Unencumbered Assets to Unsecured Debt of 246.7%.
- For the nine months ended September 30, 1997, the Operating Partnership's
Debt Service Coverage Ratio was 3.6x. Debt Service Coverage Ratio is
defined as Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA"), divided by the sum of interest expense and scheduled
principal payments. EBITDA is defined as income before extraordinary
items, provisions for gains and losses on properties and minority
interest, plus depreciation and amortization and interest expense.
S-13
<PAGE> 15
PROPERTIES
The following table and notes describe the Properties owned by the Operating
Partnership as of the date of this Prospectus Supplement and rental information
for leases in effect as of September 30, 1997 or, for Properties acquired after
September 30, 1997, as of the date of acquisition. All Properties are wholly
owned by the Operating Partnership in fee simple unless otherwise indicated. The
Operating Partnership currently has no major proposed program for the
renovation, improvement or development of any of its Properties and, unless
otherwise indicated, the Operating Partnership is holding the Properties for
investment purposes. All of the Properties are located in developed areas and,
accordingly, must compete with other similar properties for tenants and
consumers.
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
---------------- -------- ----------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
ILLINOIS
Commons of Chicago Ridge and Annex 1996 309,000 93% $ 2,837,116 $ 9.85
Chicago Ridge, IL
Commons of Crystal Lake(4)(5) 1996 273,000 71% 2,261,841 11.61
Crystal Lake, IL
Crossroads Center 1992(6) 242,000 97% 1,382,014 5.85
Fairview Heights, IL
Fairhills Shopping Center 1997 106,000 90% 594,917 6.21
Springfield, IL
Heritage Square(5) 1996 212,000 100% 2,609,091 12.29
Naperville, IL
High Point Centre 1996 240,000 99% 2,151,908 9.03
Lombard, IL
Parkway Pointe 1997 39,000 100% 463,101 12.00
Springfield, IL
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
---------------- ------------------------- ------ ----------------
<S> <C> <C> <C>
ILLINOIS
Commons of Chicago Ridge and Annex T.J. Maxx* 25,082 1998
Chicago Ridge, IL Marshalls* 27,000 1999
Office Depot* 27,680 2002
Cineplex Odeon* 25,000 2008
Michaels Stores* 17,550 1999
Pep Boys* 22,354 2015
JC Penney Home Store* 55,000 2007
For Eyes Optical 2,188 2000
Dollar Bills 5,396 1999
Factory Card Outlet 11,085 2000
Commons of Crystal Lake(4)(5) Jewel/Osco* 59,804 2007
Crystal Lake, IL Venture (not owned)* 81,338 2006
Jewelry 3 4,200 2005
Old Country Buffet 9,750 1998
Ulta 3 10,446 2000
Crossroads Center Kmart (ground lease)* 96,268 2001
Fairview Heights, IL T.J. Maxx* 32,200 2006
Sally Beauty 2,000 1999
Old Country Buffet 9,550 2003
Dress Barn 12,642 2002
Fairhills Shopping Center Jewel/Osco* 49,330 1998
Springfield, IL Baskin Robbins 1,170 1999
Heritage Square(5) Montgomery Ward(7)* 111,016 2013
Naperville, IL Circuit City* 28,351 2009
Stroud's* 26,703 2003
Walter E. Smithe 5,000 2002
Coconuts 6,000 2003
Super Crown Books 10,497 2002
High Point Centre Cub Foods* 62,000 2008
Lombard, IL T.J. Maxx* 25,200 1998
Office Depot* 36,416 2003
MacFrugal's* 17,040 2006
Payless Shoesource 3,000 1998
Hollywood Video 8,100 2006
David's Bridal 13,205 2005
Parkway Pointe Shoe Carnival* 10,186 2004
Springfield, IL Dress Barn* 8,200 2002
Liberty Mutual 1,350 2001
Hollywood Video 6,000 2007
</TABLE>
S-14
<PAGE> 16
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
---------------- -------- ---------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Rivercrest Center 1994(6) 458,000 99% $ 3,585,615 $7.87
Crestwood, IL
Rollins Crossing 1996 66,000(8) 82% 489,939 9.08
Round Lake Beach, IL
Sangamon Center North 1997 140,000 98% 1,002,405 7.31
Springfield, IL
Sheridan Village(5) 1996 296,000 98% 2,246,202 7.75
Peoria, IL
Sterling Bazaar 1997 82,000 94% 646,884 8.40
Peoria, IL
Wardcliffe Center 1997 62,000 100% 317,196 5.11
Peoria, IL
Westview Center 1993(6) 328,000 72% 2,121,997 9.01
Hanover Park, IL
--------- -- ----------- -----
TOTAL/WEIGHTED AVERAGE ILLINOIS 2,853,000 92% $22,710,226 $8.69
INDIANA
Martin's Bittersweet Plaza(9) 1997 78,000 98% 553,135 7.24
Mishawaka, IN
County Line Mall 1997 261,000 94% 1,598,100 6.49
Indianapolis, IN
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
---------------- ------------------------- ------ ----------------
<S> <C> <C> <C>
Rivercrest Center Omni Foods* 87,937 2011
Crestwood, IL Venture* 79,903 2011
Sears Roebuck and Co.* 55,000 2001
T.J. Maxx* 34,425 2004
PETsMART* 31,639 2010
Best Buy* 25,000 2008
OfficeMax* 24,000 2007
Hollywood Park* 15,000 2000
Funcoland 1,925 1998
Famous Footwear 6,000 2001
Lone Star Steakhouse 12,315 2001
Rollins Crossing Sears Hardware* 21,083 2005
Round Lake Beach, IL Super Kmart (not owned)* 190,000 2033
Pet Care Superstore 6,600 2000
Super Trak 10,000 2005
MC Sports 13,800 2005
Sangamon Center North Schnucks* 63,257 2016
Springfield, IL U.S. Post Office* 16,000 2005
Subway 1,400 1999
The Book Emporium 5,522 2001
Revco 12,468 2000
Sheridan Village(5) Bergner's Dept. Store* 162,852 2006
Peoria, IL Cohen's Furniture* 16,600 2006
Radio Shack 3,510 2001
First of America 5,697 2001
Fashion Bug 11,020 2002
Sterling Bazaar Kroger* 52,337 2011
Peoria, IL Garner's Pizza & Wings 2,100 1999
Wardcliffe Center Big Lots* 26,741 2001
Peoria, IL Little Caesar's 2,617 1998
Golf Discount 5,175 1998
Westview Center Cub Foods* 67,163 2009
Hanover Park, IL Marshalls* 34,302 2004
H&R Block 1,200 1998
Bakers Square 5,510 2005
Giant Auto 12,000 1999
TOTAL/WEIGHTED AVERAGE ILLINOIS
INDIANA
Martin's Bittersweet Plaza(9) Martin's Supermarket* 45,079 2012
Mishawaka, IN Osco Drug* 16,000 2012
Mail Boxes, Etc. 1,000 1999
County Line Mall Kroger* 52,337 2011
Indianapolis, IN Office Max/Furniture Max* 32,208 2004
Target* 99,321 2002
The Book Rack 1,495 1998
Joann Fabrics 13,506 2001
</TABLE>
S-15
<PAGE> 17
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
---------------- -------- ----------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Speedway SuperCenter and Outlots(5) 1996 541,000 97% $3,883,929 $7.43
Speedway, IN
The Village(10) 1996 356,000 86% 1,651,191 5.38
Gary, IN
Washington Lawndale Commons(5) 1996 333,000 98% 1,642,978 5.05
Evansville, IN
--------- --- ---------- -----
TOTAL/WEIGHTED AVERAGE INDIANA 1,569,000 94% $9,329,333 $6.32
IOWA
Burlington Plaza West 1997 88,000 94% 573,685 6.94
Burlington, IA
Davenport Retail 1997 63,000 100% 604,355 9.66
Davenport, IA
Holiday Plaza 1997 46,000 87% 282,219 6.98
Cedar Falls, IA
Parkwood Plaza 1997 125,000 93% 1,019,873 8.77
Urbandale, IA
Spring Village 1997 91,000 100% 567,715 6.22
Davenport, IA
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
---------------- ------------------------- ------ ----------------
<S> <C> <C> <C>
Speedway SuperCenter and Outlots(5) Kohl's* 90,072 2004
Speedway, IN Kroger* 59,515 2013
Sears Roebuck and Co.* 30,825 2004
Old Navy* 15,000 2005
Kittles* 25,320 2000
PETsMART* 21,781 2002
Factory Card Outlet* 16,675 2003
Lindo Super Spa* 16,589 2000
Indy PC 1,445 1999
Applebees 5,400 2010
CVS Pharmacy 10,700 2006
The Village(10) JC Penney* 60,600 1999
Gary, IN Goldblatt's* 55,000 2000
Post-Tribune Publishing* 19,246 1999
Indiana Employment* 18,050 2000
Kids Foot Locker 3,750 2005
Fagen Pharmacy 5,760 1998
Aldi's 13,099 2001
Washington Lawndale Commons(5) Target* 83,110 2005
Evansville, IN Sears Homelife* 34,527 2003
Allied Sporting Goods* 20,285 1997
Jo-Ann Fabrics* 15,262 2003
Books-A-Million* 20,515 2002
Mazzio's Pizza 4,000 1999
U.S. Postal Service 9,400 2000
Revco Drugstore 10,500 2008
TOTAL/WEIGHTED AVERAGE INDIANA
IOWA
Burlington Plaza West Festival Foods* 52,468 2009
Burlington, IA The Book Emporium 4,000 2002
Circus Video 8,000 1999
Davenport Retail Staples* 24,153 2011
Davenport, IA PETsMART* 26,280 2011
Factory Card Outlet 12,155 2006
Holiday Plaza West Music* 8,450 2002
Cedar Falls, IA Little Caesar's 1,480 1999
Tan Down Under 6,000 2001
Parkwood Plaza FoodSaver* 63,075 2008
Urbandale, IA We Care Hair 1,350 2002
Hollywood Video 6,000 2007
Spring Village Eagle Foods* 45,763 2005
Davenport, IA Cost Cutters 1,200 2000
Movie Gallery 5,400 2000
Walgreens 10,800 2000
</TABLE>
S-16
<PAGE> 18
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
- -------------------------------------------- -------- -------------- ------- ------------- -------------
<S> <C> <C> <C> <C> <C>
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
- -------------------------------------------- -------------------------- ------- ---------------
<S> <C> <C> <C>
Warren Plaza 1997(6) 90,000 100% $ 660,828 $ 7.33
Dubuque, IA
-------------- ------- ------------- ------
TOTAL/WEIGHTED AVERAGE IOWA 503,000 96% $ 3,708,675 $ 7.67
KANSAS
Santa Fe Square 1996(6) 134,000 94% 1,100,219 8.75
Olathe, KS
Westchester Square 1997 165,000 93% 1,231,672 8.03
Lenexa, KS
-------------- ------- ------------- ------
TOTAL/WEIGHTED AVERAGE KANSAS 299,000 93% $ 2,331,891 $ 8.35
KENTUCKY
Stony Brook 1996 136,000 98% 1,384,869 10.35
Louisville, KY
-------------- ------- ------------- ------
TOTAL/WEIGHTED AVERAGE KENTUCKY 136,000 98% $ 1,384,869 $ 10.35
-------------- ------- ------------- ------
MINNESOTA
Brookdale Square 1996(6) 185,000 86% 1,175,468 7.34
Brooklyn, MN
Burning Tree Plaza 1993(6) 139,000 93% 1,165,599 9.03
Duluth, MN
Har Mar Mall 1992(6) 430,000 92% 3,797,782 9.61
Roseville, MN
<CAPTION>
Warren Plaza Hy-Vee Supermarket* 51,492 2013
Dubuque, IA Subway 1,300 2002
Perkins Restaurant 5,000 2000
Renier Company 7,200 2001
TOTAL/WEIGHTED AVERAGE IOWA
KANSAS
Santa Fe Square Hy-Vee Supermarket* 55,820 2007
Olathe, KS Papa John's Pizza 1,250 2002
Paper Warehouse 9,490 2005
Fashion Bug 11,500 2004
Westchester Square Hy-Vee Supermarket* 63,000 2006
Lenexa, KS
Pizza Hut 2,775 2002
Treasury Drug 8,468 2001
TOTAL/WEIGHTED AVERAGE KANSAS
KENTUCKY
Stony Brook Kroger* 79,625 2021
Louisville, KY Fantastic Sams 1,260 1999
Shogun Japanese 6,170 2000
Gatti's Pizza 10,258 2000
TOTAL/WEIGHTED AVERAGE KENTUCKY
MINNESOTA
Brookdale Square Circuit City* 36,391 2014
Brooklyn, MN Office Depot* 30,395 2004
Drug Emporium* 25,782 2000
United Artists* 24,534 2002
USA Karate 2,317 1998
Blockbuster Video 6,008 2004
Burning Tree Plaza T.J. Maxx* 30,000 2004
Duluth, MN Best Buy* 28,000 1999
Piece Goods Shops* 17,682 1999
Disc Go Round 1,200 2000
Memorial Blood 5,400 1997
Only Deals 10,000 2002
Har Mar Mall HomePlace* 54,489 2010
Roseville, MN Barnes & Noble* 44,856 2010
Marshalls* 34,858 1998
T.J. Maxx* 25,025 1998
General Cinema* 22,252 2001
General Cinema* 19,950 2000
Michaels Stores* 17,907 2003
Binding Memories 1,970 2002
The Ground Round 5,796 2002
Petters Warehouse 17,386 2006
</TABLE>
S-17
<PAGE> 19
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
---------------- -------- ----------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Hub West Shopping Center(11)(12) 1991(6) 78,000 100% $ 839,271 $10.72
Richfield, MN
Richfield Hub Shopping Center(11)(13) 1988(6) 138,000 98% 1,262,477 9.35
Richfield, MN
Roseville Center 1997 75,000 92% 624,708 9.14
Roseville, MN
Sun Ray Shopping Center 1961(6) 258,000 82% 1,615,111 7.67
St. Paul, MN
Terrace Mall 1993(6) 137,000 94% 913,871 7.09
Robbinsdale, MN
Westwind Plaza 1994(6) 88,000 92% 891,960 11.07
Minnetonka, MN
White Bear Hills 1993(6) 73,000 100% 592,781 8.11
White Bear Lake, MN
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE MINNESOTA 1,601,000 91% $12,879,028 $ 8.83
MISSOURI
Grandview Plaza 1971(6) 316,000 78% 2,127,323 8.61
Florissant, MO
Liberty Corners 1997 121,000 100% 720,941 5.94
Liberty, MO
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE MISSOURI 437,000 84% $ 2,848,264 $ 7.73
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
---------------- ------------------------- ------ ----------------
<S> <C> <C> <C>
Hub West Shopping Center(11)(12) Rainbow Foods* 50,817 2012
Richfield, MN U.S. Swim & Fitness* 26,185 2001
Great Clips 1,300 1999
Richfield Hub Shopping Center(11)(13) Marshalls* 26,785 2003
Richfield, MN Michaels Stores* 24,235 1999
Burger King 4,401 2016
Famous Footwear 6,000 1998
Walgreens 12,000 2000
Roseville Center Minnesota Fabrics* 12,000 2004
Roseville, MN Snyder Drugs* 8,250 1998
Snuffy's Malt Shoppe 2,750 2001
Big Wheel Auto 5,800 2003
Blockbuster Video 8,162 2003
Sun Ray Shopping Center JC Penney* 40,451 1999
St. Paul, MN Marshalls* 26,256 2005
T.J. Maxx* 23,955 2000
Petter's* 20,000 2007
Michaels Stores* 18,127 2004
Bruegger's Bagels 2,400 2006
Petland 5,141 2000
Snyder's Drugstore 13,800 2002
Terrace Mall Rainbow Foods* 59,232 2013
Robbinsdale, MN North Memorial* 32,000 1999
Mail Boxes, Etc. 1,358 1999
Blockbuster Video 7,826 1999
Westwind Plaza Northern Hydraulics* 18,165 2002
Minnetonka, MN Caribou Coffee 2,880 2007
Big Wheel Auto 6,200 2000
Walgreens 11,009 2024
White Bear Hills Festival Foods* 45,679 2011
White Bear Lake, MN Cost Cutters 1,200 2002
Video Update 6,000 2006
Walgreens 11,890 2030
TOTAL/WEIGHTED AVERAGE MINNESOTA
MISSOURI
Grandview Plaza Home Quarters* 84,611 2013
Florissant, MO Schnucks* 68,025 2011
Walgreens* 15,984 2008
Custom Cellular 2,400 2004
Thoughtful Cards 6,121 2000
Liberty Corners Price Chopper* 56,000 2007
Liberty, MO Famous Footwear 4,500 1998
Bette's Hallmark 8,450 1999
Fashion Bug 10,770 2000
TOTAL/WEIGHTED AVERAGE MISSOURI
</TABLE>
S-18
<PAGE> 20
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
---------------- -------- ----------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
NEW MEXICO
St. Francis Plaza(11)(14) 1995 30,000 100% $ 357,000 $11.98
Santa Fe, NM
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE NEW MEXICO 30,000 100% $ 357,000 $11.98
TENNESSEE
Williamson Square(15)(16) 1996 335,000 90% 2,109,757 6.99
Franklin, TN
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE TENNESSEE 335,000 90% $ 2,109,757 $6.99
WISCONSIN
Madison Plaza 1997 128,000 100% 991,131 7.77
Madison, WI
Mequon Pavilions 1996 212,000 98% 2,269,611 10.90
Mequon, WI
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE WISCONSIN 340,000 99% $ 3,260,742 $9.71
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE SHOPPING CENTERS 8,103,000 92% $60,919,785 $8.79
RETAIL/OFFICE BUILDINGS
ILLINOIS
One North State(5) 1996 639,000 98% 9,849,135 15.72
Chicago, IL
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
---------------- ------------------------- ------ ----------------
<S> <C> <C> <C>
NEW MEXICO
St. Francis Plaza(11)(14) Walgreens* 14,950 2013
Santa Fe, NM Wild Oats* 14,850 2006
TOTAL/WEIGHTED AVERAGE NEW MEXICO
TENNESSEE
Williamson Square(15)(16) Wal-Mart* 117,493 2008
Franklin, TN Kroger* 63,986 2008
Carmike Cinemas* 29,000 2008
Pearle Vision Center 3,180 2000
Comfort Source 7,743 2003
YMCA 14,450 2002
TOTAL/WEIGHTED AVERAGE TENNESSEE
WISCONSIN
Madison Plaza Supersaver* 73,309 2008
Madison, WI Subway 1,200 1999
Planet Video 6,000 2004
Walgreens 13,500 2045
Mequon Pavilions Kohl's Food Emporium* 45,697 2010
Mequon, WI Furniture Clearance* 19,900 1997
The Men's Warehouse 4,738 2000
Mequon Pharmacy 6,500 1998
Bedtime 11,512 2001
TOTAL/WEIGHTED AVERAGE WISCONSIN
TOTAL/WEIGHTED AVERAGE SHOPPING CENTERS
RETAIL/OFFICE BUILDINGS
ILLINOIS
One North State(5) First Chicago* 296,782 2003
Chicago, IL Arthur Andersen(17)* 126,533 1998
T.J. Maxx* 77,675 2001
Filene's Basement* 50,000 2002
Int'l Academy of Design* 44,000 2003
Bruegger's Bagels 2,845 2002
Group USA 6,200 2004
</TABLE>
S-19
<PAGE> 21
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
RETAIL/OFFICE BUILDINGS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
----------------------- -------- ------------ ------- ------------- -------------
<S> <C> <C> <C> <C> <C>
MASSACHUSETTS
585 Boylston St.(10) 1961 22,000 90% $ 683,276 $ 35.07
Boston, MA
--------- --- ----------- -------
TOTAL/WEIGHTED AVERAGE RETAIL/OFFICE
BUILDINGS 661,000 98% $10,532,411 $ 16.30
--------- ---- ----------- -------
GRAND TOTAL/WEIGHTED AVERAGE 8,764,000 93% $71,452,196 $ 8.72
========= ==== =========== =======
<CAPTION>
MAJOR TENANTS AND SQUARE BASE LEASE
RETAIL/OFFICE BUILDINGS CERTAIN OTHER TENANTS(3) FEET EXPIRATION DATE
----------------------- ------------------------ ------- ---------------
<S> <C> <C> <C>
MASSACHUSETTS
585 Boylston St.(10) CVS Pharmacy* 7,582 2001
Boston, MA Lessard & Taylor 4,643 2000
TOTAL/WEIGHTED AVERAGE RETAIL/OFFICE
BUILDINGS
GRAND TOTAL/WEIGHTED AVERAGE
</TABLE>
- ---------------
(1) Annualized base rent is calculated by multiplying base rent for September
1997 by 12.
(2) Calculated by dividing annualized base rent (calculated as described in
note (1) above) by the square footage that the Operating Partnership had
leased at September 30, 1997.
(3) This column lists each of the "Major Tenants" at the Properties (indicated
with an asterisk) and certain other tenants to provide a representative
sample of the Operating Partnership's tenant base. Major tenants are
defined as tenants leasing 15,000 square feet or more of the rentable
square footage, with the exception of Parkway Pointe, Holiday Plaza,
Roseville Center and St. Francis Plaza. In some cases, the named major
tenant occupies the premises as a sublessee.
(4) The amount of rentable square feet at Commons of Crystal Lake does not
include approximately 81,000 square feet which is owned by Metropolitan
Life and leased to Venture Stores, Inc.
(5) This Property is one of the six Properties securing the REMIC Note and held
directly by a general partnership of which the Operating Partnership is a
99% general partner and a wholly owned subsidiary of the Company is a 1%
general partner. See "The Operating Partnership -- The REMIC Note and Other
Indebtedness."
(6) Year the Property was acquired by the Company, which contributed the
Property to the Operating Partnership in August 1997.
(7) Montgomery Ward, which has sought protection under Chapter 11 of the United
States Bankruptcy Code, has notified the Operating Partnership that it
intends to close this store on or before December 31, 1997.
(8) The amount of rentable square feet at Rollins Crossing does not include
approximately 190,000 square feet which is owned by Kmart Corporation.
(9) This Property secures certain indebtedness due June 2003 which bears
interest at a rate of 8.875% per annum. As of September 30, 1997, such
indebtedness had an outstanding principal balance of $3,706,000.
(10) This Property is held for sale.
(11) Title to this Property is held by the Company for the benefit of the
Operating Partnership.
(12) This Property secures certain indebtedness due September 1998 which bears
interest at a rate of 9.875% per annum. As of September 30, 1997, such
indebtedness had an outstanding principal balance of $4,884,000.
(13) This Property secures certain indebtedness due September 1998 which bears
interest at a rate of 9.875% per annum. As of September 30, 1997, such
indebtedness had an outstanding principal balance of $5,291,000.
(14) This Property secures certain indebtedness due December 2008 which bears
interest at a rate of 8.125% per annum. As of September 30, 1997, such
indebtedness has an outstanding principal balance of $1,871,000.
(15) The Operating Partnership is the 60% general partner of a partnership
owning this property, whose limited partner interests are owned by an
unrelated investor.
(16) This Property secures certain indebtedness due August 2005 which bears
interest at a rate of 8.0% per annum. As of September 30, 1997, such
indebtedness had an outstanding principal balance of $12,759,000.
(17) This tenant exercised its option on April 1, 1996, to terminate its lease,
effective as of April 1, 1998, and has paid a $1.8 million cancellation
fee. The tenant has substantially moved out of its space.
S-20
<PAGE> 22
ONE NORTH STATE
One North State was the only Property in the Portfolio at December 31,
1996, that represented 10% or more of the historic book value of the Portfolio
at December 31, 1996, or accounted for 10% or more of the Portfolio's gross
revenues in 1996. One North State is a mixed-use property located in the "Loop"
area of downtown Chicago, Illinois. The Property aggregates approximately
640,000 square feet of gross leasable area including approximately 159,000
square feet of retail space and was 98% leased as of September 30, 1997. The
aggregate cost basis of the Property for financial reporting purposes as of
December 31, 1996 was $54,692,000, and the aggregate cost for federal income tax
purposes was $73,611,000. The cost of the building is depreciated using the
straight-line method over 39 years for both financial reporting and federal
income tax purposes. Real estate taxes for this Property amounted to
approximately $3,631,000 for the period January 1, 1996 through December 31,
1996. Real estate taxes for the Property are calculated based upon the assessed
value of the Property multiplied by a tax rate determined annually by the
municipality. The estimated real estate tax expense for the year ending December
31, 1997 is $3,813,000 . The retail portion of this Property is anchored by T.J.
Maxx and Filene's Basement and has a variety of other tenants, including
Bruegger's Bagels and Group USA. The leases to T.J. Maxx, Filene's Basement,
Bruegger's Bagels and Group USA provide current minimum annual rent of
approximately $1,237,000, $1,000,000, $56,900 and $120,000, respectively. The
office portion of this Property is leased primarily to First Chicago and Arthur
Andersen. The leases to First Chicago and Arthur Andersen provide current
minimum annual rent of approximately $3,942,000 and $1,518,000, respectively.
The following tables set forth certain supplemental information with
respect to One North State, and reflect Arthur Andersen's termination in 1996 of
its lease effective April 1998, and the fact that its leased space was
substantially unoccupied at December 31, 1996. See "Risk Factors -- Adverse
Impact on Operating Results Could Occur if the Operating Partnership is Not Able
to Lease Space at One North State for Which Existing Lease Has Been Terminated,"
in the accompanying Prospectus.
a. Percentage occupied at December 31 for the last five years:
<TABLE>
<S> <C>
1996.......................................................... 78%
1995.......................................................... 95%
1994.......................................................... 95%
1993.......................................................... 95%
1992.......................................................... 89%
</TABLE>
b. The average effective annual minimum rentals per occupied square foot for
1996, 1995 and 1994 were as follows:
<TABLE>
<S> <C>
1996.......................................................... $15.18
1995.......................................................... $15.45
1994.......................................................... $16.34
</TABLE>
c. Leases in effect at December 31, 1996, expiring over each of the next ten
years, assuming no tenants exercise renewal options:
<TABLE>
<CAPTION>
LEASED PERCENTAGE
NO. OF SQUARE OF LEASED MINIMUM
LEASES FEET SQUARE FEET ANNUAL RENT
------ ------- ----------- -----------
<S> <C> <C> <C> <C>
1997..................................... 3 8,494 1.36% $ 36,000
1998..................................... 1 126,533 20.25 1,518,400
1999..................................... 1 1,177 0.19 76,505
2000..................................... 1 1,807 0.29 182,507
2001..................................... 5 83,767 13.40 1,645,670
2002..................................... 2 51,451 8.23 1,101,570
2003..................................... 4 343,432 54.96 4,712,361
2004..................................... 1 6,200 0.99 120,000
2005..................................... 2 2,035 0.33 121,547
2006..................................... 0 0 0 0
------- -----
624,896 100%
======= =====
</TABLE>
S-21
<PAGE> 23
TENANT MIX AND LEASES
As evidenced by the preceding list of Properties, the tenant mix of the
Portfolio is diverse and well represented by supermarkets, drugstores and other
consumer necessity or value-oriented retailers. Based on its past experience,
the Operating Partnership believes that such tenants tend to be stable
performers in both good and bad economic times. As of December 31, 1996, 16 of
the 32 Properties were anchored by supermarkets. No tenant included in the
Portfolio on December 31, 1996 accounted for as much as 10% of the gross
revenues of the Portfolio in 1996. In addition to the tenants listed in the
preceding table, the Operating Partnership's Properties include a variety of
smaller shop leases of various tenant types, including restaurants, home life
styles, women's ready to wear, cards, books and electronics.
The terms of the outstanding retail leases at the Properties vary from
tenancies at will to 50 years. Major tenant leases are typically for 10 to 25
years, with one or more extension options available to the lessee upon
expiration of the initial lease. By contrast, smaller shop leases are typically
negotiated for three to five year terms. The longer term of the major tenant
leases serves to protect the Operating Partnership against significant vacancies
and to assure the presence of strong tenants who draw consumers to the
Properties. The shorter term of the smaller shop leases allows the Operating
Partnership to adjust rental rates for non-major store space on a regular basis
and upgrade the overall tenant mix.
Leases to major tenants tend to provide lower minimum rents per square foot
than smaller shop leases. For example, although the Properties in the Portfolio
at the present time are not identical, major tenant leases for Properties owned
by the Company or the Operating Partnership at December 31, 1996, provided an
average annual minimum rent of $6.53 per square foot, compared with non-major
tenant leases which provided an average annual minimum rent of $10.51. In
general, the Operating Partnership believes that minimum rental rates for major
tenant leases entered into several years ago are below current market rates,
while recent major tenant leases and most other leases provide for minimum
rental rates that more closely reflect current market rates. The payment by
tenants of minimum rents that are below current market rates is offset in part
by payment of percentage rents.
Annual minimum future rentals to be received under non-cancelable operating
leases in effect at December 31, 1996, for the Properties included in the
Portfolio at December 31, 1996 (excluding Properties held for sale), and the
number of leases that will expire, the square feet covered by such leases and
the minimum annual rent in the year of expiration under such expiring leases for
the next ten years are as follows:
<TABLE>
<CAPTION>
LEASES EXPIRING
------------------------------------------
YEAR ENDING MINIMUM NUMBER MINIMUM
DECEMBER 31 FUTURE RENTS OF LEASES SQUARE FEET FUTURE RENTS
------------------------------------------- ------------ --------- ----------- ------------
<S> <C> <C> <C> <C>
1997....................................... $56,997,000 107 312,851 $3,310,512
1998....................................... 52,024,000 114 565,892 5,640,188
1999....................................... 48,267,000 130 697,434 5,436,589
2000....................................... 43,829,000 104 518,155 4,762,942
2001....................................... 38,747,000 90 612,005 5,800,715
2002....................................... 32,273,000 40 352,282 3,857,982
2003....................................... 28,886,000 30 601,037 6,862,889
2004....................................... 22,699,000 22 357,283 2,345,931
2005....................................... 19,792,000 39 334,033 2,630,149
2006....................................... 16,910,000 29 441,153 2,712,121
</TABLE>
THE REMIC NOTE AND OTHER INDEBTEDNESS
The title to six of the Properties acquired from Tucker described in the
preceding list of Properties -- Commons of Crystal Lake, Heritage Square,
Sheridan Village, Speedway SuperCenter (excluding Outlots), Washington Lawndale
Commons and One North State -- is held by a general partnership of which the
Operating Partnership and a wholly-owned subsidiary of the Company are
respectively 99% and 1% partners. The partnership is obligated under a $100
million mortgage note maturing in September 2000 secured by such six properties
that was issued to a trust qualifying as a real estate mortgage investment
conduit for federal income tax purposes (the "REMIC Note"). The REMIC Note
matures in one balloon payment in September 2000 and bears interest at a
fixed-rate of 7.3% per annum, with monthly interest-only payments
S-22
<PAGE> 24
required. Pursuant to the terms of the REMIC indenture governing the REMIC Note,
prior to October 1997 principal payments on the REMIC Note could not be made and
the Properties collateralizing the REMIC Note could not be sold. On October 24,
1997, the Operating Partnership gave the REMIC Trustee notice of its intent to
repay the REMIC Note on November 26, 1997. Concurrently with the delivery of
such notice, the Operating Partnership entered into a standby commitment with
The First National Bank of Chicago for a $105 million line of credit (the
"Standby Line of Credit"), which the Operating Partnership may use to prepay all
or a portion of the REMIC Note on November 26, 1997. In the event that the sale
of the Notes offered hereby is consummated in sufficient time, the Operating
Partnership will use the proceeds therefrom to repay a portion of the REMIC Note
on November 26, 1997 including the prepayment penalty (estimated to be
$3,900,000), with the balance funded with proceeds from the bank line of credit.
In the event the Operating Partnership uses the Standby Line of Credit to prepay
the entire $100 million principal amount of the REMIC Note and any accrued but
unpaid interest thereon, the Operating Partnership will use the proceeds of the
sale of the Notes offered hereby to repay a portion of such amount drawn under
the Standby Line of Credit. See "Use of Proceeds." As a result of such
prepayment, the Operating Partnership also will incur a significant prepayment
penalty equal to the greater of either (i) 1% of the amount of principal being
prepaid or (ii) the product of (A) the difference between the outstanding
principal balance of the REMIC Note before prepayment and the present value of
all remaining interest and principal payments thereon (calculated using the
then-current Treasury Rate) and (B) the amount of principal being prepaid
divided by the outstanding principal balance of the REMIC Note. The amount of
such prepayment penalty is currently estimated at $3,900,000. In anticipation of
issuing the Notes to refinance the REMIC Note, the Operating Partnership entered
into five forward Treasury Note purchase agreements with third parties in order
partially to hedge the interest rate risk until the Notes are issued. In the
event the contemplated debt issuance has not been consummated by the expiration
date of the forward Treasury Note purchase agreements, the Operating Partnership
expects to roll over such agreements under the same terms expiring on a date
that would coincide with the anticipated issuance date.
The Operating Partnership believes that, even with the prepayment penalty,
refinancing the REMIC Note with debt at the lower interest rates currently
available will economically benefit the Operating Partnership more than keeping
the REMIC Note outstanding until its stated maturity in September 2000, at which
time interest rates may be substantially higher. In addition, the Operating
Partnership believes that prepayment of the REMIC Note will result in increased
financial flexibility because a larger percentage of its Portfolio will be
unencumbered. Following repayment of the REMIC Note, approximately 92% of the
Operating Partnership's assets will be unencumbered.
The Operating Partnership and the Company are also parties to a $150
million unsecured revolving line of credit with BankBoston, N.A. and other bank
lenders. The line of credit, which matures in March 1999, is available for the
acquisition, development, renovation and expansion of existing and new
properties and for working capital purposes. As a result of the investment grade
corporate rating of "BBB-" assigned to the Operating Partnership by Standard &
Poor's in August 1997 and the prospective investment grade rating of "(P)Baa3"
assigned to the unissued shelf registration of debt securities filed by the
Operating Partnership by Moody's in November 1997, the interest rate on
outstanding borrowings under the line of credit was lowered from 1.5% to 1.375%
over the London InterBank Offer Rate ("LIBOR") in effect from time to time. The
line of credit contains certain financial and operational covenants that, among
other provisions, limit the amount of secured and unsecured indebtedness the
Company and the Operating Partnership may have outstanding at any time, and
provide for the maintenance of certain financial tests including minimum net
worth and debt service coverage requirements. Management believes that such
covenants will not adversely affect the business or the operation of its
properties. In addition, the lenders may accelerate the maturity of the line of
credit in the event that the Operating Partnership fails to pay at maturity or
to perform any other material obligation under any other indebtedness amounting
to greater than $10 million.
Five other Properties of the Operating Partnership secure an aggregate of
approximately $28.5 million of additional mortgage debt, of which approximately
$10.0 million matures in September 1998, $2.9 million matures in 2003 and $10.7
million matures in August 2005. Total debt outstanding as of September 30, 1997
amounted to $250,511,000, of which $128,711,000 was secured by various of the
Properties. As of
S-23
<PAGE> 25
September 30, 1997, approximately 38% of the Operating Partnership's Total
Assets were encumbered by mortgage indebtedness, of which approximately 30% were
encumbered specifically by the REMIC Note.
USE OF INTEREST RATE AND EXCHANGE RATE HEDGING INSTRUMENTS AND RELATED RISKS
The Operating Partnership may enter into derivative financial instrument
transactions in order to mitigate its interest rate risk on a related financial
instrument. The Operating Partnership has designated these derivative financial
instruments as hedges and applies deferral accounting, as the instrument to be
hedged exposes the Operating Partnership to interest rate risk and the
derivative financial instrument reduces that exposure. Gains and losses related
to the derivative financial instrument are deferred and amortized over the terms
of the hedged instrument. If a derivative terminates or is sold, the gain or
loss is deferred and amortized over the remaining life of the derivative.
Derivatives that do not satisfy the criteria above are carried at market value,
and any changes in market value are recognized in other income. As of September
30, 1997, the Operating Partnership has only entered into derivative
transactions that satisfy the aforementioned criteria. By entering into such
hedging transactions, the Operating Partnership may be prevented from taking
advantage of lower interest rates if interest rates decline. The holders of the
Notes will be affected by any resulting impact on the general creditworthiness
of the Operating Partnership. In addition, in the event that debt securities are
not issued for the purpose of repaying either the REMIC Note or other unsecured
indebtedness in the future, the Operating Partnership will either settle or mark
to market the forward Treasury Note purchase agreements and any gain or loss on
the difference between the market value and the cost basis of the agreements
will be recognized into earnings. Subsequently, the forward Treasury Note
purchase agreements will be carried at market and any changes in market value
will be recognized into earnings. In the event that the Operating Partnership
settles the forward Treasury Note purchase agreements at a time when interest
rates have decreased, the Operating Partnership will be required to pay the
counterparty to such agreement an amount which could adversely affect the
Operating Partnership's net income and cash available for distribution and may
affect the amount of distributions it can make to the holders of Units,
including the Company.
S-24
<PAGE> 26
USE OF PROCEEDS
The net proceeds to the Operating Partnership from the sale of the Notes
offered hereby, after deducting the underwriting discount and estimated
expenses, including prepayment penalty, are estimated to be $95,400,000. The
Operating Partnership intends to use the net proceeds to prepay a portion of the
$100 million principal amount of the REMIC Note, any accrued but unpaid interest
thereon, and a related prepayment penalty (estimated to be $3,900,000), with the
balance funded by the Operating Partnership's unsecured line of credit. The
REMIC Note matures in one balloon payment in September 2000 and bears interest
at a fixed-rate of 7.3% per annum, with monthly interest-only payments required.
In addition, the REMIC Note is collateralized by first mortgage liens on six of
the Properties (Commons of Crystal Lake, Heritage Square, Sheridan Village,
Speedway SuperCenter, Washington Lawndale Commons and One North State) and by an
assignment of all of the rents and leases at each of these Properties. See "The
Operating Partnership -- The REMIC Note and Other Indebtedness." In the event
that the sale of the Notes offered hereby is not consummated in sufficient time
to partially prepay the REMIC Note on November 26, 1997, the Operating
Partnership will use the Standby Line of Credit to prepay all of the REMIC Note.
See "The Operating Partnership -- The REMIC Note and Other Indebtedness." In
such case, the Operating Partnership would then use the net proceeds from the
sale of the Notes to partially repay amounts drawn under the Standby Line of
Credit. The Standby Line of Credit, if used, will bear interest at a rate of
1.20% over LIBOR and have a maximum maturity of three months from the date of
borrowing.
First Chicago Capital Markets, Inc. ("FCCM"), one of the Underwriters, is
an affiliate of The First National Bank of Chicago, the provider of the Standby
Line of Credit. FCCM is participating in this offering on the same terms as the
other Underwriters and will not receive any benefit in connection with this
offering other than customary managing underwriter and selling fees.
S-25
<PAGE> 27
CAPITALIZATION
The following table sets forth the capitalization of the Operating
Partnership on an historical basis as of September 30, 1997, and for the
Operating Partnership as adjusted to give effect to the issuance and sale of the
Notes and application of the net proceeds therefrom. See "Use of Proceeds." The
information set forth in the table should be read in conjunction with the
selected financial information presented elsewhere in this Prospectus Supplement
and the Consolidated Financial Statements and notes thereto incorporated by
reference into the accompanying Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
--------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
DEBT:
Unsecured Credit Facility........................................... $121,800 $126,400
Mortgage Notes Payable.............................................. 128,711 28,511
Notes due 2004...................................................... 100,000
-------- --------
Total Debt.................................................. 250,511 254,911
-------- --------
PARTNERS' CAPITAL:
Operating Partnership Units -- 22,752,076 issued and outstanding....
General partner -- outstanding 21,681,156........................... 291,981 288,203
Limited partners -- outstanding 1,070,920........................... 14,422 14,300
-------- --------
Total partners' capital.......................................... 306,403 302,503
-------- --------
Total capitalization........................................ $556,914 $557,414
======== ========
</TABLE>
S-26
<PAGE> 28
SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Operating Partnership and is qualified by, and should be read in conjunction
with, the information included under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the "Consolidated Financial
Statements" included herein. In the opinion of management, the consolidated
historical financial information of the Operating Partnership for the nine
months ended September 30, 1997 and 1996 includes all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the
information set forth herein. See "Available Information" and "Incorporation of
Certain Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED) YEARS ENDED DECEMBER 31,
------------------------- ---------------------------------------------------------------
HISTORICAL HISTORICAL
------------------------- ---------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATE)
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income..................... $ 69,922 $ 54,643 $ 77,512 $ 36,405 $ 32,875 $ 22,875 $ 11,839
Other income...................... 1,093 996 1,327 167 112 594 308
Expenses.......................... 51,109 43,318 60,184 27,711 24,877 17,550 11,175
----------- ----------- ----------- ---------- ---------- ---------- ----------
Income before gain on sale and
provision for loss on real
estate investments.............. 19,906 12,321 18,655 8,861 8,110 5,919 972
Gain on sale of property.......... 3,073 9,379 9,379 -- 983 -- --
Provision for loss on real estate
investment...................... (1,300) -- -- -- -- -- --
----------- ----------- ----------- ---------- ---------- ---------- ----------
Income before allocation to
minority interest............... 21,679 21,700 28,034 8,861 9,093 5,919 $ 972
Income allocated to minority
interest........................ (70) (54) (78) -- -- -- --
----------- ----------- ----------- ---------- ---------- ---------- ----------
Net income........................ $ 21,609 $ 21,646 $ 27,956 $ 8,861 $ 9,093 $ 5,919 $ 972
=========== =========== =========== ========== ========== ========== ==========
Total assets at end of period..... $ 577,870 $ 485,961 $ 502,284 $ 180,545 $ 166,579 $ 127,931 $ 93,326
=========== =========== =========== ========== ========== ========== ==========
Mortgage and bank loans payable at
end of period................... $ 250,511 $ 220,017 $ 188,894 $ 39,394 $ 66,748 $ 29,317 $ 44,085
=========== =========== =========== ========== ========== ========== ==========
Per Unit:
Net income...................... $ 0.97 $ 1.28 $ 1.56 $ 0.90 $ 1.11 $ 0.88 $ 0.49
Distributions................... $ 1.01 $ 0.99 $ 1.34 $ 1.37 $ 1.35 $ 1.29 $ 1.24
Weighted average units
outstanding..................... 22,372,142 16,859,016 17,932,769 9,863,767 8,191,831 6,715,813 1,972,054
</TABLE>
S-27
<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Operating Partnership believes that improving its financial flexibility
will position the Operating Partnership for future growth, allowing it to take
advantage of acquisition, renovation and expansion opportunities. The Operating
Partnership further considers its liquidity and ability to generate cash from
operating and from financing activities to be sufficient, and expects them to
continue to be sufficient, to meet its operating expense, debt service,
distribution requirements and acquisition opportunities for the foreseeable
future. Due to the capital intensive nature of real estate in general, the
avenues available for raising capital, as well as the mix of debt and equity,
are a critical component in the ability of the Operating Partnership to continue
to grow.
The Operating Partnership funds operating expenses and distributions
primarily from operating cash flows, although its bank line of credit may also
be used for these purposes. The Operating Partnership and the Company may each
borrow under the bank line of credit and are jointly and severally liable for
all obligations thereunder. The Operating Partnership funds acquisitions and
capital expenditures primarily from the line of credit and, to a lesser extent,
operating cash flows, as well as through the issuance of LP Units. The Operating
Partnership may also acquire properties through capital contributions by the
Company of proceeds from the issuance by the Company of additional securities.
In addition, three properties which no longer fit the Operating Partnership's
strategic focus were held for sale at September 30, 1997. The Operating
Partnership may also dispose of other properties which it no longer considers to
be core properties, reinvesting the proceeds from such dispositions in
properties with better growth potential and that are more consistent with the
Operating Partnership's strategic focus. In addition, the Operating Partnership
may acquire partial interests in real estate assets through participation in
joint venture transactions.
The Operating Partnership focuses its investment activities on community
and neighborhood shopping centers primarily in the Midwestern United States
anchored by regional and national grocery store chains. The Operating
Partnership will continue to seek acquisition opportunities of individual
properties and property portfolios and of private and public real estate
entities in both primary and secondary Midwestern markets where management can
utilize its extensive experience in shopping center renovation, expansion,
re-leasing and re-merchandising to achieve long-term cash flow growth and
favorable investment returns.
As of September 30, 1997, financial liquidity was provided by approximately
$4,404,000 in cash and cash equivalents and by the Operating Partnership's
unused balance on the line of credit of $28,200,000. In addition, the Company
has an effective "universal shelf" registration statement under which the
Company may issue up to $234,460,000 in equity securities, making such capital
available to the Operating Partnership. During the third quarter, the Operating
Partnership filed a "shelf" registration statement under which it may, when
declared effective, issue up to $300,000,000 in unsecured, non-convertible
investment grade debt securities. The "shelf" registration statements give the
Company and the Operating Partnership flexibility to issue additional securities
from time to time when management determines that market conditions and the
opportunity to utilize the proceeds from the issuance of such securities are
favorable.
Mortgage debt outstanding at September 30, 1997 consisted of fixed-rate
notes totaling $128,711,000 with a weighted average interest rate of 7.58%
maturing at various dates through 2008. Short term liquidity requirements
include debt service payments due within one year. Scheduled principal
amortization of mortgage debt totaled $477,000 during the nine months ended
September 30, 1997, with another $162,000 scheduled principal payments due for
the remainder of the year. During the year ending December 31, 1998, scheduled
principal payments of approximately $536,000 are due. Additionally, in September
1998, approximately $10,011,000, with an interest rate of 9.875% is scheduled to
mature. Management currently expects to fund such debt service requirements with
operating cash flow and the line of credit.
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<PAGE> 30
OPERATING ACTIVITIES
Net cash flows provided by operating activities increased to $27,669,000
during the first nine months of 1997, from $21,633,000 during the same period in
1996. The increase is primarily due to the growth of the Operating Partnership's
Portfolio, from 17 Properties at January 1, 1996, to 44 Properties at September
30, 1997.
Funds from operations ("FFO") increased $10,102,000, or 48%, from
$21,263,000 to $31,365,000 for the nine months ended September 30, 1997,
compared with the same period in 1996, and $2,667,000, or 32%, from $8,432,000
to $11,099,000 for the three months ended September 30, 1997 compared with the
same period in 1996. The Operating Partnership generally considers FFO to be a
relevant and meaningful supplemental measure of the performance of an equity
REIT because it is predicated on a cash flow analysis, contrasted with net
income, a measure predicated on generally accepted accounting principles which
gives effect to non-cash items such as depreciation. FFO, as defined by the
National Association of Real Estate Investment Trusts ("NAREIT") and as followed
by the Operating Partnership, represents net income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from
sales of property, plus depreciation and amortization. In computing FFO, the
Operating Partnership does not add back to net income the amortization of costs
incurred in connection with the Operating Partnership's financing activities or
depreciation of non-real estate assets. FFO does not represent cash generated
from operating activities in accordance with generally accepted accounting
principles and should not be considered as an alternative to cash flow as a
measure of liquidity or as a measure of cash made available to investors.
Reference is made to the consolidated statements of cash flows, which have been
prepared in accordance with generally accepted accounting principles, to obtain
an understanding of the cash made available to fund cash flow requirements.
Since the definition of FFO is a guideline, computation of FFO may vary from one
REIT (and/or its operating partnership) to another. FFO is not necessarily
indicative of cash available to fund cash needs.
INVESTING ACTIVITIES
Net cash flows from investing activities decreased to a net use of cash of
$65,770,000 during the first nine months of 1997, from a net use of cash of
$3,540,000 during the same period of 1996.
During the first nine months of 1997, the Operating Partnership acquired 14
shopping centers for a total purchase price of approximately $95.7 million, and
sold two shopping centers for a net sales price of approximately $17.3 million.
Subsequent to quarter-end, the Operating Partnership completed the acquisitions
of three additional shopping centers located in Kansas and Illinois for
approximately $22 million, and sold a shopping center located in Maine for a net
sales price of approximately $2.4 million.
FINANCING ACTIVITIES
Net cash flows provided by financing activities increased to $35,043,000
during the first nine months of 1997, from a net use of cash of $16,759,000
during the same period in 1996. Distributions (treated as a reduction in cash
flows from financing activities in the accompanying financial statements) were
$22,704,000 in the first nine months of 1997, and $16,626,000 in the first nine
months of 1996.
Of the 14 acquisitions completed during the first nine months of 1997,
eleven of the shopping centers were acquired for cash provided by the Operating
Partnership's bank line of credit. One shopping center was acquired with cash
provided by the Operating Partnership's bank line of credit and the assumption
of a $3,800,000 non-recourse mortgage note, and two shopping centers were
acquired through the issuance of 759,919 LP Units to the former owners of the
shopping centers. Financing for the three shopping centers acquired subsequent
to the quarter-end included approximately $22 million drawn from the bank line
of credit.
During the nine months ended September 30, 1997, the Operating Partnership
completed the sales of Hood Commons and Meadows Town Mall located in New
Hampshire and Illinois, respectively, for a net sales price of $17.3 million.
The net proceeds were used to pay down the Operating Partnership's bank line of
credit.
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<PAGE> 31
Subsequent to September 30, 1997, the net proceeds of approximately $2.4 million
from the sale of Augusta Plaza, located in Maine, were also used to paydown the
unsecured bank line of credit.
In March 1997, the Operating Partnership amended its $150 million bank line
of credit facility, extending the maturity date to March 15, 1999, and reducing
the interest rate to the lower of the bank's base rate or 1.50% over LIBOR from
the lower of the bank's base rate or 1.75% over LIBOR. The amended line of
credit agreement also provides more flexible covenants compared with the
previous agreement. In August 1997, Standard & Poor's announced that it assigned
an investment grade corporate credit rating of "BBB-" to the Operating
Partnership. In November 1997, Moody's announced that it also assigned a
prospective investment grade corporate credit rating of "(P)Baa3" to the
Operating Partnership's unissued shelf registration of debt securities. As a
result, the interest rate on the line of credit was further reduced to the lower
of the bank's base rate or 1.375% over LIBOR in accordance with the line of
credit agreement, representing a decrease in the interest margin on the line of
credit by 0.375% from December 31, 1996.
CAPITAL STRATEGY
Management from time to time identifies Properties in the Portfolio that no
longer are consistent with the current operating focus or for which a purchase
offer is received that management believes should be accepted to provide funds
that may immediately or eventually be invested in properties with potential for
a better return.
At September 30, 1997, the Operating Partnership was holding for sale 585
Boylston Street, located in Boston, Massachusetts and Village Shopping Center,
located in Gary, Indiana as well as Augusta Plaza Shopping Center in Augusta,
Maine, which was sold the next day, October 1, 1997. The 585 Boylston Street
property is not aligned with the Operating Partnership's current market
strategy. Village Shopping Center, one of the properties acquired from Tucker,
is considered by management to be a property where the proceeds from a sale
could be better invested in a property or properties with higher growth
potential, requiring lower property management intensity and with a tenant base
more consistent with the current strategy. Proceeds received from a sale of
these properties would provide additional liquidity to the Operating Partnership
and may be applied in whole or in part to tax-deferred "like-kind" exchange
acquisitions of additional properties.
As part of the Tucker acquisition, the Operating Partnership assumed the
$100,000,000 REMIC Note. The REMIC Note has a fixed, 7.3% rate of interest, with
an effective rate of 7.23%, matures in September 2000 and becomes prepayable,
upon payment of a significant prepayment premium, in October 1997. As of
September 30, 1997, approximately 38% of the Operating Partnership's assets were
encumbered by mortgage indebtedness, of which approximately 30% were encumbered
specifically by the REMIC Note. As discussed above, the investment grade
corporate credit rating received from Standard & Poor's and the prospective
investment grade corporate credit rating received from Moody's provides the
Operating Partnership with the ability to issue fixed-rate unsecured debt. Based
on current market conditions, management believes that it may be advantageous to
prepay the REMIC Note with either the proceeds from an issuance of investment
grade unsecured debt or the Standby Line of Credit , thereby releasing the six
properties securing the REMIC Note from the lien of the REMIC Indenture, and
extending the Operating Partnership's weighted average debt maturity. Management
believes that, even with the prepayment penalty, refinancing the REMIC Note with
debt at the lower interest rates currently available will economically benefit
the Operating Partnership more than keeping the REMIC Note outstanding until its
stated maturity, at which time interest rates may be substantially higher. There
can be no assurance that the Operating Partnership will in fact issue investment
grade debt securities.
In anticipation of issuances of investment grade unsecured debt, and
because management considered interest rates to be at historically favorable
levels, prior to September 30, 1997 the Operating Partnership entered into four
forward Treasury Note purchase agreements with third parties in order to
partially hedge the interest rate. In addition, on October 30, 1997, the
Operating Partnership entered into an additional forward Treasury Note purchase
agreement also in order to partially hedge the interest rate of anticipated debt
offerings. On October 24, 1997, the Operating Partnership gave the REMIC Trustee
notice of its intent to repay the REMIC Note on November 26, 1997. Concurrently
with the delivery of such notice, the Operating Partnership entered into the
Standby Line of Credit of $105 million, which the Operating Partnership may use
S-30
<PAGE> 32
to prepay all or a portion of the REMIC Note on November 26, 1997 in the event
that a sale of investment grade debt securities has not been consummated by such
date. In the event a debt issuance has not been consummated by the expiration
date of the forward Treasury Note purchase agreements, the Operating Partnership
expects to roll over such agreements under the same terms expiring on a date
that would coincide with the anticipated issuance date. Following repayment of
the REMIC Note, the Operating Partnership would have approximately $28.5 million
of secured debt with approximately 93% of its annualized property net operating
income of the most recent fiscal quarter unencumbered. There can be no assurance
that the Operating Partnership will prepay the REMIC Note or that, if the REMIC
Note is prepaid, the effective cost of doing so will not be greater than the
current interest cost of the REMIC Note.
On October 22, 1997, the Company entered into an agreement with PaineWebber
Incorporated whereby PaineWebber, acting as underwriter, will purchase up to $60
million of the Company's common stock over the next six months at the then
current market price less a negotiated discount. Under the terms of this
agreement, the Company, at its option, would have the right to sell common
shares in amounts ranging from $5 million to $20 million per transaction. The
sale price (before discount) would be fixed at the New York Stock Exchange
closing price of the Company's common stock on the next or second next trading
day after delivery to PaineWebber of a securities purchase notice specifying the
number of shares to be sold in the particular transaction. It is expected that
the Company will contribute, in exchange for an equivalent number of GP Units,
the net proceeds from equity raised under the agreement to be used to facilitate
the Operating Partnership's acquisition program, reduce amounts outstanding
under the bank line of credit and for general corporate purposes.
Management believes that the Company's recent growth and capital structure
activities have positioned it and the Operating Partnership for enhanced growth
through accessing the capital markets using both debt and equity securities.
Management believes accessing the public markets enables the Company and the
Operating Partnership to take advantage of favorable opportunities. However,
while the public capital markets have generally been favorable for selected
REITs during the past few years, there can be no assurance either that the
public markets will remain receptive to providing new capital to REITs and their
operating partnerships or that the terms upon which the Company and the
Operating Partnership may be able to raise funds will be attractive or favorable
to them or to their share owners and partners.
RESULTS OF OPERATIONS
SEPTEMBER 30, 1997 COMPARED TO SEPTEMBER 30, 1996
During the first nine months of 1997, the Operating Partnership acquired
fourteen shopping centers for a total purchase price of approximately $95.7
million, and sold two shopping centers for a total net sales price of
approximately $17.3 million. During the year ended December 31, 1996, the
Operating Partnership acquired sixteen properties, including fourteen properties
upon the Tucker Acquisition, and sold its interest in a ground lease. For the
nine months ended September 30, 1997, net income was $21.6 million, or $0.97 per
Unit, compared with $21.6 million, or $1.28 per Unit, for the nine months ended
September 30, 1996. Net income for the nine months ended September 30, 1997,
includes a $3.1 million gain on sale of property reflected in the first quarter
and a $1.3 million provision for loss on real estate investment reflected in the
second quarter. Net income for the nine months ended September 30, 1996,
includes a $9.4 million gain on sale of property reflected in the first quarter.
Weighted average Units outstanding for the nine-month period were 22,372,142
compared with 16,859,016 in the prior-year period. Net income for the three
months ended September 30, 1997, totaled $7.0 million, or $0.31 per Unit,
compared with $5.1 million, or $0.27 per Unit, for the comparable period in
1996. Weighted average shares outstanding for the quarter increased to
22,591,276 from 18,980,883 for the same period in the prior year. The increased
number of Units outstanding was due primarily to the 2,875,000 share November
1996 Offering which net proceeds were contributed to the Operating Partnership
in exchange for an equivalent number of GP Units, and the issuance of 7,428,157
GP Units to the Company in connection with the Tucker Acquisition on March 15,
1996.
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<PAGE> 33
ACQUISITION AND DISPOSITION ACTIVITIES
<TABLE>
<CAPTION>
ACQUISITIONS DATE
- ------------ ------------------
<S> <C>
Tucker (14 properties)................................................... March 15, 1996
Brookdale Square......................................................... March 26, 1996
Santa Fe Square.......................................................... December 27, 1996
Roseville Center......................................................... January 1, 1997
Martin's Bittersweet Plaza............................................... January 1, 1997
Warren Plaza............................................................. January 21, 1997
Spring Village........................................................... April 28, 1997
Davenport Retail......................................................... June 19, 1997
Fairhills Shopping Center................................................ July 1, 1997
Parkway Pointe........................................................... July 1, 1997
Sangamon Center North.................................................... July 1, 1997
Burlington Plaza......................................................... July 1, 1997
Holiday Plaza,........................................................... July 1, 1997
County Line Mall......................................................... July 31, 1997
Parkwood Plaza........................................................... August 1, 1997
Madison Plaza............................................................ August 25, 1997
Liberty Corners.......................................................... August 29, 1997
</TABLE>
<TABLE>
<CAPTION>
DISPOSITIONS DATE
- ------------ ------------------
<S> <C>
Nicollet Avenue ground lease............................................. March 26, 1996
Hood Commons............................................................. March 13, 1997
Meadows Town Mall........................................................ August 8, 1997
</TABLE>
Property Specific Revenues And Expenses
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 PROPERTIES
------------------- ACQUISITIONS/ HELD BOTH
1997 1996 DIFFERENCE DISPOSITIONS PERIODS
------- ------- ----------- ------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Rental income........................ $69,922 $54,643 $15,279 $14,517 $ 762
Operations, maintenance and
management......................... 10,478 9,277 1,201 1,952 (751)
Real estate taxes.................... 13,652 12,063 1,589 2,084 (495)
Depreciation and amortization........ 12,099 9,573 2,526 2,430 96
<CAPTION>
THREE MONTHS ENDED PROPERTIES
SEPTEMBER 30 ACQUISITIONS/ HELD BOTH
1997 1996 DIFFERENCE DISPOSITIONS PERIODS
------- ------- ------- ------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Rental income........................ $24,033 $21,442 $ 2,591 $ 2,294 $ 297
Operations, maintenance and
management......................... 3,479 3,485 (6) 384 (390)
Real estate taxes.................... 4,025 4,375 (350) 362 (712)
Depreciation and amortization........ 4,244 3,597 647 391 256
</TABLE>
Results Attributable to Acquisition and Disposition Activities
Rental income increased from $54,643,000 in the first nine months of 1996
to $69,922,000 in the first nine months of 1997. Approximately $14,517,000 of
the increase was attributable to the Operating Partnership's acquisition and
disposition activities. Rental income increased from $21,442,000 for the three
month period ended September 30, 1996, to $24,033,000 for the same period in
1997. Approximately $2,294,000 of the increase was attributable to the Operating
Partnership's acquisition and disposition activities.
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<PAGE> 34
Operations, maintenance and management expense increased from $9,277,000 in
the first nine months of 1996 to $10,478,000 in the first nine months of 1997.
Operations, maintenance and management expenses incurred for properties acquired
during the nine month period, net of such expenses eliminated for properties
disposed, of $1,952,000 were partially offset by a decrease of $751,000 in such
expenses for properties held both periods. For the three month period ended
September 30, 1997, operations, maintenance and management expense decreased to
$3,479,000 from $3,485,000 for the same period in 1996, despite incurring a net
increase of approximately $384,000 due to acquisition and disposition
activities.
Real estate taxes increased from $12,063,000 in the first nine months of
1996 to $13,652,000 in the first nine months of 1997, despite an increase of
$2,084,000 for the nine month period attributable to expenses incurred for new
acquisitions net of the elimination of such expenses for properties disposed,
since real estate taxes for properties held both periods decreased $495,000.
Real estate taxes decreased from $4,375,000 for the three month period ended
September 30, 1996, to $4,025,000 for the same period in 1997, despite an
increase in real estate taxes of $362,000 due to the Operating Partnership's
acquisition and disposition activities. The decrease in real estate taxes for
properties held both periods of $712,000 represents a 16.3% reduction from the
prior year period.
Depreciation and amortization increased from $9,573,000 in the first nine
months of 1996 to $12,099,000 in the first nine months of 1997. Approximately
$2,430,000 of the increase was attributable to the Operating Partnership's
acquisition and disposition activities. For the three month period, depreciation
and amortization increased $647,000 from $3,597,000 to $4,244,000. Approximately
$391,000 of the increase was attributable to the Operating Partnership's
acquisition and disposition activities, and $256,000 was attributable to
increases from properties held both periods.
Results for Properties Fully Operating Throughout Both Periods
The remaining increase in rental income for the nine month period ended
September 30, 1997, of $762,000 represented a nominal increase of 1.4% over the
first nine months of 1996, but was attained despite a reduction in property
operating expenses, from which recoveries from tenants are derived, of
approximately 5.8%. The positive variance was primarily due to increases in
rental income at Har Mar Mall of approximately $466,000, or 10.5%, and
Rivercrest Shopping Center of approximately $378,000 or 9.7%, resulting
primarily from successful leasing activity, partially offset by a decrease at
Westview Shopping Center of approximately $397,000, or 12.8%, where tax
reimbursements were lower due to a reduction in the related real estate tax
expense. Additionally, subsequent to quarter-end, Waccamaw Pottery had a
successful grand opening of their 55,000 square foot space at Westview Shopping
Center, which is expected to contribute to increased rental income in future
quarters. The increase in rental income for properties held throughout the three
months ended September 30, 1997 and 1996 of $297,000 was again a nominal 1.4%,
but was attained despite a reduction in property operating expenses of
approximately 14.0%. The most significant increase in rental income were
achieved at Har Mar Mall due to increased leasing activity and higher percentage
rents resulting from positive sales at the Center, at Burning Tree Plaza due to
the expansion of Best Buy, at Crossroads Shopping Center due to the expansion of
T.J. Maxx, and at Commons of Chicago Ridge due to the commencement of a 55,000
square foot JC Penney Homestore. These increases were partially offset by a
reduction in rental income at Westview Shopping Center due to lower tax
reimbursements due to the reduction in the related real estate tax expense.
During the second quarter, the Company signed a new lease with OfficeMax for
30,000 square feet at Grandview Plaza, which is expected to commence in the
fourth quarter of 1997, slightly ahead of schedule, and contribute to higher
rental income. In October 1997, the Operating Partnership received notice from
Montgomery Ward, which filed for Chapter 11 bankruptcy protection in July 1997,
that it intends to close the store at Heritage Square on or before December 31,
1997. The tenant has paid, and is expected to continue to pay, post-petition
rent and other charges through the closing date. However, rental income is
expected to decrease for such space upon closing of the store. The Operating
Partnership has begun efforts, and is in discussions with prospective tenants,
to re-lease the 111,000 square foot space.
The remaining decrease in operations, maintenance and management expense of
$751,000, or 8.1%, from the first nine months of 1996 was primarily attributable
to cost savings resulting from the completion in the
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<PAGE> 35
second quarter of 1996 of the internalization of the property management
function for the properties located in the Midwest. The decrease in the three
month period of $390,000, or 11.2%, was primarily due to expense savings at One
North State due to lower negotiated rates on contract services, and expense
savings at Village Shopping Center and Commons of Chicago Ridge, both due to
parking lot repairs in the prior year period, along with decreases at various
other locations.
The remaining decrease in real taxes of $495,000, or 4.1%, for the
nine-month period ended September 30, 1997, and $712,000, or 16.3%, for the
three month period then ended, results from management's successful negotiation
of tax reductions most significantly at Westview Shopping Center, Commons of
Chicago Ridge and Rivercrest Shopping Center.
The remaining increases in depreciation and amortization of $96,000 and
$256,000 for the nine and three month periods, respectively, ended September 30,
1997, compared with the same periods in 1996, were primarily a result of new
construction and leasing at White Bear Hills, Har Mar Mall and Burning Tree
Plaza as well as new tenancies at various other locations.
Non-Property Specific Expenses
Mortgage and other interest expense increased to $11,593,000 for the nine
months ended September 30, 1997, from $9,660,000 during the same period in 1996,
and increased to $4,362,000 from $4,106,000 during the three month period ended
September 30, 1997, compared with the same period in 1996. Debt assumed in the
Tucker Acquisition on March 15, 1996, consisting primarily of the $100 million
REMIC mortgage note secured by six of the acquired Tucker properties, accounted
for $1,711,000 of the increase during the nine month period, but did not
contribute to an increase during the three month period because such debt was
outstanding during the full quarter each year. Additionally, mortgage interest
expense on the mortgage note assumed upon the acquisition of Martin's
Bittersweet Plaza in January 1997 contributed to an increase of approximately
$253,000 during the first nine of 1997 compared with the first nine months of
1996, and $83,000 for the three month period ended September 30, 1997, compared
with the three month period in 1996. Despite a weighted average interest rate of
7.47% for the three month period in 1997 compared with a weighted average
interest rate of 7.71% for the same period in 1996, a higher average outstanding
balance on the line of credit, which was used to fund substantially all of the
acquisition activity during 1997, and which was paid down in the fourth quarter
of 1996 with the proceeds contributed from the Company's public offering of
Common Stock, resulted in an increase in interest expense of $170,000 during the
three-month period. For the nine month period, the change in interest expense on
the line of credit was minimal.
Administrative and general expense increased from $1,992,000 during the
nine months ended September 30, 1996, to $3,287,000 during the nine months ended
September 30, 1997, and from $813,000 for the three months ended September 30,
1996, to $1,310,000 for the three months ended September 30, 1997. Although the
Tucker Acquisition created substantial operating efficiencies, following the
acquisition the Operating Partnership reorganized its internal operations to
function by disciplines rather than geography. The reorganization included the
addition of executive management for leasing, asset management and acquisition
activities. In addition, the acquisition of 18 properties since September 30,
1996 has required an increase in personnel to manage the additional workload. As
a result of the aforementioned reorganization and acquisition activity, the
number of employees has increased, resulting in an increase in payroll costs.
Additionally, during the third quarter of 1997, approximately $162,000 of costs
relating to potential acquisitions were written-off, since such acquisitions
were deemed improbable.
During the first quarter of 1996, the Operating Partnership incurred a
one-time charge of $344,000 consisting of deferred financing costs related to
Bradley's former bank line of credit and certain deferred acquisition costs
related to acquisitions which Bradley chose not to pursue due to the efforts
required to finalize the Tucker Acquisition. During the third quarter of 1996,
the Operating Partnership relocated its headquarters from Boston, Massachusetts
to Northbrook, Illinois, resulting in a charge to earnings of approximately
$409,000.
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<PAGE> 36
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements the description of the general terms and provisions of the
"Senior Securities" set forth in the accompanying Prospectus under "Description
of Debt Securities," to which reference is hereby made. Unless otherwise defined
in this Prospectus Supplement, capitalized terms used under "Description of
Notes" have the meaning set forth in the Indenture.
GENERAL
The Notes constitute a separate series of Senior Securities (which are more
fully described in the accompanying Prospectus) to be issued under an indenture,
dated as of , 1997 (the "Indenture") between the Operating
Partnership and LaSalle National Bank, N.A. (the "Trustee"). The form of the
Indenture has been filed as an exhibit to (or incorporated by reference to) the
Registration Statement of which this Prospectus Supplement is a part and is
available for inspection at the offices of the Operating Partnership. The
Indenture is subject to, and governed by, the Trust Indenture Act of 1939, as
amended (the "TIA"). The statements made hereunder relating to the Indenture and
the Notes to be issued thereunder are descriptions of the material provisions
thereof. All section references appearing herein are to sections of the
Indenture and capitalized terms used but not defined herein shall have the
respective meanings set forth in the Indenture.
The Notes will be limited to an aggregate principal amount of $100,000,000.
The Notes will be direct, unsecured obligations of the Operating Partnership and
will rank equally with all other unsecured and unsubordinated indebtedness of
the Operating Partnership from time to time outstanding. The Notes will be
effectively subordinated to mortgages and other secured indebtedness of the
Operating Partnership and to Indebtedness and other liabilities of any
Subsidiaries (as defined below) which may be formed by the Operating Partnership
in the future. Accordingly, such prior indebtedness will have to be satisfied in
full before holders of the Notes will be able to realize any value from
encumbered or indirectly-held Properties. In addition, the Notes will be repaid
solely from the assets of the Operating Partnership; holders of the Notes will
not have recourse against any limited partner of the Operating Partnership for
the repayment of the Notes.
As of September 30, 1997, on a pro forma basis after giving effect to the
offering of the Notes hereby, the application of the net proceeds therefrom and
the repayment of certain secured and unsecured indebtedness including the
repayment of the REMIC Note, the Operating Partnership would have had
approximately $254,911,000 of total indebtedness, of which approximately
$226,400,000 would have been unsecured indebtedness and approximately
$28,511,000 would have been indebtedness secured by certain of the Properties.
The Operating Partnership may incur additional indebtedness, including secured
indebtedness, subject to the provisions described below under "-- Certain
Covenants -- Limitations on Incurrence of Indebtedness."
The Notes will only be issued in fully registered form in denominations of
$1,000 and integral multiples thereof.
PRINCIPAL AND INTEREST
The Notes will bear interest at % per annum and will mature on November
, 2004. The Notes will bear interest from November , 1997 or from the
immediately preceding Interest Payment Date (as defined below) to which interest
has been paid, payable semi-annually in arrears on and of each year, commencing
, 1998 (each, an "Interest Payment Date") and on the applicable
Maturity Date, to the Persons in whose name the Notes are registered in the
Security Register on the preceding or (whether or not a Business Day, as defined
below), as the case may be (each, a "Regular Record Date"). Interest on the
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
S-35
<PAGE> 37
If any Interest Payment Date or the Stated Maturity Date falls on a day
that is not a Business Day, the required payment shall be made on the next
Business Day as if it were made on the date such payment was due and no interest
shall accrue on the amount so payable for the period from and after such
Interest Payment Date or the Maturity Date, as the case may be. "Business Day"
means any day, other than a Saturday or Sunday, on which banks in the City of
New York or in the City of Chicago are not required or authorized by law,
regulation or executive order to close.
The principal of and interest on the Notes will be payable at the corporate
trust office of LaSalle National Bank (the "Paying Agent") in the City of
Chicago, Illinois, initially located at 135 South LaSalle Street, Chicago,
Illinois 60603, provided that at the option of the Operating Partnership,
payment of interest may be made by check mailed to the address of the Person
entitled thereto as it appears in the Security Register or by wire transfer of
funds to such Person at an account maintained within the United States.
OPTIONAL REDEMPTION
The Notes may be redeemed at any time at the option and in the sole
discretion of the Operating Partnership, in whole or from time to time in part,
at a redemption price equal to the sum of (i) the principal amount of the Notes
being redeemed plus accrued interest thereon to the redemption date, and (ii)
the Make-Whole Amount (as defined below), if any, with respect to such Notes
(the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes called for redemption shall have been made available on
the redemption date referred to in such notice, such Notes will cease to bear
interest on the date fixed for such redemption specified in such notice and the
only right of the Holders of the Note will be to receive payment of the
Redemption Price. The Operating Partnership would not have to repay any other
liabilities or obtain any consents or waivers before the redemption of the
Notes. In the event, however, that the Operating Partnership fails to redeem any
Notes submitted for redemption in an aggregate amount of $10 million or greater,
the lenders under the Operating Partnership's line of credit may accelerate such
line of credit. The terms of the Operating Partnership's other indebtedness do
not contain limits on the Operating Partnership's ability to repay any Notes
which have been submitted for redemption so long as the Operating Partnership
does not fail to repay such Notes in an aggregate amount of $10 million or
greater. In the event of such failure to repay the Notes, the lenders under the
Operating Partnership's line of credit may accelerate such line of credit.
Notice of any optional redemption of any Notes will be given to Holders at
their addresses, as shown in the Security Register for the Notes, not more than
60 nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the Redemption Price and the
principal amount of the Notes held by each Holder to be redeemed.
If less than all the Notes are to be redeemed at the option and in the sole
discretion of the Operating Partnership, the Operating Partnership will notify
the Trustee at least 45 days prior to the giving of the redemption notice (or
such shorter period as is satisfactory to the Trustee) of the aggregate
principal amount of Notes to be redeemed and their redemption date. The Trustee
shall select not more than 60 days prior to the redemption date, in such manner
as it shall deem fair and appropriate, Notes to be redeemed in whole or in part.
Notes may be redeemed in part in the minimum authorized denomination for Notes
or in any integral multiple thereof.
As used herein:
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Note, as the case may be, the excess, if any, of (i)
the aggregate present value as of the date of such redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount of
interest (exclusive of interest accrued to the date of redemption or accelerated
payment) that would have been payable in respect of each such dollar if such
redemption or accelerated payment had not been made, determined by discounting,
on a semi-annual basis, such principal and interest at the Reinvestment Rate
(determined on the third Business Day preceding the date such notice of
redemption is given or declaration of acceleration is made) from the respective
dates on which such principal and interest would have
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been payable if such redemption or accelerated payment had not been made to the
date of redemption or accelerated payment, over (ii) the aggregate principal
amount of the respective Notes being redeemed or paid. For purposes of the
Indenture, all references to any "premium" on the Notes shall be deemed to refer
to any Make-Whole Amount, unless the context otherwise requires.
"Reinvestment Rate" means 0.25% (twenty-five one hundredths of one percent)
plus the arithmetic mean of the yields under the respective headings "This Week"
and "Last Week" published in the Statistical Release (as defined below) under
the caption "Treasury Constant Maturities" for the maturity (rounded to the
nearest month) corresponding to the remaining life to maturity, as of the
payment date of the principal being redeemed or paid. If no maturity exactly
corresponds to such maturity, yields for the two published maturities most
closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Board of Governors
of the Federal Reserve System and which reports yields on actively traded United
States government securities adjusted to constant maturities or, if such
Statistical Release is not published at the time of any determination of the
Make-Whole Amount, then such other reasonably comparable index which shall be
designated by the Operating Partnership.
CERTAIN COVENANTS
Limitations on Incurrence of Indebtedness. The Operating Partnership will
not, and will not permit any Subsidiary to, incur any Indebtedness (as defined
below) if, immediately after giving effect to the incurrence of such additional
Indebtedness and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Indebtedness of the Operating Partnership
and its Subsidiaries on a consolidated basis determined in accordance with GAAP
is greater than 60% of the sum of (without duplication) (i) the Total Assets (as
defined below) of the Operating Partnership and its Subsidiaries as of the end
of the calendar quarter covered in the Operating Partnership's Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently
filed with the Securities and Exchange Commission (the "Commission") (or, if
such filing is not permitted under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), with the Trustee) prior to the incurrence of such
additional Indebtedness, and (ii) the purchase price of any real estate assets
or mortgages receivable acquired since the end of the most recent calendar
quarter, and (iii) the amount of any securities offering proceeds received (to
the extent that such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Indebtedness), by the Operating
Partnership or any Subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the incurrence of such additional
Indebtedness, less (iv) the decrease, if any, in the Total Assets of the
Operating Partnership and its Subsidiaries since the end of such quarter.
In addition to the foregoing limitation on the incurrence of Indebtedness,
the Operating Partnership will not, and will not permit any Subsidiary to, incur
any Indebtedness secured by any Encumbrance (as defined below) upon any of the
property of the Operating Partnership or any Subsidiary if, immediately after
giving effect to the incurrence of such additional Indebtedness and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Indebtedness of the Operating Partnership and its Subsidiaries on a
consolidated basis which is secured by any Encumbrance on property of the
Operating Partnership or any Subsidiary is greater than 40% of the sum of
(without duplication) (i) the Total Assets of the Operating Partnership and its
Subsidiaries as of the end of the calendar quarter covered in the Operating
Partnership's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as
the case may be, most recently filed with the Commission (or, if such filing is
not permitted under the Exchange Act, with the Trustee) prior to the incurrence
of such additional Indebtedness and (ii) the purchase price of any real estate
assets or mortgages receivable acquired since the end of such calendar quarter,
and (iii) the amount of any securities offering proceeds received (to the extent
that such proceeds were not used to acquire real estate assets or mortgages
receivable or used to reduce Indebtedness), by the Operating Partnership or any
Subsidiary since the end of
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such calendar quarter, including those proceeds obtained in connection with the
incurrence of such additional Indebtedness, less (iv) the decrease, if any, in
the Total Assets of the Operating Partnership and its Subsidiaries since the end
of such quarter.
The Operating Partnership and its Subsidiaries may not at any time own
Total Unencumbered Assets (as defined below) equal to less than 150% of the
aggregate outstanding principal amount of the Unsecured Indebtedness (as defined
below) of the Operating Partnership and its Subsidiaries on a consolidated
basis.
In addition to the foregoing limitations on the incurrence of Indebtedness,
the Operating Partnership will not, and will not permit any Subsidiary to, incur
any Indebtedness if the ratio of Consolidated Income Available for Debt Service
(as defined below) to the Annual Service Charge (as defined below) for the four
consecutive fiscal quarters most recently ended prior to the date on which such
additional Indebtedness is to be incurred shall have been less than 1.5:1 on a
pro forma basis after giving effect thereto and to the application of the
proceeds therefrom, and calculated on the assumption that (i) such Indebtedness
and any other Indebtedness incurred by the Operating Partnership and its
Subsidiaries since the first day of such four-quarter period and the application
of the proceeds therefrom, including to refinance other Indebtedness, had
occurred at the beginning of such period; (ii) the repayment or retirement of
any other Indebtedness by the Operating Partnership and its Subsidiaries since
the first day of such four-quarter period had been repaid or retired at the
beginning of such period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such period); (iii) in the
case of Acquired Indebtedness (as defined below) or Indebtedness incurred in
connection with any acquisition since the first day of such four-quarter period,
the related acquisition had occurred as of the first day of such period with the
appropriate adjustments with respect to such acquisition being included in such
pro forma calculation; and (iv) in the case of any acquisition or disposition by
the Operating Partnership or its Subsidiaries of any asset or group of assets
since the first day of such four-quarter period, whether by merger, stock
purchase or sale, or asset purchase or sale, such acquisition or disposition or
any related repayment of Indebtedness had occurred as of the first day of such
period with the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation.
The foregoing covenants do not restrict the Operating Partnership from
refinancing existing Indebtedness, provided that the outstanding principal
amount of such Indebtedness is not increased.
Provision of Financial Information. Whether or not the Operating
Partnership is subject to Section 13 or 15(d) of the Exchange Act, the Operating
Partnership will, to the extent permitted under the Exchange Act, file with the
Commission the annual reports, quarterly reports and other documents which the
Operating Partnership would have been required to file with the Commission
pursuant to such Section 13 or 15(d) if the Operating Partnership were so
subject, such documents to be filed with the Commission on or prior to the
respective dates (the "Required Filing Dates") by which the Operating
Partnership would have been required to file such documents if the Operating
Partnership were so subject. The Operating Partnership will also in any event
(x) within 15 days of each Required Filing Date (i) if the Operating Partnership
is not then subject to such Section 13 or 15(d), transmit by mail to all Holders
of Notes, as their names and addresses appear in the Security Register, without
cost to such Holders, copies of the annual reports and quarterly reports that
the Operating Partnership would have been required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act if the Operating Partnership
were subject to such Sections, (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents that the Operating Partnership
would have been required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act if the Operating Partnership were subject to such
Sections and (y) if filing such documents by the Operating Partnership with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder.
Waiver of Certain Covenants. The Operating Partnership may omit to comply
with any term, provision or condition of the foregoing covenants, and with any
other term, provision or condition with respect to the Notes, (except any such
term, provision or condition which could not be amended without the consent of
all
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Holders of the Notes or such series thereof, as applicable), if before or after
the time for such compliance the Holders of at least a majority in principal
amount of all of the outstanding Notes, by Act of such Holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition. Except to the extent so expressly waived, and until such
waiver shall become effective, the obligations of the Operating Partnership and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
As used herein, and in the Indenture:
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Subsidiary.
"Annual Service Charge" for any period means the aggregate interest expense
for such period in respect of, and the amortization during such period of any
original issue discount of, Indebtedness of the Operating Partnership and its
Subsidiaries and the amount of dividends which are payable during such period in
respect of any Disqualified Stock.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participations or other
ownership interests (however designated) of such Person and any rights (other
than debt securities convertible into or exchangeable for corporate stock),
warrants or options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations (as defined below) of the Operating Partnership and its
Subsidiaries plus amounts which have been deducted, and minus amounts which have
been added, for the following (without duplication): (i) interest on
Indebtedness of the Operating Partnership and its Subsidiaries, (ii) provision
for taxes of the Operating Partnership and its Subsidiaries based on income,
(iii) amortization of debt discount, (iv) provisions for gains and losses on
properties and property depreciation and amortization, (v) the effect of any
noncash charge resulting from a change in accounting principles in determining
Earnings from Operations (as defined below) for such period and (vi)
amortization of deferred charges.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which by the terms of such Capital Stock (or by the terms of any
security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock), (ii) is convertible into or exchangeable or exercisable for Indebtedness
or Disqualified Stock or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for Capital Stock which is not Disqualified Stock or the
redemption price of which may, at the option of such Person, be paid in Capital
Stock which is not Disqualified Stock), in each case on or prior to the Stated
Maturity of the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items and property
valuation losses, as reflected in the financial statements of the Operating
Partnership and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security interest
of any kind.
"Indebtedness" of the Operating Partnership or any Subsidiary means any
indebtedness of the Operating Partnership or any Subsidiary, whether or not
contingent, in respect of (i) borrowed money or evidenced by bonds, notes,
debentures or similar instruments whether or not such indebtedness is secured by
any Encumbrance existing on property owned by the Operating Partnership or any
Subsidiary, (ii) indebtedness for borrowed money of a Person other than the
Operating Partnership or a Subsidiary which is secured by any Encumbrance
existing on property owned by the Operating Partnership or any Subsidiary, to
the extent of the lesser of (x) the amount of indebtedness so secured and (y)
the fair market value of the property subject to
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such Encumbrance, (iii) the reimbursement obligations, contingent or otherwise,
in connection with any letters of credit actually issued or amounts representing
the balance deferred and unpaid of the purchase price of any property or
services except any such balance that constitutes an accrued expense or trade
payable, or all conditional sale obligations or obligations under any title
retention agreement, (iv) the principal amount of all obligations of the
Operating Partnership or any Subsidiary with respect to redemption, repayment or
other repurchase of any Disqualified Stock, (v) any lease of property by the
Operating Partnership or any Subsidiary as lessee which is reflected on the
Operating Partnership's consolidated balance sheet as a capitalized lease in
accordance with GAAP, or (vi) interest rate swaps, caps or similar agreements
and foreign exchange contracts, currency swaps or similar agreements, to the
extent, in the case of items of indebtedness under (i) through (iii) above, that
any such items (other than letters of credit) would appear as a liability on the
Operating Partnership's consolidated balance sheet in accordance with GAAP, and
also includes, to the extent not otherwise included, any obligation by the
Operating Partnership or any Subsidiary to be liable for, or to pay, as obligor,
guarantor or otherwise (other than for purposes of collection in the ordinary
course of business), Indebtedness of another Person (other than the Operating
Partnership or any Subsidiary) (it being understood that Indebtedness shall be
deemed to be incurred by the Operating Partnership or any Subsidiary whenever
the Operating Partnership or such Subsidiary shall create, assume, guarantee or
otherwise become liable in respect thereof).
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests of which are owned, directly
or indirectly, by such Person. For the purposes of this definition, "voting
equity securities" means equity securities having voting power for the election
of directors, whether at all times or only so long as no senior class of
security has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated Real
Estate Assets and (ii) all other assets of the Operating Partnership and its
Subsidiaries determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated Real
Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Operating Partnership and its Subsidiaries not subject to an
Encumbrance for borrowed money, determined in accordance with GAAP (but
excluding accounts receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost (original
cost plus capital improvements) of real estate assets of the Operating
Partnership and its Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in accordance with GAAP.
"Unsecured Indebtedness" means Indebtedness which is not secured by any
Encumbrance upon any of the properties of the Operating Partnership or any
Subsidiary.
See "Description of Notes -- Certain Covenants" in the accompanying
Prospectus for a description of additional covenants applicable to the Operating
Partnership.
MERGER, CONSOLIDATION OR SALE
The Indenture provides that the Operating Partnership may, without the
consent of the holders of the Notes, consolidate with, or sell, lease or convey
all or substantially all of its assets to, or merge with or into, any other
entity, provided that (i) either the Operating Partnership shall be the
continuing entity, or the successor entity shall be an entity organized and
existing under the laws of the United States or a State thereof and such
successor entity (if other than the Operating Partnership) formed by or
resulting from any such consolidation or merger or which shall have received the
transfer of such assets, shall expressly assume all of the Operating
Partnership's obligations under the Indenture; (b) immediately after giving
effect to such transaction and treating any indebtedness which becomes an
obligation of the Operating Partnership or any Subsidiary as a result thereof as
having been incurred by the Operating Partnership or such Subsidiary at the time
of such transaction, no Event of Default under the Indenture, and no event
which, after notice or the lapse of time, or both, would become such an Event of
Default, shall have occurred and be continuing and (c) an officer's certificate
and legal opinion covering such conditions shall be delivered to the Trustee.
Accordingly, while the Operating Partnership may transfer all or substantially
all of its assets, without the consent of the holders of
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the Notes, any transaction that would result in the Operating Partnership, or
any successor entity, breaching the limitations on the incurrence of
indebtedness contained in the covenants would result in an Event of Default
under the Indenture. Thus, the holders of the Notes are afforded some protection
in the event of a highly leveraged transaction, merger or similar transaction,
which may adversely affect the creditworthiness of the Notes and/or the
Operating Partnership.
The applicability of the covenants containing debt incurrence limitations
and the provisions regarding merger, consolidation or sale may be waived by the
holders of at least a majority in principal amount of all outstanding Notes but
not by the Trustee or by the Company, in its capacity as general partner. In
addition, the applicability of the Indenture provisions relating to mergers,
consolidations or sales are not limited in the event of a leveraged buyout
initiated or supported by the Operating Partnership, the management of the
Operating Partnership, or any affiliate thereof.
EVENTS OF DEFAULT
The Indenture provides that the following events are "Events of Default"
with respect to the Notes: (a) default in the payment of any interest on any
Notes when such interest becomes due and payable that continues for a period of
30 days; (b) default in the payment of the principal of (or Make-Whole Amount,
if any, on) any Notes when due and payable; (c) default in the performance, or
breach, of any other covenant or warranty of the Operating Partnership in the
Indenture with respect to the Notes and continuance of such default or breach
for a period of 60 days after written notice as provided in the Indenture; (d)
default under any bond, debenture, note, mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Operating Partnership (or by any
Subsidiary, the repayment of which the Operating Partnership has guaranteed or
for which the Operating Partnership is directly responsible or liable as obligor
or guarantor), having an aggregate principal amount outstanding of at least
$10,000,000, whether such indebtedness now exists or shall hereafter be created,
which default shall have resulted in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable or such obligations being accelerated, without such
acceleration having been rescinded or annulled, within a period of 10 days after
written notice to the Operating Partnership as provided in the Indenture; (e)
the entry by a court of competent jurisdiction of one or more judgments, orders
or decrees against the Operating Partnership or any Subsidiary in an aggregate
amount (excluding amounts covered by insurance) in excess of $10,000,000 and
such judgments, orders or decrees remain undischarged, unstayed and unsatisfied
in an aggregate amount (excluding amounts covered by insurance) in excess
$10,000,000 for a period of 30 consecutive days; and (f) certain events of
bankruptcy, insolvency or reorganization, on court appointment of a receiver,
liquidator or trustee of the Operating Partnership or any Significant
Subsidiary. The Term "Significant Subsidiary" has the meaning ascribed to such
term in Regulation S-X promulgated under the Securities Act. If an Event of
Default specified in clause (f) above, relating to the Operating Partnership or
any Significant Subsidiary occurs, the principal amount of and the Make-Whole
Amount on, all outstanding Notes shall become due and payable without any
declaration or other act on the part of the Trustee or of the Holders. In the
event that the Operating Partnership's obligations under the Notes are
accelerated in an amount of $10 million or greater the lenders under the
Operating Partnership's bank line of credit may accelerate the obligations under
such line of credit.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The provisions of Article 14 of the Indenture relating to defeasance and
covenant defeasance, which are described under "Description of
Notes -- Discharge, Defeasance and Covenant Defeasance" in the accompanying
Prospectus, will apply to the Notes. Each of the covenants described under
"-- Certain Covenants" herein and "Description of Notes -- Certain Covenants" in
the accompanying Prospectus will be subject to covenant defeasance.
BOOK-ENTRY SYSTEM
The provisions described under "Description of Debt Securities -- Global
Securities" in the accompanying Prospectus will apply to the Notes.
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The Notes will be issued in the form of one or more fully registered global
notes ("Global Notes") which will be deposited with, or on behalf of DTC, and
registered in the name of DTC's nominee, Cede & Co. Except under the
circumstance described below, the Notes will not be issuable in definitive form.
Unless and until it is exchanged in whole or in part for the individual Notes
represented thereby, a Global Note may not be transferred except as a whole by
DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC
or by DTC or any nominee of DTC to a successor depository or any nominee of such
successor.
Upon the issuance of a Global Note, DTC or its nominee will credit on its
book-entry registration and transfer system the respective principal amounts of
the individual Notes represented by such Global Note to the accounts of persons
that have accounts with DTC ("Participants"). Such accounts shall be designated
by the underwriters, dealers or agents with respect to the Notes. Ownership of
beneficial interests in a Global Note will be limited to Participants or persons
that may hold interests through Participants. Ownership of beneficial interests
in such Global Note will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (with respect to
beneficial interests of Participants) and records of Participants (with respect
to beneficial interests of persons who hold through Participants). The laws of
some states require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such limits and laws may impair the
ability to own, pledge or transfer any beneficial interest in a Global Note.
So long as DTC or its nominee is the registered owner of such Global Note,
DTC or its nominee, as the case may be, will be considered the sole owner to
holder of the Notes represented by such Global Note for all purposes under the
Indenture and the beneficial owners of the Notes will be entitled only to those
rights and benefits afforded to them in accordance with DTC's regular operating
procedures. Except as provided below, owners of beneficial interest in a Global
Note will not be entitled to have any of the individual Notes registered in
their names, will not receive or be entitled to receive physical delivery of any
such notes in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Payments of principal of and any interest on, individual Notes represented
by a Global Note registered in the name of DTC or its nominee will be made to
DTC or its nominee, as the case may be, as the registered owner of the Global
Note representing such Notes. None of the Operating Partnership, the Trustee,
any Paying Agent or the Security Registrar will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Note for such Notes or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Operating Partnership expects that DTC or its nominee, upon receipt of
any payment of principal or interest in respect of a permanent Global Note
representing any Notes, immediately will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Note as shown on the records of DTC or its
nominee. The Operating Partnership also expects that payments by Participants to
owners of beneficial interests in such Global Note held through such
Participants will be governed by standing instructions and customary practices,
as is the case with securities held for the account of customers in bearer form
or registered in "street name." Such payments will be the responsibility of such
Participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depository is not appointed by the Operating
Partnership within 90 days, the Operating Partnership will issue individual
Notes in exchange for the Global Note or Notes representing the Notes. In
addition, the Operating Partnership may, at any time and in its sole discretion,
determine not to have any Notes represented by one or more Global Notes and, in
such event, will issue individual Notes in exchange for the Global Note or Notes
representing the Notes. Individual Notes so issued will be issued in
denominations unless otherwise specified by the Operating Partnership, of $1,000
and integral multiples thereof.
DTC has advised the Operating Partnership of the following information
regarding DTC: DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking law, a member of the 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 holds securities that its
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Participants deposit with DTC. DTC also facilities the settlement among its
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry charges in its
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants of DTC include securities brokers
and dealers (including the Underwriter), banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a number of its
direct Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a direct Participant of DTC, either directly or indirectly.
The rules applicable to DTC and its participants are on file with the
Commission.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriter in immediately
available funds. All payments of principal and interest in respect of the Notes
will be made by the Operating Partnership in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity or until the
Notes are issued in certificated form, and secondary market trading activity in
the Notes will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Notes.
GOVERNING LAW
The Indenture will be governed by and shall be construed in accordance with
the laws of the State of New York.
NO PERSONAL LIABILITY OR RECOURSE
No recourse under or upon any obligation, covenant or agreement contained
in the Indenture or the Notes, or because of any indebtedness evidenced thereby,
or for any claim based thereon or otherwise in respect thereof, shall be had (i)
against any other past, present or future limited partner in the Operating
Partnership, (ii) against any other person or entity which owns an interest,
directly or indirectly, in any limited partner of the Operating Partnership, or
(iii) against any past, present or future stockholder, employee, officer or
director, as such, of the Company or any successor, either directly or through
the Operating Partnership or the Company or any successor, under any rule of
law, statute or constitutional provision or by the enforcement of any assessment
or by any legal or equitable proceeding or otherwise. Each Holder of Notes
waives and releases all such liability by accepting such Notes. The waiver and
release are part of the consideration for the issue of the Notes.
S-43
<PAGE> 45
UNDERWRITING
Subject to the terms and the conditions in the underwriting agreement dated
as of November , 1997 (the "Underwriting Agreement") by and among the
Operating Partnership and the underwriters named below (the "Underwriters"), the
Operating Partnership has agreed to sell to each of the Underwriters named
below, and each of such Underwriters has agreed severally to purchase from the
Operating Partnership the respective principal amount of Notes set forth
opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
- ----------------------------------------------------------------------------- ----------------
<S> <C>
PaineWebber Incorporated..................................................... $
BT Alex. Brown Incorporated..................................................
Salomon Brothers Inc. .......................................................
First Chicago Capital Markets, Inc. .........................................
------------
Total.............................................................. $100,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, and that the
Underwriters will purchase all Notes offered hereby if any of such Notes are
purchased.
The Underwriters have advised the Operating Partnership that they propose
initially to offer the Notes directly to the public at the public offering price
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of % of the principal
amount of the Notes. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of % of the principal amount of the Notes, to certain
other dealers. After the initial offering of the Notes, the public offering
price and other selling terms may from time to time be changed.
Each series of Notes are a new issue of securities with no established
trading market. The Operating Partnership has been advised by the Underwriters
that they intend to make a market in the Notes but are not obligated to do so
and may discontinue market making at any time without notice. No assurance can
be given as to the liquidity of the trading market for the Notes.
The Company and the Operating Partnership have agreed to indemnify the
Underwriters against certain civil liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriters may be required to
make in respect thereof.
Until the distribution of the Notes is completed, the rules of the
Securities and Exchange Commission may limit the ability of the Underwriters to
bid for and purchase the Notes. As an exception to these rules, the Underwriters
are permitted to engage in certain transactions that stabilize the price of the
Notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes. In addition, if the
Underwriters create a short position in the Notes in connection with this
offering (i.e., they sell more Notes than are set forth on the cover page of
this Prospectus Supplement), the Underwriters may reduce the short position by
purchasing Notes in the open market. In general, purchases of a security for the
purpose of stabilization or to reduce a short position could cause the price of
the security to be higher than it might be in the absence of such purchases.
Neither the Operating Partnership nor the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above might have on the price of the Notes. In
addition, neither the Operating Partnership nor the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
In the ordinary course of their businesses, certain of the Underwriters and
their affiliates have engaged and may in the future engage in investment
banking, financial advisory and other commercial services and transactions with
the Company and the Operating Partnership for which customary compensation has
been,
S-44
<PAGE> 46
and will be, received. On November 26, 1997, the Operating Partnership entered
into a commitment with The First National Bank of Chicago, an affiliate of First
Chicago Capital Markets, Inc., for the $105 million Standby Line of Credit. The
Standby Line of Credit, if used, will bear interest at a rate of 1.20% over
LIBOR. A flat $35,000 fee was charged when the Operating Partnership entered
into the commitment for the Standby Line of Credit, and an additional fee of
.05% of the amount drawn down will be charged each time the Standby Line of
Credit is used.
LEGAL MATTERS
Certain legal matters, including the legality of the Notes, will be passed
upon for the Operating Partnership by Goodwin, Procter & Hoar LLP, Boston,
Massachusetts. William B. King, whose professional corporation is a partner in
Goodwin, Procter & Hoar LLP, is Secretary of the Company, the general partner of
the Operating Partnership, and is the beneficial owner of approximately 9,000
shares of Common Stock of the Company. Certain legal matters for the
Underwriters will be passed upon by Rogers & Wells, New York, New York.
S-45
<PAGE> 47
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
NOR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED , 1997
$300,000,000
BRADLEY OPERATING LIMITED PARTNERSHIP
DEBT SECURITIES
---------------------
Bradley Operating Limited Partnership (the "Operating Partnership") is the
entity though which Bradley Real Estate, Inc. ("Bradley" or the "Company"), a
self-administered and self-managed real estate investment trust ("REIT"),
conducts substantially all of its business and owns substantially all of its
assets. Bradley, the country's oldest continuously qualified REIT, is the sole
general partner of and owns a substantial majority of the economic interests in
the equity of the Operating Partnership.
The Operating Partnership may offer from time to time in one or more series
unsecured, non-convertible investment grade debt securities (the "Debt
Securities" or the "Securities"). The aggregate public offering price of the
Debt Securities shall be up to $300,000,000 (or its equivalent in another
currency based on the exchange rate at the time of sale) in amounts, at prices
and on terms to be determined at the time of offering. The Debt Securities may
be offered separately or together, in separate series, in amounts, at prices and
on terms to be set forth in one or more supplements to this Prospectus (each a
"Prospectus Supplement").
The specific terms of the Securities for which this Prospectus is being
delivered will be set forth in this Prospectus and in the applicable Prospectus
Supplement and will include, where applicable, the specific title, aggregate
principal amount, ranking, currency, form (which may be registered or bearer, or
certificated or global), authorized denominations, maturity, rate (or manner of
calculation thereof) and time of payment of interest, terms for redemption at
the option of the Operating Partnership or repayment at the option of the
holder, terms for sinking fund payments, covenants and any initial public
offering price.
The applicable Prospectus Supplement will also contain information, where
appropriate, about material United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.
The Securities may be offered directly by the Operating Partnership,
through agents designated from time to time by the Operating Partnership or to
or through underwriters or dealers. If any agents or underwriters are involved
in the sale of any of the Securities, their names, and any applicable purchase
price, fee, commission or discount arrangement between or among them, will be
set forth, or will be calculable from the information set forth, in an
accompanying Prospectus Supplement. See "Plan of Distribution." No Securities
may be sold without delivery of a Prospectus Supplement describing the method
and terms of the offering of such Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is , 1997.
<PAGE> 48
AVAILABLE INFORMATION
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus or
the accompanying Prospectus Supplement and, if given or made, such information
or representation must not be relied upon as having been authorized by the
Operating Partnership, the Company or any underwriter, dealer or agent. Neither
the delivery of this Prospectus or the accompanying Prospectus Supplement nor
any sale made hereunder of thereunder shall, under any circumstances, create an
implication that the information contained herein or in the accompanying
Prospectus Supplement is correct as of any date subsequent to the date hereof or
thereof or that there has been no change in the affairs of the Operating
Partnership or the Company since the date hereof or hereof. Neither this
Prospectus nor the accompanying Prospectus Supplement constitutes an offer to
sell or a solicitation of an offer to buy Securities in any jurisdiction in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to any person to whom it
is unlawful to make such offer or solicitation.
The Operating Partnership and the Company are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC" or the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York,
New York 10048, and Northwest Atrium Center, 500 W. Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials can be obtained upon written
request from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. The Commission
also maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
the Company and the Operating Partnership, that file electronically with the
Commission. Information concerning the Company's common stock, which is listed
on the New York Stock Exchange (the "NYSE") under the symbol "BTR," can be
inspected and copied at the NYSE, 20 Broad Street, New York, New York 10005.
The Operating Partnership has filed with the Commission a Registration
Statement on Form S-3 (No. 333-36577) under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Debt Securities. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Registration Statement, including exhibits thereto, may be
inspected and copied at public reference facilities of the Commission described
above. Statements contained in this Prospectus or any Prospectus Supplement as
to the contents of any document referred to are not necessarily complete, and in
each instance reference is made to the copy of such document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission pursuant to
the Exchange Act are incorporated in this Prospectus by reference: (A), with
respect to the Operating Partnership (Commission File No. 000-23065), (i) the
Operating Partnership's Registration Statement on Form 10 filed on September 11,
1997, as amended; (ii) the Operating Partnership's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997; and (iii) the Operating Partnership's
current report on Form 8-K filed on October 6, 1997 (B), with respect to the
Company (Commission File No. 001-10328), (i) the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996; (ii) the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997; (iii) the Company's Proxy Statement dated March 31, 1997
with respect to its Annual Meeting of Stockholders on May 14, 1997; (iv) the
Company's current report on Form 8-K filed on September 12, 1997; (v) the
Company's current report on Form 8-K filed on October 6, 1997; (vi) the
Company's current report on Form 8-K filed on October 17, 1997 and (vii) the
Company's current report on Form 8-K filed on October 22, 1997.
2
<PAGE> 49
All other documents filed with the Commission by the Operating Partnership
amending or supplementing its Form 10 Registration Statement and all documents
filed with the Commission by the Operating Partnership or 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 are to be incorporated herein by reference and shall be deemed to be
a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in an applicable Prospectus Supplement) or in any subsequently filed
document that is incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus or any Prospectus Supplement, except as so
modified or superseded.
The Operating Partnership will provide, without charge, to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
at the request of such person, a copy of any or all of the documents
incorporated herein by reference (other than exhibits thereto, unless such
exhibits are specifically incorporated by reference into such documents).
Written requests for such copies should be directed to Ms. Marianne Dunn, Senior
Vice President, Bradley Real Estate, Inc., Suite 600, 40 Skokie Boulevard,
Northbrook, Illinois 60062-1626, telephone (847) 272-9800.
RISK FACTORS
General
As in every business, there are risk factors that affect the Operating
Partnership and its operations. Set forth below are some of the factors that
could cause the actual results of the Operating Partnership's operations or
plans to differ materially from expectations set forth elsewhere in this
Registration Statement.
Risk that Existing Indebtedness Will be Refinanced on Unfavorable Terms; Risk
that Increases in Interest Rates Will Adversely Affect Net Income and Cash
Available for Distribution; Management Could Cause the Operating Partnership to
Become Highly Leveraged Because Organizational Documents Contain No Limitation
on Debt
The partnership is obligated under a $100 million mortgage note maturing in
September 2000 secured by six properties that was issued to a trust qualifying
as a real estate mortgage investment conduit for federal income tax purposes
(the "REMIC Note"). Although the investment grade corporate ratings recently
assigned to the Operating Partnership by Standard & Poor's Investment Services
("Standard & Poor's") and Moody's Investors Service ("Moody's") is expected to
assist the Operating Partnership in refinancing such indebtedness at maturity or
sooner, there can be no assurance that the cost of replacement indebtedness
(including any penalty that may be payable upon the prepayment of the REMIC
Note) may not be greater than the cost of the existing indebtedness. The fact
that the Operating Company will continue to be obligated on a substantial amount
of debt, even if only a relatively small portion of such debt is secured,
subjects the Operating Partnership to risks of default if it is unable to pay
such debt at maturity, and may require the sale or mortgaging of properties of
the Operating Partnership at an inconvenient time or on terms that are adverse
to the Operating Partnership.
To the extent that the Operating Partnership is responsible for floating
rate debt (such as that incurred under the revolving line of credit) and to the
extent that its exposure to increases in interest rates is not eliminated
through interest rate protection or cap agreements, such increases will
adversely affect the Operating Partnership's net income and cash available for
distribution and may affect the amount of distributions it can make to the
holders of Units, including the Company.
The Amended and Restated Articles of Incorporation of the Company (the
"Charter") and the Bylaws of the Company (the "Bylaws") and the Second Restated
Agreement of Limited Partnership of the Operating Partnership (the "Operating
Partnership Agreement") do not contain any limitation on the amount of
indebtedness the Company or the Operating Partnership may incur. Although
management attempts to maintain a balance
3
<PAGE> 50
between total outstanding indebtedness and the value of the portfolio of the
Operating Partnership, (i.e., a ratio of debt and preferred stock to Real Estate
Value of 50% or less, with "Real Estate Value" defined as net operating income
dividend by 10.25%) there can be no assurance that management will not alter
this balance at any time. Accordingly, the Operating Partnership could become
more highly leveraged, resulting in an increase in debt service that could
adversely affect the Operating Partnership's ability to make expected
distributions to holders of limited partner units ("LP Units") and in an
increased risk of default on its obligations under any outstanding indebtedness.
Failure to pay its debt obligations when due could also result in the Operating
Partnership losing its interest in any properties that secure indebtedness
included within such obligations.
Adverse Effects on Creditworthiness of Debt Securities May Result From a
Highly Leveraged Transaction or Change in Control
Unless otherwise provided in a supplemental indenture, the indentures under
which Debt Securities will be issued do not contain any provisions that would
limit the ability of the Operating Partnership to incur indebtedness or protect
holders of Debt Securities against adverse effects on the creditworthiness of
the Debt Securities in the event of a highly leveraged transaction or change in
control (through the acquisition of securities, the election of directors or
otherwise) involving the Operating Partnership or the Company. Accordingly,
there can be no assurance that the Operating Partnership will not enter into
such a transaction and thereby adversely affect the Operating Partnership's
ability to meet its obligations under the Debt Securities.
Adverse Effect on the Business May Result if Operating Partnership Becomes
Liable for the Cost of Remediation on Any of its Properties; Risk that Operating
Partnership Would be Required to Take Further Actions at Commons of Chicago
Ridge
Under various federal, state and local laws, ordinances and regulations, an
owner of real estate is liable for the costs of removal or remediation of
certain hazardous or toxic substances on or in such property. Such laws often
impose such liability without regard to whether the owner knew of, or was
responsible for, the presence of such hazardous or toxic substances. The
presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or rent such
property or to use such property as collateral in its borrowings. All of the
Operating Partnership's properties, including those acquired in the Tucker
Acquisition (as hereinafter defined), have been subjected to Phase I or similar
environmental audits (which involve inspection without soil sampling or ground
water analysis) by independent environmental consultants. Except as described
below, these environmental audit reports have not revealed any potential
significant environmental liability, nor is management aware of any
environmental liability with respect to the properties that it believes would
have a material adverse effect on the Operating Partnership's business, assets
or results of operations. No assurance can be given that existing environmental
studies with respect to the properties reveal all environmental liabilities or
that any prior owner of any such property did not create any material
environmental condition not known to management.
Phase II site assessments of the Commons of Chicago Ridge property acquired
from Tucker Properties Corporation ("Tucker") have disclosed the presence of
contaminants in fill material and soil at the property that could be associated
with the property's former use as a landfill and as the former site of an
asphalt plant and storage tanks for petroleum products (which storage tanks have
been removed from the property), but not at such levels as would require
reporting to environmental agencies. These Phase II site assessments also
disclosed the presence in groundwater of contaminants similar to those detected
in the soil samples. Environmental assessments of the property have also
detected methane gas, probably associated with the former use of the property as
landfill. A regular maintenance program was implemented by Tucker and is being
continued by the Operating Partnership to control the migration and effect of
the methane gas. There can be no assurance that an environmental regulatory
agency such as the Illinois Environmental Protection Agency will not in the
future require further investigation to determine the source and vertical and
horizontal extent of the contamination. If any such investigation is required
and confirms the existence of contaminants at the levels disclosed in the Phase
II site assessments, it is possible that the relevant agency could require the
Operating Partnership to take action to address the contamination, which action
could range from ongoing monitoring to remediation of the contamination. Based
on the information currently available, management
4
<PAGE> 51
does not believe that the cost of responding to such contamination would be
material to the Operating Partnership.
In connection with the execution of the merger agreement relating to the
Tucker Acquisition, the Operating Partnership and certain individuals who had
previously provided a limited indemnity to Tucker for environmental liabilities
at Commons of Chicago Ridge (the "Individuals") agreed to indemnify the Company,
Operating Partnership and its affiliates against all claims, losses, costs and
expenses incurred by such parties arising out of any administrative, regulatory
or judicial action, suit, investigation or proceeding in connection with any
applicable environmental health or safety law regarding hazardous substances,
materials, wastes or petroleum products, or any common law right of action
regarding such substances, materials, wastes or products, whether brought by a
governmental or regulatory authority or by a third party, that is initiated on
or before October 4, 2003, with respect to conditions or acts at the Commons of
Chicago Ridge which existed prior to October 4, 1993. In connection with this
indemnification obligation, the Operating Partnership has agreed to keep the
Individuals reasonably informed of various activities relating to the property
and to consult with the Individuals with respect to any potential claims,
settlements and remediation which could trigger the indemnification obligations
of the Individuals. There can be no assurance that the Individuals will be in a
position to honor their indemnity obligations. Regardless of such
indemnification, based on the information currently available, management does
not believe that the environmental liabilities and expenses relating to the
Commons of Chicago Ridge property would have a material effect on the liquidity,
financial condition or operating results of the Operating Partnership.
Risk that Adverse Economic Trends in the Midwestern Region or the Retail
Industry Will Adversely Affect the Operating Partnership's Cash Available for
Distribution
Substantially all of the Operating Partnership's properties are located in
the Midwestern region of the United States and such properties consist
predominantly of community and neighborhood shopping centers. The Operating
Partnership's performance therefore is linked to economic conditions in the
Midwest and in the market for retail space generally. The market for retail
space has been adversely affected by the ongoing consolidation in the retail
sector, the adverse financial condition of certain large companies in this
sector and the excess amount of retail space in certain markets. To the extent
that these conditions impact the market rents for retail space, they could
result in a reduction of cash receipts and cash available for distribution and
thus affect the amount of distributions the Operating Partnership can make to
the holders of its outstanding units of partnership interests, including the
Company.
If a Significant Number of Tenants Were Unable to Meet Their Obligations to
the Operating Partnership, then Cash Available for Distribution Would Be
Adversely Affected; Tenants Which File for Bankruptcy Protection May Not Make
Rental Payments in a Timely Manner
Since substantially all of the Operating Partnership's income has been, and
will continue to be, derived from rental income from retail shopping centers,
the amount of cash receipts and cash available for distribution to the holders
of its Units, including the Company, would be adversely affected if a
significant number of tenants were unable to meet their obligations to the
Operating Partnership or if the Operating Partnership were unable to lease, on
economically favorable terms, a significant amount of space in its shopping
centers. In addition, in the event of default by a tenant, the Operating
Partnership may experience delays and incur substantial costs in enforcing its
rights as landlord.
At any time, a tenant of the Operating Partnership's properties may seek
the protection of the bankruptcy laws, which could result in the rejection and
termination of the tenant lease. Such an event could cause a reduction of cash
receipts and cash available for distribution and thus affect the amount of
distributions the Operating Partnership can make to the holders of its Units,
including the Company. No assurance can be given that any present tenant which
has filed for bankruptcy protection will continue making payments under its
lease or that any tenants will not file for bankruptcy protection in the future
or, if any tenants file, that they will continue to make rental payments in a
timely manner. In addition, a tenant may, from time to time, experience a
downturn in its business, which may weaken its financial condition and result in
a reduction or failure to make rental payments when due. If a lessee or
sublessee defaults in its obligations to the Operating
5
<PAGE> 52
Partnership, the Operating Partnership may experience delays in enforcing its
right as lessor or sublessor and may incur substantial costs and experience
significant delays associated with protecting its investment, including costs
incurred in renovating and releasing the property.
Adverse Impact on Operating Results Could Occur if the Operating Partnership
is Not Able to Lease Space at One North State for Which Existing Lease Has Been
Terminated
During the year ended December 31, 1996, more than 10% of the total revenue
of the Operating Partnership was derived from rents and expense reimbursements
from tenants of the One North State property, which is a "mixed use" property
located in downtown Chicago. The total rents currently being paid by certain of
this property's tenants may be in excess of current market rates. The leases of
these tenants begin to expire in 2001. One office tenant, Arthur Andersen,
however, has exercised an option to terminate its lease, effective as of April
1, 1998, and paid the Operating Partnership a $1.8 million cancellation fee.
Pursuant to the terms of the indenture governing the REMIC Note, this
termination fee was paid into a reserve account which is required to be used,
among other things, to pay for tenant alterations, leasing commissions and other
lease inducements directly related to this space. Any unused amount of this
reserve account must be used to repay the principal amounts owed under the REMIC
Note. The inability of the Operating Partnership to lease such property, or a
significant reduction in the amount of rent and expense reimbursements paid by
the tenants of such property, could have an adverse impact on the operating
results of the Operating Partnership.
Risks of Reduced Rental Income and Cash Available for Distribution from
Vacancies and Lease Renewals
The Operating Partnership is continually faced with expiring tenant leases
at its properties. Some lease expirations provide the Operating Partnership with
the opportunity to increase rentals or to hold the space available for a
stronger long-term tenancy. In other cases, there may be no immediately
foreseeable strong tenancy for space, and the space may remain vacant for a
longer period than anticipated or may be able to be re-leased only at less
favorable rents. In such situations, the Operating Partnership may be subject to
competitive and economic conditions over which it has no control. Accordingly,
there is no assurance that the effects of possible vacancies or lease renewals
at such properties may not reduce the rental income and cash available for
distribution below levels anticipated by the Operating Partnership.
Risk that Competition in the Properties' Market Areas Could Adversely Affect
Ability to Rent Space, Amount of Rents Charged or Development and Acquisition
Opportunities
All of the Operating Partnership's properties are located in developed
areas. There are numerous other retail properties and real estate companies
within the market area of each such property which compete with the Operating
Partnership for tenants and development and acquisition opportunities. The
number of competitive retail properties and real estate companies in such areas
could have a material effect on (i) the Operating Partnership's ability to rent
space at the properties and the amount of rents charged and (ii) development and
acquisition opportunities. The Operating Partnership competes for tenants and
acquisitions with others who have greater resources than it does.
Possible Adverse Consequences of Limitations on Insurance
The Operating Partnership carries comprehensive general liability coverage
and umbrella liability coverage on all of its properties with limits of
liability which the management deems adequate to insure against liability claims
and provide for cost of defense. Similarly, the Operating Partnership is insured
against the risk of direct physical damage in amounts that management estimates
to be adequate to reimburse the Operating Partnership on a replacement cost
basis for costs incurred to repair or rebuild each property, including loss of
rental income during the reconstruction period. Currently, the Operating
Partnership also insures the properties for loss caused by earthquake or flood
in the aggregate amount of $10 million per occurrence. Because of the high cost
of this type of insurance coverage and the wide fluctuations in price and
availability, management has made the determination that the risk of loss due to
earthquake and flood does not justify the cost to increase coverage limits any
further under current market conditions. Should the
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<PAGE> 53
availability and pricing of this coverage become more cost advantageous,
management would re-evaluate its position.
Uncertainty of Meeting Acquisition Objectives; Acquired Properties May Not
Meet Management's Expectation
The Operating Partnership continually seeks prospective acquisitions of
additional shopping centers and portfolios of shopping centers which management
believes can be purchased at attractive initial yields and/or which demonstrate
the potential for revenue and cash flow growth through implementation of
renovation, expansion, re-tenanting and re-leasing programs similar to those
undertaken with respect to properties in the existing portfolio. There can be no
assurance that the Operating Partnership will effect any potential acquisition
that it may evaluate. The evaluation process involves costs which are
non-recoverable in the case of acquisitions which are not consummated. In
addition, notwithstanding management's adherence to its criteria for evaluating
and due diligence regarding potential acquisitions, there can be no assurance
that any acquisition that is consummated will meet management's expectations.
Risk that Company's Control of the Operating Partnership May Allow the Company
to Take Actions Adverse to the Best Interests of the Limited Partners
The Operating Partnership Agreement gives the Company as general partner
broad control over the operations and business activities of the Operating
Partnership. In exercising its authority as general partner, the Company is
subject to the provisions of the Delaware Revised Uniform Limited Partnership
Act and to general fiduciary principles of fair dealing to the limited partners
as well as to any specific limitations or restrictions on its authority
contained in the Operating Partnership Agreement or in any individually
negotiated agreement with a particular limited partner.
Risk from Reliance Upon the Company to Manage the Operating Partnership;
Adverse Consequences of the Company's Failure to Qualify as a REIT; Risk of
Adverse Tax Consequences to Holders of Units
Although the fact that substantially all of the assets of the Company are
represented by its interest in the Operating Partnership, the Operating
Partnership in general, and the holders of the LP Units (as hereinafter defined)
in particular, must rely upon the Company as general partner to manage the
affairs and business of the Operating Partnership. In addition to the risks
described above that relate to the Operating Partnership, the Company is subject
to certain other risks that may affect its financial and other condition,
including particularly adverse consequences if the Company fails to qualify as a
REIT for federal income tax purposes. The description of certain risk factors
applicable to the Company contained under the caption "Business -- Risk Factors"
in Item 1 of the Company's 10-K report for the year ended December 31, 1996 is
hereby incorporated by reference.
Among the powers that the Company has as general partner of the Operating
Partnership are the powers to determine whether and when to sell any particular
property or properties owned by the Operating Partnership, subject to any
specific agreements limiting the power of sale that the Operating Partnership
may have entered into with the contributor or contributors of any specific
properties at the time that such contributor or contributors contributed their
interest in the property to the Operating Partnership in exchange for LP Units.
After the expiration of any such limiting agreement on the Company's authority
as general partner to sell a property, the property may be sold and such sale
may result in the recognition of capital gains or other tax consequences to the
holder or holders of LP Units that were deferred at the time of the original
contribution of the properties to the Operating Partnership.
Risk that Ability to Transfer General Partnership Interest in Sole Discretion
of the Company Will Result in a General Partner Not in the Best Interest of the
Limited Partners
Pursuant to the Operating Partnership Agreement, the Company, as general
partner, may, in its sole and absolute discretion, transfer its interest in the
Operating Partnership at any time; provided, however, that until March 16, 1998,
the general partnership may not without the consent of the majority of the
limited partners, transfer its general partnership interest to any of its
affiliates other than an affiliate whose securities will
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<PAGE> 54
become issuable upon redemption of the Units. The Partnership Agreement does not
provide the LP Unit holders any voting or consent rights with respect to a
transfer of the general partnership interest. Accordingly, the Company could,
without the consent of the LP Unit holders, transfer its general partnership
interest to another entity which could use the broad powers of the general
partner in a manner not in the best interests of the LP Unit holders or in a
manner which would have an adverse effect on the business or financial condition
of the Operating Partnership. Although the Company has no present intention of
transferring its general partnership interest, there can be no assurance that it
will not do so at some point in the future.
Limits on Changes in Control in Organizational Documents May Discourage a
Third Party From Making an Acquisition Proposal
Certain provisions contained in the Company's Charter and Bylaws may have
the effect of discouraging a third party from making an acquisition proposal for
the Company and may thereby inhibit a change in control of the Company. These
provisions include the following: (i) the Company's Charter provides for three
classes of Directors, with the term of office of one class expiring each year,
(ii) the Company's Bylaws provide that the holders of not less than 25% of the
outstanding shares of Common Stock may call a special meeting of the Company's
stockholders, and (iii) the Charter generally limits any holder from acquiring
more than 9.8% of the value of all outstanding capital stock of the Company.
With respect to clause (ii) in the proceeding sentence, Maryland General
Corporation Law ("MGCL") authorizes the Directors of the Company to amend the
Bylaws to increase the number of outstanding shares of Common Stock required to
call a special meeting from 25% to a majority.
The provisions described above could have a potential anti-takeover effect
on the Company. The staggered Board provision in the Charter prevents
stockholders from voting on the election of more than one class of directors at
each annual meeting of stockholders and thus may have the effect of keeping the
members of the Board of Directors of the Company in control for a longer period
to time. The staggered board provision and the provision in the Bylaws requiring
holders of at least 25% of the outstanding shares of Common Stock (as
hereinafter defined) to call a special meeting of stockholders may have the
effect of making it more difficult for a third party to acquire control of the
Company without the consent of its Board of Directors, including certain
acquisitions which stockholders deem to be in their best interest. In addition,
the Ownership limits in the Charter may also (i) deter certain tender offers for
the shares of Common Stock which might be attractive to certain stockholders, or
(ii) limit the opportunity for stockholders to receive a premium for their
shares of Common Stock that might otherwise exist if an investor were attempting
to assemble a block of shares in excess of 9.8% of the value of the outstanding
shares of Common Stock, or otherwise effect a change in control.
Maryland Business Combination Statute. Under the MGCL, certain "business
combinations" (including mergers, consolidations, share exchanges, certain asset
transfers and certain issuances of equity securities) between a Maryland
corporation and any persons who own 10% or more of the voting power of the
corporation's shares (an "Interested Stockholder") are prohibited for five years
after the most recent date on which the Interested Stockholder became an
Interested Stockholder. Thereafter, any such business combination must be
approved by the affirmative vote of at least 80% of the votes entitled to be
cast by holders of outstanding voting shares of the corporation other than
shares held by the Interested Stockholder with whom the business combination is
to be effected, unless, among other things, the holders of the corporation's
shares receive a minimum price (as defined in the MGCL) for their shares and the
consideration is received in cash or in the same form as previously paid by the
Interested Stockholder for the shares that it owns. However, these provisions of
Maryland law do not apply to "business combinations" with an Interested
Stockholder that are approved or exempted by the board of directors of the
corporation before that Interested Stockholder becomes an Interested
Stockholder.
Maryland Control Share Acquisition Statute. Maryland law provides that
"control shares" of a Maryland corporation acquired in a "control share
acquisition" have no voting rights except to the extent approved by a vote of
two-thirds of the votes eligible under the statute to be cast on that matter.
"Control Shares" are voting shares that, if aggregated with all other such
shares of stock previously acquired by the acquiror, would entitle the acquiror
to exercise voting power in electing directors within one of the following
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<PAGE> 55
ranges of voting power: (i) one-fifth or more but less than one-third, (ii)
one-third or more but less than a majority, or (iii) a majority of all voting
power. Control Shares do not include shares the acquiring person is then
entitled to vote as a result of having previously obtained stockholder approval.
A "control share acquisition" means the acquisition of Control Shares, subject
to certain expenses.
If voting rights are not approved at a meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the Control Shares (except those for which voting rights have previously
been approved) for fair value. If voting rights for Control Shares are approved
at a stockholder meeting and the acquiror becomes entitled to vote a majority of
the shares entitled to vote, all other stockholders may exercise appraisal
rights.
THE OPERATING PARTNERSHIP
Bradley Operating Limited Partnership (the "Operating Partnership") is the
entity through which Bradley Real Estate, Inc. (the "Company"), a
self-administered and self-managed real estate investment trust ("REIT"),
conducts substantially all of its business and owns (either directly or through
subsidiaries) substantially all of its assets. The Operating Partnership is an
owner of grocery-anchored, open-air neighborhood and community shopping centers
in the Midwestern region of the United States and is engaged in the business of
acquiring, and actively managing and leasing such properties. As used herein,
the term "Bradley Real Estate, Inc." refers also to its predecessor Bradley Real
Estate Trust, and the term "Company" or "Bradley" as used herein refers to
Bradley Real Estate, Inc. and its subsidiaries on a consolidated basis
(including Bradley Operating Limited Partnership and its subsidiaries) or, where
the context so requires, Bradley Real Estate, Inc. only. The term "Operating
Partnership" as used herein means Bradley Operating Limited Partnership and its
subsidiaries on a consolidated basis, or, where the context so requires, Bradley
Operating Limited Partnership only.
The Company has elected to qualify as a REIT for federal income tax
purposes since its organization in 1961. The Company believes it is the nation's
oldest continually qualified REIT. In March 1996, the Company completed the
acquisition of Tucker (the "Tucker Acquisition"). The Tucker acquisition was
consummated through the issuance by the Company of approximately 7.4 million
shares of its common stock, par value $.01 per share, ("Common Stock"), valued
at $13.96 per share, and was accounted for using the purchase method of
accounting. Tucker held title to all of its properties through two partnerships:
eight properties through Tucker Operating Limited Partnership ("TOP"), in which
Tucker had a 95.9% general partnership interest, and six properties through
Tucker Financing Partnership ("TFP"), a general partnership of which TOP owned
99% and a wholly-owned Tucker corporate subsidiary owned the remaining 1%. Upon
the acquisition of Tucker, the Company succeeded to Tucker's interest in TOP,
TFP and the wholly-owned Tucker corporate subsidiary, and the name "Bradley" was
substituted for "Tucker" in each subsidiary and partnership. In August 1997, the
Company contributed to the Operating Partnership its interests in the 18
properties that it had theretofore held directly. The Operating Partnership
therefore succeeds Bradley as the entity through which the Company expects to
expand its ownership and operation of properties primarily located in the
Midwestern region of the country.
The Company currently owns an approximately 95% economic interest in and is
the sole general partner of the Operating Partnership (this structure is
commonly referred to as an umbrella partnership REIT or "UPREIT"). The board of
directors of the Company manages the affairs of the Operating Partnership by
directing the affairs of the Company. Economic interests in the equity of the
Operating Partnership are evidenced by units of partnership interest ("Units")
with the interest of the general partner evidenced by general partner units ("GP
Units").
The limited partners of the Operating Partnership are persons who received
limited partner interests evidenced by LP Units in connection with their
contributions of direct or indirect interests in certain properties to the
Operating Partnership. The Operating Partnership is obligated to redeem each LP
Unit at the request of the holder thereof for cash equal to the fair market
value of a share of the Company's Common Stock at the time of such redemption,
provided that the Company, at its option, may elect to acquire any such LP Unit
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<PAGE> 56
presented for redemption for either one share of Common Stock or cash. The
Company presently anticipates that it will elect to issue Common Stock to
acquire LP Units for redemption, rather than paying cash. With each such
redemption, the Company's percentage ownership interest in the equity of the
Operating Partnership will increase. In addition, whenever the Company issues
Common Stock, it is anticipated that the Company will contribute any net
proceeds therefrom to the Operating Partnership and the Operating Partnership
will issue an equivalent number of GP Units to the Company. The Operating
Partnership has authority to issue preferred units that may have distribution
and other rights senior to the rights of holders of Units, but the Operating
Partnership may issue preferred units to the Company only in exchange for the
contribution by the Company to the Operating Partnership of the net proceeds
from the Company's issuance of an equivalent number of shares of preferred stock
that have equivalent seniority rights over the rights of holders of shares of
Common Stock of the Company.
The Operating Partnership may issue additional Units to purchase additional
properties or to purchase land parcels for the development of properties in
transactions that defer some or all of the seller's tax consequences. The
Operating Partnership believes that many potential sellers of properties have a
low tax basis in their properties and would be more willing to sell the
properties in transactions that defer the federal income tax consequences of the
sale. Offering Units representing an equity interest in the Operating
Partnership instead of cash for properties may provide potential sellers with
partial federal income tax deferral.
As part of its ongoing business, the Operating Partnership regularly
evaluates, and engages in discussions with public and private real estate
entities regarding possible portfolio or individual asset acquisitions or
business combinations. In evaluating potential acquisitions, the Operating
Partnership focuses principally on community and neighborhood shopping centers
in the upper Midwest -- generally consisting of the states of Illinois, Indiana,
Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South
Dakota and Wisconsin -- that are anchored by strong national, regional and
independent grocery store chains. The Operating Partnership favors
grocery-anchored shopping centers because, based on its experience and current
research, such properties offer better prospects for sustainable cash flow
growth over time due to their strong and predictable daily consumer traffic and
are less susceptible to downturns in the general economy than apparel- or
leisure-anchored shopping center properties.
The Operating Partnership is a Delaware limited partnership, and its
general partner, the Company, is a Maryland corporation. The executive offices
of both the Operating Partnership and the Company are located at 40 Skokie
Boulevard, Suite 600, Northbrook, Illinois 60062-1626 and their telephone number
is (847) 272-9800.
Reference is made to the applicable Prospectus Supplement accompanying this
Prospectus for additional information concerning the Operating Partnership as of
the date of such Prospectus Supplement.
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<PAGE> 57
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Operating Partnership intends to use the net proceeds from the sale of Debt
Securities primarily to repay indebtedness of the Operating Partnership, which
may include indebtedness incurred in connection with the acquisition,
development or improvement of shopping centers, to acquire or develop additional
shopping centers and to fund expansions and/or improvements to such shopping
centers or to certain shopping centers already owned by the Operating
Partnership.
Pending their use as described above, the net proceeds from the sale of any
Debt Securities may be used for other general purposes of the Operating
Partnership or invested in short-term securities.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of the Operating Partnership for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------ -------------------------------
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ ----
<S> <C> <C> <C> <C> <C>
1.21:1 2.84:1 2.79:1 2.63:1 2.95:1 2.79:1
</TABLE>
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income before income
taxes and extraordinary items. Fixed charges consist of interest costs, whether
expensed or capitalized, the interest component of rental expense, if any, and
amortization of debt discounts and issue costs, whether expensed or capitalized.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities will be issued under one or more indentures, each dated
as of a date prior to the issuance of the Debt Securities to which it relates
and containing such terms as either the chief executive officer or the chief
financial officer of the general partner shall determine. All of the Debt
Securities issued hereby will be investment grade. Senior Securities and
Subordinated Securities may be issued pursuant to separate indentures
(respectively, a "Senior Indenture" and a "Subordinated Indenture"), in each
case between the Operating Partnership and a trustee (a "Trustee"), which may be
the same Trustee, and in the form that has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part, subject to such
amendments or supplements as may be adopted from time to time. The Senior
Indenture and the Subordinated Indenture, as amended or supplemented from time
to time, are sometimes hereinafter referred to collectively as the "Indentures."
The Indentures will be subject to and governed by the Trust Indenture Act of
1939, as amended (the "TIA"). The statements made under this heading and in the
applicable Prospectus Supplement relating to the Debt Securities and the
Indentures are descriptions of the material provisions thereof.
Capitalized terms used herein and not defined shall have the meanings
assigned to them in the applicable Indenture.
TERMS
The indebtedness represented by the Senior Securities will rank equally
with all other unsecured and unsubordinated indebtedness of the Operating
Partnership. The indebtedness represented by Subordinated Securities will be
subordinated in right of payment to the prior payment in full of the Senior Debt
of the Operating Partnership as described under "Subordination." The material
terms of the Debt Securities offered by a Prospectus Supplement will be
described in the applicable Prospectus Supplement, along with any applicable
additions to the general terms of the Debt Securities as described herein and
any applicable federal income tax considerations. Accordingly, for a description
of the material terms of any series of Debt
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Securities, reference must be made to both the Prospectus Supplement relating
thereto and the description of the Debt Securities set forth in this Prospectus.
Except as set forth in any Prospectus Supplement, the Debt Securities may
be issued without limit as to aggregate principal amount, in one or more series,
in each case as established from time to time by the Operating Partnership or as
set forth in the applicable Indenture or in one or more indentures supplemental
to such Indenture. All Debt Securities of one series need not be issued at the
same time and, unless otherwise provided, a series may be reopened, without the
consent of the holders of the Debt Securities of such series, for issuance of
additional Debt Securities of such series.
Each Indenture will provide that the Operating Partnership may, but need
not, designate more than one Trustee thereunder, each with respect to one or
more series of Debt Securities. Any Trustee under an Indenture may resign or be
removed with respect to one or more series of Debt Securities and a successor
Trustee may be appointed to act with respect to such series. In the event that
two or more persons are acting as Trustee with respect to different series of
Debt Securities, each such Trustee shall be a Trustee of a trust under the
applicable Indenture separate and apart from the trust administered by any other
Trustee, and, except as otherwise indicated herein, any action described herein
to be taken by each Trustee may be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Debt Securities for which it
is Trustee under the applicable Indenture.
The following summaries set forth certain general terms and provisions of
the Indentures and the Debt Securities. The Prospectus Supplement relating to
the series of Debt Securities being offered will contain further terms of such
Debt Securities, including the following specific terms:
(1) The title of such Debt Securities and whether such Debt Securities
are Senior Securities or Subordinated Securities;
(2) The aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) The price (expressed as a percentage of the principal amount
thereof) at which such Debt Securities will be issued and, if other than
the principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity thereof;
(4) The date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be payable;
(5) The rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) The date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the dates on which any
such interest will be payable, the record dates for such interest payment
dates, or the method by which such dates shall be determined, the persons
to whom such interest shall be payable, and the basis upon which interest
shall be calculated if other than that of a 360-day year of twelve 30-day
months;
(7) The place or places where the principal of (and premium, if any)
and interest, if any, on such Debt Securities will be payable, where such
Debt Securities may be surrendered for registration of transfer or exchange
and where notices or demands to or upon the Operating Partnership in
respect of such Debt Securities and the applicable Indenture may be served;
(8) The period or periods, if any, within which, the price or prices
at which and the other terms and conditions upon which such Debt Securities
may, pursuant to any optional or mandatory redemption provisions, be
redeemed, as a whole or in part, at the option of the Operating
Partnership;
(9) The obligation, if any, of the Operating Partnership to redeem,
repay or purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a holder thereof, and the period or
periods within which, the price or prices at which and the other terms and
conditions upon
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which such Debt Securities will be redeemed, repaid or purchased, as a
whole or in part, pursuant to such obligation;
(10) If other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(11) Whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies, currency unit
or units, or composite currency or currencies) and the manner in which such
amounts shall be determined;
(12) Whether such Debt Securities will be issued in certificated or
book-entry form and, if in book entry form, the identity of the depository
for such Debt Securities;
(13) Whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the denominations
thereof and terms and conditions relating thereto;
(14) The applicability, if any, of the defeasance and covenant
defeasance provisions described herein or set forth in the applicable
Indenture, or any modification thereof,
(15) Whether and under what circumstances the Operating Partnership
will pay any additional amounts on such Debt Securities in respect of any
tax, assessment or governmental charge and, if so, whether the Company will
have the option to redeem such Debt Securities in lieu of making such
payment;
(16) Any additions to the events of default or covenants of the
Operating Partnership with respect to such Debt Securities, and any
additions to the right of any Trustee or any of the holders to declare the
principal amount of any of such Debt Securities due and payable;
(17) With respect to any Debt Securities that provide for optional
redemption or prepayment upon the occurrence of certain events (such as a
change of control of the Operating Partnership), (i) the possible effects
of such provisions on the market price of the Operating Partnership's or
the Company's securities or in deterring certain mergers, tender offers or
other takeover attempts, and the intention of the Operating Partnership to
comply with the requirements of Rule 14e-1 under the Exchange Act and any
other applicable securities laws in connection with such provisions; (ii)
whether the occurrence of the specified events may give rise to
cross-defaults on other indebtedness such that payment on such Debt
Securities may be effectively subordinated; and, (iii) the existence of any
limitation on the Operating Partnership's financial or legal ability to
repurchase such Debt Securities upon the occurrence of such an event
(including, if true, the lack of assurance that such a repurchase can be
effected) and the impact, if any, under the Indenture of such a failure,
including whether and under what circumstances such a failure may
constitute an Event of Default; and
(18) Any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture.
If so provided in the applicable Prospectus Supplement, the Debt Securities
may be issued at a discount below their principal amount and provide for less
than the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof ("Original Issue Discount Securities"). In
such cases, any special U.S. federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable Prospectus Supplement.
Except as described under "-- Merger, Consolidation or Sale of Assets" or
as may be set forth in any Prospectus Supplement, the Debt Securities will not
contain any provisions that would limit the ability of the Operating Partnership
to incur indebtedness or that would afford holders of Debt Securities protection
in the event of (i) a highly leveraged or similar transaction involving the
Operating Partnership, the management of the Operating Partnership or the
Company, or any affiliate of any such party, (ii) a change of control, or
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<PAGE> 60
(iii) a reorganization, restructuring, merger or similar transaction involving
the Operating Partnership that may adversely affect the holders of the Debt
Securities. In addition, subject to the limitations set forth under "-- Merger,
Consolidation or Sale of Assets," the Operating Partnership may, in the future,
enter into certain transactions, such as the sale of all or substantially all of
its assets or the merger or consolidation of the Operating Partnership, that
would increase the amount of the Operating Partnership's indebtedness or
substantially reduce or eliminate the Operating Partnership's indebtedness or
substantially reduce or eliminate the Operating Partnership's assets, which may
have an adverse effect on the Operating Partnership's ability to service its
indebtedness, including the Debt Securities. Reference is made to the applicable
Prospectus Supplement for information with respect to any additions to the
events of default or covenants that are described below, including any addition
of a covenant or other provision providing event risk or similar protection.
Any Prospectus Supplement relating to a series of Debt Securities that is
subject to the optional redemption of such series of Debt Securities will
describe, to the extent applicable, the obligation of the Operating Partnership
to comply with the requirements of Rule 14(e)-1 under the Exchange Act and any
other applicable securities laws.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for any
authorized denomination of other Debt Securities of the same series and of a
like aggregate principal amount and tenor upon surrender of such Debt Securities
at the corporate trust office of the applicable Trustee or at the office of any
transfer agent designated by the Operating Partnership for such purpose. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer or exchange thereof at the corporate trust office of
the applicable Trustee or at the office of any transfer agent designated by the
Operating Partnership for such purpose. Every Debt Security surrendered for
registration of transfer or exchange must be duly endorsed or accompanied by a
written instrument of transfer, and the person requesting such action must
provide evidence of title and identity satisfactory to the applicable Trustee or
transfer agent. No service charge will be made for any registration of transfer
or exchange of any Debt Securities, but the Trustee or the Operating Partnership
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. If the applicable Prospectus Supplement
refers to any transfer agent (in addition to the applicable Trustee) initially
designated by the Operating Partnership with respect to any series of Debt
Securities, the Operating Partnership may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that the Operating Partnership will be required
to maintain a transfer agent in each place of payment for such series. The
Operating Partnership may at any time designate additional transfer agents with
respect to any series of Debt Securities.
Neither the Operating Partnership nor any Trustee shall be required (i) to
issue, register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before the day of mailing
of a notice of redemption of any Debt Securities that may be selected for
redemption and ending at the close of business on the day of such mailing; (ii)
to register the transfer of or exchange any Debt Security, or portion thereof,
so selected for redemption, in whole or in part, except the unredeemed portion
of any Debt Security being redeemed in part; or (iii) to issue, register the
transfer of or exchange any Debt Security that has been surrendered for
repayment at the option of the holder, except the portion, if any, of such Debt
Security not to be so repaid.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indentures will provide that the Operating Partnership may, without the
consent of the holders of any outstanding Debt Securities, consolidate with, or
sell, lease or convey all or substantially all of its assets to, or merge with
or into, any other entity provided that (i) either the Operating Partnership
shall be the continuing entity, or the successor entity (if other than the
Operating Partnership) formed by or resulting
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<PAGE> 61
from any such consolidation or merger or which shall have received the transfer
of such assets, shall expressly assume (A) the Operating Partnership's
obligations to pay principal of (and premium, if any) and interest on all of the
Debt Securities and (B) the due and punctual performance and observance of all
of the covenants and conditions contained in each Indenture; (ii) immediately
after giving effect to such transaction and treating any indebtedness that
becomes an obligation of the Operating Partnership or any subsidiary as a result
thereof as having been incurred by the Operating Partnership or such subsidiary
at the time of such transaction, no event of default under the Indentures, and
no event which, after notice or the lapse of time, or both, would become such an
event of default, shall have occurred and be continuing; and (iii) an officers'
certificate and legal opinion covering such conditions shall be delivered to
each Trustee.
CERTAIN COVENANTS
Existence. Except as permitted under "-- Merger, Consolidation or Sale of
Assets," the Indentures will require the Operating Partnership to do or cause to
be done all things necessary to preserve and keep in full force and effect its
existence, rights and franchises; provided, however, that the Operating
Partnership shall not be required to preserve any right or franchise if it
determines that the preservation thereof is no longer desirable in the conduct
of its business.
Maintenance of Properties. The Indentures will require the Operating
Partnership to cause all of its material properties used or useful in the
conduct of its business or the business of any subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Operating Partnership may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that the Operating Partnership and its subsidiaries shall not
be prevented from selling or otherwise disposing of their properties for value
in the ordinary course of business.
Insurance. The Indentures will require the Operating Partnership to cause
each of its and its subsidiaries' insurable properties to be insured against
loss or damage at least equal to their then full insurable value with insurers
of recognized responsibility and, if described in the applicable Prospectus
Supplement, having a specified rating from a recognized insurance rating
service.
Payment of Taxes and Other Claims. The Indentures will require the
Operating Partnership to pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges levied or imposed upon it or any subsidiary or upon the
income, profits or property of the Operating Partnership or any subsidiary and
(ii) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon the property of the Operating Partnership or any
subsidiary; provided, however, that the Operating Partnership shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith.
Additional Covenants. Any additional covenants of the Operating
Partnership with respect to any series of Debt Securities will be set forth in
the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Unless otherwise provided in the applicable Prospectus Supplement, each
Indenture will provide that the following events are "Events of Default" with
respect to any series of Debt Securities issued thereunder: (i) default for 30
days in the payment of any installment of interest on any Debt Security of such
series; (ii) default in the payment of principal of (or premium, if any, on) any
Debt Security of such series at its maturity; (iii) default in making any
sinking fund payment as required for any Debt Security of such series; (iv)
default in the performance or breach of any other covenant or warranty of the
Operating Partnership contained in the Indenture (other than a covenant added to
the Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series), continued for 60 days after written notice
as provided in the applicable Indenture; (v) default under any bond, debenture,
note or other evidence of indebtedness for money borrowed (except mortgage
indebtedness) by the Operating Partnership or any of its subsidiaries in an
aggregate principal amount in excess of $25,000,000 or under any indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money
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borrowed (except mortgage indebtedness) by the Operating Partnership or any of
its subsidiaries in an aggregate principal amount in excess of $25,000,000,
whether such indebtedness exists on the date of such Indenture or shall
thereafter be created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable or such obligations being accelerated,
without such acceleration having been rescinded or annulled; (vi) certain events
of bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Operating Partnership or any Significant Subsidiary
of the Operating Partnership; and (vii) any other event of default provided with
respect to a particular series of Debt Securities. The term "Significant
Subsidiary" has the meaning ascribed to such term in Regulation S-X promulgated
under the Securities Act.
If an Event of Default under any Indenture with respect to Debt Securities
of any series at the time outstanding occurs and is continuing, then in every
such case the applicable Trustee or the holders of not less than 25% in
principal amount of the Debt Securities of that series will have the right to
declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities or indexed securities, such portion of the
principal amount as may be specified in the terms thereof) of all the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Operating Partnership (and to the applicable Trustee if given by
the holders). However, at any time after such a declaration of acceleration with
respect to Debt Securities of such series (or of all Debt Securities then
outstanding under any Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
applicable Trustee, the holders of not less than a majority in principal amount
of outstanding Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) may rescind and
annul such declaration and its consequences if (i) the Operating Partnership
shall have deposited with the applicable Trustee all required payments of the
principal of (and premium, if any) and interest on the Debt Securities of such
series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the applicable Trustee; and (ii) all events of default, other than
the non-payment of accelerated principal (or specified portion thereof), with
respect to Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) have been cured
or waived as provided in such Indenture. The Indentures will also provide that
the holders of not less than a majority in principal amount of the outstanding
Debt Securities of any series (or of all Debt Securities then outstanding under
the applicable Indenture, as the case may be) may waive any past default with
respect to such series and its consequences, except a default (i) in the payment
of the principal of (or premium, if any) or interest on any Debt Security of
such series; or (ii) in respect of a covenant or provision contained in the
applicable Indenture that cannot be modified or amended without the consent of
the holder of each outstanding Debt Security affected thereby.
The Indentures will require each Trustee to give notice to the holders of
Debt Securities within 90 days of a default under the applicable Indenture
unless such default shall have been cured or waived; provided, however, that
such Trustee may withhold notice to the holders of any series of Debt Securities
of any default with respect to such series (except a default in the payment of
the principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if specified responsible officers of such Trustee
consider such withholding to be in the interest of such holders.
The Indentures will provide that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the case of failure of
the applicable Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an event of default from the
holders of not less than 25% in principal amount of the outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it. This provision will not prevent, however, any holder of Debt
Securities from instituting suit for the enforcement of payment of the principal
of (and premium, if any) and interest on such Debt Securities at the respective
due dates thereof.
The Indentures will provide that, subject to provisions in each Indenture
relating to its duties in case of default, a Trustee will be under no obligation
to exercise any of its rights or powers under an Indenture at the
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request or direction of any holders of any series of Debt Securities then
outstanding under such Indenture, unless such holders shall have offered to the
Trustee thereunder reasonable security or indemnity. The holders of not less
than a majority in principal amount of the outstanding Debt Securities of any
series (or of all Debt Securities then outstanding under an Indenture, as the
case may be) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Trustee, or
of exercising any trust or power conferred upon such Trustee. However, a Trustee
may refuse to follow any direction which is in conflict with any law or the
applicable Indenture, which may involve such Trustee in personal liability or
which may be unduly prejudicial to the holders of Debt Securities of such series
not joining therein.
Within 120 days after the close of each fiscal year, the Operating
Partnership will be required to deliver to each Trustee a certificate, signed by
one of several specified officers of the Operating Partnership, stating whether
or not such officer has knowledge of any default under the applicable Indenture
and, if so, specifying each such default and the nature and status thereof.
MODIFICATION OF THE INDENTURES
Except as set forth in the second following paragraph, modifications and
amendments of an Indenture will be permitted to be made only with the consent of
the holders of not less than a majority in principal amount of all outstanding
Debt Securities issued under such Indenture affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the holder of each such Debt Security affected thereby,
(i) change the stated maturity of the principal of, or any installment of
interest (or premium, if any) on, any such Debt Security; (ii) reduce the
principal amount of, or the rate or amount of interest on, or any premium
payable on redemption of, any such Debt Security, or reduce the amount of
principal of an Original Issue Discount Security that would be due and payable
upon declaration of acceleration of the maturity thereof or would be provable in
bankruptcy, or adversely affect any right of repayment of the holder of any such
Debt Security; (iii) change the place of payment, or the coin or currency, for
payment of principal of, premium, if any, or interest on any such Debt Security;
(iv) impair the right to institute suit for the enforcement of any payment on or
with respect to any such Debt Security; (v) reduce the above-stated percentage
of any outstanding Debt Securities necessary to modify or amend the applicable
Indenture with respect to such Debt Securities, to waive compliance with certain
provisions thereof or certain defaults and consequences thereunder or to reduce
the quorum or voting requirements set forth in the applicable Indenture; or (vi)
modify any of the foregoing provisions or any of the provisions relating to the
waiver of certain past defaults or certain covenants, except to increase the
required percentage to effect such action or to provide that certain other
provisions may not be modified or waived without the consent of the holder of
such Debt Security.
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all holders of Debt Securities
of that series, waive, insofar as that series is concerned, compliance by the
Operating Partnership with certain restrictive covenants of the applicable
Indenture.
Modifications and amendments of an Indenture will be permitted to be made
by the Operating Partnership and the respective Trustee thereunder without the
consent of any holder of Debt Securities for any of the following purposes: (i)
to evidence the succession of another person to the Operating Partnership as
obligor under such Indenture; (ii) to add to the covenants of the Operating
Partnership for the benefit of the holders of all or any series of Debt
Securities or to surrender any right or power conferred upon the Operating
Partnership in such Indenture; (iii) to add events of default for the benefit of
the holders of all or any series of Debt Securities; (iv) to add or change any
provisions of an Indenture to facilitate the issuance of, or to liberalize
certain terms of, Debt Securities in bearer form, or to permit or facilitate the
issuance of Debt Securities in uncertificated form, provided that such action
shall not adversely affect the interests of the holders of the Debt Securities
of any series in any material respect; (v) to change or eliminate any provisions
of an Indenture, provided that any such change or elimination shall become
effective only when there are no Debt Securities outstanding of any series
created prior thereto which are entitled to the benefit of such provision; (vi)
to secure the Debt Securities; (vii) to establish the form or terms of Debt
Securities of any series; (viii) to provide for the acceptance of appointment by
a successor Trustee or facilitate the
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administration of the trusts under an Indenture by more than one Trustee; (ix)
to cure any ambiguity, defect or inconsistency in an Indenture, provided that
such action shall not adversely affect the interests of holders of Debt
Securities of any series issued under such Indenture; or (x) to supplement any
of the provisions of an Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt Securities,
provided that such action shall not adversely affect the interests of the
holders of the outstanding Debt Securities of any series.
The Indentures will provide that in determining whether the holders of the
requisite principal amount of outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of any Debt Security denominated in a foreign currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above); (iii) the
principal amount of an indexed security that shall be deemed outstanding shall
be the principal face amount of such indexed security at original issuance,
unless otherwise provided with respect to such indexed security pursuant to such
Indenture; and (iv) Debt Securities owned by the Operating Partnership or any
other obligor upon the Debt Securities, or any affiliate of the Operating
Partnership or of such other obligor shall be disregarded.
The Indentures will contain provisions for convening meetings of the
holders of Debt Securities of a series. A meeting will be permitted to be called
at any time by the applicable Trustee, and also, upon request, by the Operating
Partnership or the holders of at least 10% in principal amount of the
outstanding Debt Securities of such series, in any such case upon notice given
as provided in such Indenture. Except for any consent that must be given by the
holder of each Debt Security affected by certain modifications and amendments of
an Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; provided, however, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
holders of a specified percentage, which is less than a majority, in principal
amount of the outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of holders of Debt Securities of any series duly
held in accordance with an Indenture will be binding on all holders of Debt
Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding Debt
Securities of a series, the persons holding or representing such specified
percentage in principal amount of the outstanding Debt Securities of such series
will constitute a quorum.
Notwithstanding the foregoing provisions, the Indentures will provide that
if any action is to be taken at a meeting of holders of Debt Securities of any
series with respect to any request, demand, authorization, direction, notice,
consent, waiver and other action that such Indenture expressly provides may be
made, given or taken by the holders of a specified percentage in principal
amount of all outstanding Debt Securities affected thereby, or of the holders of
such series and one or more additional series: (i) there shall be no minimum
quorum requirement for such meeting; and (ii) the principal amount of the
outstanding Debt Securities of such series that vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made,
given or taken under such Indenture.
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SUBORDINATION
Unless otherwise provided in the applicable Prospectus Supplement,
Subordinated Securities will be subject to the following subordination
provisions.
Upon any distribution to creditors of the Operating Partnership in a
liquidation, dissolution or reorganization, the payment of the principal of and
interest on any Subordinated Securities will be subordinated to the extent
provided in the applicable Indenture in right of payment to the prior payment in
full of all Senior Debt (as defined below), but the obligation of the Operating
Partnership to make payments of the principal of and interest on such
Subordinated Securities will not otherwise be affected. No payment of principal
or interest will be permitted to be made on Subordinated Securities at any time
if a default on Senior Debt exists that permits the holders of such Senior Debt
to accelerate its maturity and the default is the subject of judicial
proceedings or the Operating Partnership receives notice of the default. After
all Senior Debt is paid in full and until the Subordinated Securities are paid
in full, holders will be subrogated to the rights of holders of Senior Debt to
the extent that distributions otherwise payable to holders have been applied to
the payment of Senior Debt. The Subordinated Indenture will not restrict the
amount of Senior Debt or other indebtedness of the Operating Partnership and its
subsidiaries. As a result of these subordination provisions, in the event of a
distribution of assets upon insolvency, holders of Subordinated Indebtedness may
recover less, ratably, than general creditors of the Operating Partnership.
Senior Debt will be defined in the applicable Indenture as the principal of
and interest on, or substantially similar payments to be made by the Operating
Partnership in respect of, the following, whether outstanding at the date of
execution of the applicable Indenture or thereafter incurred, created or
assumed: (i) indebtedness of the Operating Partnership for money borrowed or
represented by purchase-money obligations; (ii) indebtedness of the Operating
Partnership evidenced by notes, debentures, or bonds, or other securities issued
under the provisions of an indenture, fiscal agency agreement or other
agreement; (iii) obligations of the Operating Partnership as lessee under leases
of property either made as part of any sale and leaseback transaction to which
the Operating Partnership is a party or otherwise; (iv) indebtedness,
obligations and liabilities of others in respect of which the Operating
Partnership is liable contingently or otherwise to pay or advance money or
property or as guarantor, endorser or otherwise or which the Operating
Partnership has agreed to purchase or otherwise acquire; and (v) any binding
commitment of the Operating Partnership to fund any real estate investment or to
fund any investment in any entity making such real estate investment, in each
case other than (A) any such indebtedness, obligation or liability referred to
in clauses (i) through (iv) above as to which, in the instrument creating or
evidencing the same pursuant to which the same is outstanding, it is provided
that such indebtedness, obligation or liability is not superior in right of
payment to the Subordinated Securities or ranks without preference to the
Subordinated Securities; (B) any such indebtedness, obligation or liability
which is subordinated to indebtedness of the Operating Partnership to
substantially the same extent as or to a greater extent than the Subordinated
Securities are subordinated; and (C) the Subordinated Securities. There will not
be any restrictions in any Indenture relating to Subordinated Securities upon
the creation of additional Senior Debt.
If this Prospectus is being delivered in connection with a series of
Subordinated Securities, the accompanying Prospectus Supplement or the
information incorporated herein by reference will set forth the approximate
amount of Senior Debt outstanding as of the end of the Operating Partnership's
most recent fiscal quarter.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Operating Partnership will be permitted, at its option, to discharge
certain obligations to holders of any series of Debt Securities issued under any
Indenture that have not already been delivered to the applicable Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt
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Securities in respect of principal (and premium, if any) and interest to the
date of such deposit (if such Debt Securities have become due and payable) or to
the stated maturity or redemption date, as the case may be.
The Indentures will provide that, unless otherwise indicated in the
applicable Prospectus Supplement, the Operating Partnership may elect either (i)
to defease and be discharged from any and all obligations with respect to such
Debt Securities (except for the obligation to pay additional amounts, if any,
upon the occurrence of certain events of tax, assessment or governmental charge
with respect to payments on such Debt Securities and the obligations to register
the transfer or exchange of such Debt Securities, to replace temporary or
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or
agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance"); or (ii) to be released from its obligations with respect
to such Debt Securities under the applicable Indenture (being the restrictions
described under "-- Certain Covenants") or, if provided in the applicable
Prospectus Supplement, its obligations with respect to any other covenant, and
any omission to comply with such obligations shall not constitute an event of
default with respect to such Debt Securities ("covenant defeasance"), in either
case upon the irrevocable deposit by the Operating Partnership with the
applicable Trustee, in trust, of an amount, in such currency or currencies,
currency unit or units or composite currency or currencies in which such Debt
Securities are payable at stated maturity, or Government Obligations (as defined
below), or both, applicable to such Debt Securities, which through the scheduled
payment of principal and interest in accordance with their terms will provide
money in an amount sufficient to pay the principal of (and premium, if any) and
interest on such Debt Securities, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Operating Partnership has delivered to the applicable Trustee an
opinion of counsel (as specified in the applicable Indenture) to the effect that
the holders of such Debt Securities will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to U.S. federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such opinion of counsel,
in the case of defeasance, will be required to refer to and be based upon a
ruling received from or published by the Internal Revenue Service or a change in
applicable U.S. federal income tax law occurring after the date of the
Indenture. In the event of such defeasance, the holders of such Debt Securities
would thereafter be able to look only to such trust fund for payment of
principal (and premium, if any) and interest.
"Government Obligations" means securities that are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged; or (ii) obligations
of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the foreign currency in which the Debt Securities of such series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt; provided,
however, that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the Government
Obligation evidenced by such depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Operating Partnership has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to Debt Securities of any
series, (i) the holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the applicable Indenture or the terms of such Debt
Security to receive payment in a currency, currency unit or composite currency
other than that in which such deposit has been made in respect of such Debt
Security; or (ii) a Conversion Event (as defined below) occurs in respect of the
currency, currency unit or composite currency in which such deposit has been
made, the indebtedness represented by such Debt Security will be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
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principal of (and premium, if any) and interest on such Debt Security as they
become due out of the proceeds yielded by converting the amount so deposited in
respect of such Debt Security into the currency, currency unit or composite
currency in which such Debt Security becomes payable as a result of such
election or such cessation of usage based on the applicable market exchange
rate. "Conversion Event" means the cessation of use of (i) a currency, currency
unit or composite currency both by the government of the country which issued
such currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community; (ii) the
European Currency Unit ("ECU") both within the European Monetary System and for
the settlement of transactions by public institutions of or within the European
Communities; or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that is payable in a foreign currency
that ceases to be used by its government of issuance shall be made in U.S.
dollars.
In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any event of default other than the event
of default described in clause (iv) under "-- Events of Default, Notice and
Waiver" with respect to specified sections of an Indenture (which sections would
no longer be applicable to such Debt Securities) or described in clause (vii)
under "-- Events of Default, Notice and Waiver" with respect to any other
covenant as to which there has been covenant defeasance, the amount in such
currency, currency unit or composite currency in which such Debt Securities are
payable, and Government Obligations on deposit with the applicable Trustee, will
be sufficient to pay amounts due on such Debt Securities at the time of their
stated maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such event of default.
However, the Operating Partnership would remain liable to make payment of such
amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
NO CONVERSION RIGHTS
The Debt Securities will not be convertible into or exchangeable for any
equity interest in the Operating Partnership or any capital stock or debt
securities of the Company.
PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the Trustee, the
address of which will be stated in the applicable Prospectus Supplement;
provided, however, that, at the option of the Operating Partnership, payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register for such Debt Securities or by
wire transfer of funds to such person at an account maintained within the United
States.
All moneys paid by the Operating Partnership to a paying agent or a Trustee
for the payment of the principal of or any premium or interest on any Debt
Security which remain unclaimed at the end of two years after such principal,
premium or interest has become due and payable will be repaid to the Operating
Partnership, and the holder of such Debt Security thereafter may look only to
the Operating Partnership for payment thereof.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities which evidence the aggregate amount of a
particular series of the debt (the "Global Securities") that will be deposited
with, or on behalf of, a depositary identified in the applicable Prospectus
Supplement relating to such series. Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form. The
specific terms of the depositary arrangement with respect to a series of Debt
Securities will be described in the applicable Prospectus Supplement relating to
such series.
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PLAN OF DISTRIBUTION
The Operating Partnership may sell Debt Securities through underwriters or
dealers, directly to one or more purchasers, or through agents.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale or at prices related to such
prevailing market prices, or at negotiated prices.
In connection with the sale of Debt Securities, underwriters or agents may
receive compensation from the Operating Partnership or from purchasers of Debt
Securities, for whom they may act as agents, in the form of discounts,
concessions, or commissions. Underwriters may sell Debt Securities 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. Underwriters, dealers, and agents
that participate in the distribution of Debt Securities may be deemed to be
underwriters, and any discounts or commissions they receive from the Operating
Partnership, and any profit on the resale of Debt Securities they realize may be
deemed to be underwriting discounts and commissions, under the Securities Act.
Any such underwriter or agent will be identified, and any such compensation
received from the Operating Partnership will be described, in the applicable
Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
series of Debt Securities will be a new issue with no established trading
market. The Operating Partnership may elect to list any series of Debt
Securities on an exchange, but is not obligated to do so. It is possible that
one or more underwriters may make a market in a series of Debt Securities, but
will not be obligated to do so and may discontinue any market making at any time
without notice. Therefore, no assurance can be given as to the liquidity of, or
the trading market for, Debt Securities.
Under agreements into which the Operating Partnership may enter,
underwriters will be, and dealers and agents who participate in the distribution
of Debt Securities may be, entitled to indemnification by the Operating
Partnership against certain liabilities, including liabilities under the
Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Operating Partnership or the
Company in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Operating
Partnership may itself, or may authorize underwriters or other persons acting as
the Operating Partnership's agents to solicit offers by certain institutions to
purchase Debt Securities from the Operating Partnership pursuant to contracts
providing for payment and delivery on a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Operating Partnership. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the Debt
Securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such other
agents will not have any responsibility in respect of the validity or
performance of such contracts.
In order to comply with the securities laws of certain states, if
applicable, the Debt Securities offered hereby will be sold in such
jurisdictions only through registered or licensed brokers or dealers.
LEGAL MATTERS
Certain legal matters, including the legality of the Debt Securities, will
be passed upon for the Operating Partnership by Goodwin, Procter & Hoar LLP,
Boston, Massachusetts. William B. King, whose professional corporation is a
partner in Goodwin, Procter & Hoar LLP, is Secretary of the Company, the general
partner of the Operating Partnership, and is the beneficial owner of
approximately 9,000 shares of Common Stock of the Company. In case of an
underwritten public offering, certain legal matters will be passed upon for the
underwriters by legal counsel named in the applicable Prospectus Supplement.
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EXPERTS
The consolidated financial statements and schedule of Bradley Operating
Limited Partnership and Predecessor Business and Subsidiaries as of December 31,
1996 and 1995 and for each of the years in the three-year period ended December
31, 1996 contained in the Operating Partnership's Form 10 Registration
Statement, the consolidated financial statements and schedule of Bradley Real
Estate, Inc. as of December 31, 1996 and 1995 and for each of the years in the
three-year period ended December 31, 1996 contained in the Company's Annual
Report on Form 10-K, and the combined statement of revenues and certain expenses
of the Acquisition Properties (as defined) for the year ended December 31, 1996
contained in the Operating Partnership's Form 10/A-2 Registration Statement have
been incorporated by reference herein and in the Registration Statement of which
this Prospectus is a part in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accounts, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. To the
extent that KPMG Peat Marwick LLP audits and reports on financial statements of
the Operating Partnership or the Company issued at future dates, and consents to
the use of their reports thereon, such financial statements also will be
incorporated by reference in the Registration Statement in reliance upon their
reports and said authority.
The consolidated balance sheets of Tucker Properties Corporation as of
December 31, 1995 and 1994 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended
contained in said Form 10/A-2 Registration Statement have been likewise
incorporated in reliance upon the report of Coopers & Lybrand L.L.P.,
independent accountants, also incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
23
<PAGE> 70
================================================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS (COLLECTIVELY, THE "PROSPECTUS") AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE OPERATING PARTNERSHIP OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Operating Partnership................. S-9
Use of Proceeds........................... S-25
Capitalization............................ S-26
Selected Financial Data................... S-27
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. S-28
Description of Notes...................... S-35
Underwriting.............................. S-44
Legal Matters............................. S-45
PROSPECTUS
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Risk Factors.............................. 3
The Operating Partnership................. 9
Use of Proceeds........................... 11
Ratios of Earnings to Fixed Charges....... 11
Description of Debt Securities............ 11
Plan of Distribution...................... 22
Legal Matters............................. 22
Experts................................... 23
</TABLE>
------------------------
UNTIL , ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS SUPPLEMENT. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OF SUBSCRIPTIONS.
================================================================================
================================================================================
BRADLEY OPERATING
LIMITED PARTNERSHIP
$100,000,000 % NOTES DUE 2004
---------------------
PROSPECTUS SUPPLEMENT
---------------------
PAINEWEBBER INCORPORATED
BT ALEX. BROWN
SALOMON BROTHERS INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
------------------------
, 1997
================================================================================
<PAGE> 71
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of the fees and
expenses (other than underwriting commissions and discounts) anticipated to be
paid by the Operating Partnership in connection with the issuance and
distribution of the Securities.
<TABLE>
<S> <C>
SEC registration fee.............................................................. $103,449
Legal fees and expenses........................................................... 200,000
Accounting fees and expenses...................................................... 50,000
Printing fees and expenses........................................................ 50,000
Rating agency costs............................................................... 125,000
Indenture Trustee fees............................................................ 50,000
Miscellaneous..................................................................... 21,551
--------
Total................................................................... $600,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware Revised Uniform Limited Partnership Act provides that a
limited partnership has the power to indemnify and hold harmless any partner or
other person from and against any and all claims and demands whatsoever, subject
to such standards and restrictions, if any, as are set forth in its partnership
agreement.
The Operating Partnership Agreement generally provides that the general
partner and any person acting on its behalf will incur no liability to the
Operating Partnership or any limited partner for any act or omission within the
scope of the general partner's authorities, provided the general partner's or
such other person's action or omission to act was taken in good faith and in the
belief that such action or omission was in the best interests of the Operating
Partnership and its affiliates, and provided further, that the general partner's
or such other person's actions or omissions shall not constitute actual fraud or
gross negligence or deliberately dishonest conduct.
The Operating Partnership Agreement also provides for the indemnification
of the general partner and its affiliates and any individual acting on their
behalf from any loss, damage, claim or liability, including, but not limited to,
reasonable attorneys' fees and expenses, incurred by them by reason of any act
performed by them in accordance with the standards set forth above or in
enforcing the provisions of this indemnity.
The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (i) actual receipt of an improper benefit or profit in money,
property or services or (ii) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The charter of the
Company contains such a provision which eliminates such liability to the maximum
extent permitted by Maryland law.
The charter of the Company authorizes it, 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 (i) any
present or former director, officer, agent, employee or plan administrator of
the Company or of its predecessor Bradley Real Estate Trust (the "Trust") or
(ii) any individual who, at the request of the Company, serves or has served in
any of these capacities with another corporation, partnership, joint venture,
trust, employee benefit plan or any other enterprise. The Bylaws of the Company
obligate it, to the maximum extent permitted by Maryland law, to indemnify (a)
any present or former director or officer of the Company, (b) any individual
who, at the request of the Company, serves or has served another corporation,
partnership, joint venture, trust or other enterprise as a director or officer
or (c) any present or former Trustee or officer of the Trust.
II-1
<PAGE> 72
The MGCL requires a corporation (unless its charter provides otherwise,
which the Company's charter does not) to indemnify a director 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. 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 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 (i) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and (a) was
committed in bad faith or (b) was the result of active and deliberate
dishonesty, (ii) the director or officer actually received an improper personal
benefit in money, property or services or (iii) in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful. However, a Maryland corporation may not indemnify for
an adverse judgment in a suit by or in the right of the corporation. In
addition, the MGCL requires a corporation as a condition to advancing expenses,
to obtain (x) a written affirmation by the director or officer of his good faith
belief that he has met the standard of conduct necessary for indemnification by
the corporation as authorized by the bylaws and (y) a written statement by or on
his behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met.
The Company and the Operating Partnership have claims-made directors and
officers liability insurance policies that insure the directors and officers of
the Company including in its capacity as general partner of the Operating
Partnership against loss from claimed wrongful acts and insure the Company for
indemnifying the directors and officers against such loss. The policy limits of
liability are $10,000,000 each policy year and are subject to a retention of
$150,000 of loss by the Company.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- ----------------------------------------------------------------------------------
<C> <C> <S>
*1.1 -- Form of Underwriting Agreement.
*3.1 -- Second Restated Agreement of Limited Partnership of Bradley Operating Limited
Partnership, dated as of September 2, 1997, incorporated by reference to the
Operating Partnership's Registration Statement on Form 10.
3.2.1 -- Articles of Amendment and Restatement of Bradley Real Estate, Inc. (the
"Company"), incorporated by reference to Exhibit 3.1 of the Company's Current
Report on Form 8-K dated October 17, 1994.
3.2.2 -- Articles of Merger between Tucker Properties Corporation and Bradley Real Estate,
Inc., incorporated by reference to Exhibit 3.3 of the Company's Annual Report on
Form 10-K dated March 25, 1996.
4.1 -- Indenture for Senior Debt Securities (includes form of Senior Security in Exhibit
A).
4.2 -- Indenture for Subordinated Debt Securities -- same as Exhibit 4.1, except as
described in Exhibit 4.2.
*4.3 -- Form of Supplemental Indenture
5.1 -- Opinion of Goodwin, Procter & Hoar LLP as to the legality of the Debt Securities
being registered.
10.1.1 -- Revolving Credit Agreement dated as of March 15, 1996 by and among Bradley Real
Estate, Inc., Bradley Operating Limited Partnership and The First National Bank of
Boston, incorporated by reference to Exhibit 10.2 of the Company's Annual Report
on Form 10-K dated March 25, 1996.
10.1.2 -- First Amendment dated as of May 2, 1996 and Second Amendment dated as of March 28,
1997 to the aforesaid Revolving Credit Agreement, incorporated by reference to
Exhibit 10.2.1 of the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 dated May 13, 1997.
</TABLE>
II-2
<PAGE> 73
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- ----------------------------------------------------------------------------------
<C> <C> <S>
10.2 -- Indenture dated as of June 1, 1994 between Tucker Financing Partnership (name
changed March 15, 1996 to Bradley Financing Partnership) and Bankers Trust Company
of California, N.A. relating to 7.30% Mortgage Notes due September 30, 2000,
incorporated by reference to Exhibit 10.3 of the Company's Annual Report on Form
10-K dated March 25, 1996.
*12.1 -- Calculation of Ratios of Earnings to Fixed Charges.
*23.1 -- Consent of KPMG Peat Marwick LLP.
*23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1).
24.1 -- Power of Attorney (included in Part II of this registration statement).
*25.1 -- Form T-1 Statement of Eligibility and Qualification Under the Trust Indenture Act
of 1939 of a Corporation Designated to Act as Trustee for Bradley Operating
Limited Partnership.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment or incorporated by subsequent reference.
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, as amended (the "Securities Act");
(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 the 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 and 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 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 the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(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 undertakes that, for purposes of
determining any liability under the Securities Act each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE> 74
(c) The undersigned registrant hereby undertakes: (1) to use its best
efforts to distribute prior to the opening of bids, to prospective bidders,
underwriters, and dealers, a reasonable number of copies of a prospectus which
at that time meets the requirements of Section 10(a) of the Act, and relating to
the securities offered at competitive bidding, as contained in the registration
statement, together with any supplements thereto, and (2) to file an amendment
to the registration statement reflecting the results of bidding, the terms of
the reoffering and related maters to the extent required by the applicable form,
not later than the first use, authorized by the issuer after the opening of
bids, of a prospectus relating to the securities offered at competitive bidding,
unless no further public offering of such securities by the issuer and no
reoffering of such securities by the purchasers is proposed to be made.
(d) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(e) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(f) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(g) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-4
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Northbrook, State of Illinois on
November 14, 1997.
BRADLEY OPERATING LIMITED
PARTNERSHIP
By: Bradley Real Estate, Inc.
Its: General Partner
By: /s/ IRVING E. LINGO, JR.
-------------------------------------
Irving E. Lingo, Jr.
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to Registration Statement has been signed by the following
persons in the capacities indicated on November 14, 1997.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C> <C>
* President, Chief Executive
- ------------------------------------------ Officer and Director
Thomas P. D'Arcy
/s/ IRVING E. LINGO, JR. Chief Financial Officer and
- ------------------------------------------ Treasurer
Irving E. Lingo, Jr.
* Controller
- ------------------------------------------
David M. Garfinkle
* Director, Chairman of the Board
- ------------------------------------------
Joseph E. Hakim
* Director
- ------------------------------------------
William L. Brown
* Director
- ------------------------------------------
Stephen G. Kasnet
* Director
- ------------------------------------------
Paul G. Kirk, Jr.
* Director
- ------------------------------------------
W. Nicholas Thorndike
* Director
- ------------------------------------------
A. Robert Towbin
By: /s/ IRVING E. LINGO, JR.
--------------------------------------
Irving E. Lingo, Jr.
Attorney-in-fact for the persons
marked above with an asterisk
</TABLE>
II-5
<PAGE> 76
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- -------- ---------------------------------------------------------------------------- ----
<C> <C> <S> <C>
*1.1 -- Form of Underwriting Agreement.
*3.1 -- Second Restated Agreement of Limited Partnership of Bradley Operating
Limited Partnership, dated as of September 2, 1997, incorporated by
reference to the Operating Partnership's Registration Statement on Form 10.
3.2.1 -- Articles of Amendment and Restatement of Bradley Real Estate, Inc. (the
"Company"), incorporated by reference to Exhibit 3.1 of the Company's
Current Report on Form 8-K dated October 17, 1994.
3.2.2 -- Articles of Merger between Tucker Properties Corporation and Bradley Real
Estate, Inc. incorporated by reference to Exhibit 3.3 of the Company's
Annual Report on Form 10-K dated March 25, 1996.
4.1 -- Text of Indenture for Senior Debt Securities (includes form of Senior
Security in Exhibit A).
4.2 -- Text of Indenture for Subordinated Debt Securities -- same as Exhibit 4.1,
except as described in Exhibit 4.2.
*4.3 -- Form of Supplemental Indenture.
5.1 -- Opinion of Goodwin, Procter & Hoar LLP as to the legality of the Debt
Securities being registered.
10.1.1 -- Revolving Credit Agreement dated as of March 15, 1996 by and among Bradley
Real Estate, Inc., Bradley Operating Limited Partnership and The First
National Bank of Boston, incorporated by reference to Exhibit 10.2 of the
Company's Annual Report on Form 10-K dated March 25, 1996.
10.1.2 -- First Amendment dated as of May 2, 1996 and Second Amendment dated as of
March 28, 1997 to the aforesaid Revolving Credit Agreement, incorporated by
reference to Exhibit 10.2.1 of the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997 dated May 13, 1997.
10.2 -- Indenture dated as of June 1, 1994 between Tucker Financing Partnership
(name changed March 15, 1996 to Bradley Financing Partnership) and Bankers
Trust Company of California, N.A. relating to 7.30% Mortgage Notes due
September 30, 2000, incorporated by reference to Exhibit 10.3 of the
Company' Annual Report on Form 10-K dated March 25, 1996.
*12.1 -- Calculation of Ratios of Earnings to Fixed Charges.
*23.1 -- Consent of KPMG Peat Marwick LLP.
*23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1).
24.1 -- Power of Attorney (included in Part II of this registration statement).
*25.1 -- Form T-1 Statement of Eligibility and Qualification Under the Trust
Indenture Act of 1939 of a Corporation Designated to Act as Trustee for
Bradley Operating Limited Partnership.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment or incorporated by subsequent reference.
<PAGE> 1
EXHIBIT 1.1
___________
BRADLEY REAL ESTATE, INC.
$100,000,000 OF ___% SENIOR NOTES DUE 2004
UNDERWRITING AGREEMENT
______________________
November __, 1997
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
Dear Ladies and Gentlemen:
Bradley Real Estate, Inc., a Maryland corporation (the "Company")
and Bradley Operating Limited Partnership, a Delaware limited partnership
(the "Operating Partnership" and together with the Company, the
"Transaction Entities"), confirm their agreement with PaineWebber
Incorporated, BT Alex. Brown, Salomon Brothers Inc. and First Chicago
Capital Markets, Inc., (the "Underwriters," which term shall also include
any underwriter substituted as hereinafter provided in Section 9 of this
Agreement), with respect to the sale by the Operating Partnership and the
purchase by the Underwriters, acting severally and not jointly, of
$100,000,000 aggregate principal amount of its [____]% Senior Notes due
2004 (the "Securities"), as further described on SCHEDULES A AND C hereto.
Capitalized terms used but not otherwise defined herein shall
have the meanings given to those terms in the Prospectus (as herein
defined):
1. DESCRIPTION OF SECURITIES. The Operating Partnership
proposes to issue and sell to the Underwriters the Securities to be issued
under an Indenture, dated [__________], 1997 (the "Senior Indenture"), as
supplemented by Supplemental Indenture No. 1 thereto to be dated November
[__], 1997 (the "Supplemental Indenture" and, together with the Senior
Indenture, the "Indenture") between the Operating Partnership and LaSalle
National Bank, as trustee (the "Trustee").
2. REPRESENTATIONS AND WARRANTIES OF THE TRANSACTION ENTITIES.
Each of the Transaction Entities, jointly and severally, represents and
warrants to you and the Underwriters as follows:
<PAGE> 2
(a) A registration statement on Form S-3 (File
No. 333-36577) with respect to the Securities being offered by the
Operating Partnership, including a prospectus, has been prepared by
the Transaction Entities in conformity with the requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and the rules and
regulations of the Securities and Exchange Commission (the
"Commission") thereunder (the "1933 Act Rules and Regulations"), has
been filed with the Commission and has been declared effective. Such
registration statement and prospectus may have been amended or
supplemented prior to the date of this Underwriting Agreement; any
such amendment or supplement was so prepared and filed, and any such
amendment filed after the effective date of such registration
statement has been declared effective. No stop order suspending the
effectiveness of the registration statement has been issued, and no
proceeding for that purpose has been instituted or threatened by the
Commission. A prospectus supplement (the "Prospectus Supplement")
setting forth the terms of the offering, sale and plan of distribution
of the Securities being offered by the Operating Partnership and
additional information concerning the Operating Partnership and its
business has been or will be so prepared and will be filed pursuant to
Rule 424(b) of the 1933 Act Rules and Regulations on or before the
second business day after the date hereof (or such earlier time as may
be required by the 1933 Act Rules and Regulations). Copies of such
registration statement and prospectus, any such amendments or
supplements and all documents incorporated by reference therein that
were filed with the Commission on or prior to the date of this
Underwriting Agreement have been delivered or made available to you
and your counsel. Such registration statement, as it may have
heretofore been amended, is referred to herein as the "Registration
Statement," and the final form of prospectus included in the
Registration Statement, as supplemented by the Prospectus Supplement,
is referred to herein as the "Prospectus." Any reference herein to
the Registration Statement, the Prospectus, any preliminary prospectus
or any amendment or supplement thereto shall be deemed to refer to and
include the documents incorporated by reference therein, and any
reference herein to the terms "amend," "amendment" or "supplement"
with respect to the Registration Statement, Prospectus or any
preliminary prospectus shall be deemed to refer to and include the
filing after the execution hereof of any document with the Commission
deemed to be incorporated by reference therein. For purposes of this
Underwriting Agreement, all references to the Registration Statement,
the Prospectus, any preliminary prospectus or any amendment or
supplement thereto shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering Analysis and
Retrieval System (EDGAR), and such copy shall be identical to any
Prospectus delivered to you for use in connection with the offering of
the Securities by the Operating Partnership.
2
<PAGE> 3
(b) The Registration Statement and the
Prospectus, at the time the Registration Statement became effective
and at each time thereafter at which an Annual Report on Form 10-K, a
Quarterly Report on Form 10-Q or a Current Report on Form 8-K was
filed by either of the Transaction Entities with the Commission,
complied, and as of each applicable Representation Date (as herein
defined) will comply, in all material respects with the requirements
of the 1933 Act and the 1933 Act Rules and Regulations; the Indenture,
on the date of filing thereof with the Commission and at the Closing
Date (as hereinafter defined) conformed or will conform in all
material respects with the requirements of the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Commission
thereunder (the "TIA"); the Registration Statement, at the time it
became effective and at each time thereafter at which a Quarterly
Report on Form 10-Q or a Current Report on Form 8-K was filed by
either of the Transaction Entities with the Commission, did not, and
at each time thereafter at which any amendment to the Registration
Statement becomes effective or any Annual Report on Form 10-K,
Quarterly Report on Form 10-Q or Current Report on Form 8-K is filed
by either of the Transaction Entities with the Commission and as of
each Representation Date, will not, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
and the Prospectus, as of the date hereof, does not, and as of each
Representation Date will not, include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that the
representations and warranties in this subsection shall not apply to
(i) that part of the Registration Statement which constitutes the
Statement of Eligibility and Qualification under the TIA (the "Form T-
1") and (ii) statements in or omissions from the Registration
Statement or Prospectus relating to you and made in reliance upon and
in conformity with information furnished to the Transaction Entities
in writing by you expressly for use in the Registration Statement or
Prospectus.
(c) The documents incorporated by reference in
the Registration Statement and the Prospectus, at the time they were
or hereafter are filed with the Commission, complied and will comply,
as the case may be, in all material respects with the requirements of
the Securities and Exchange Act of 1934 (the "1934 Act") and the rules
and regulations of the Commission thereunder (the "1934 Act Rules and
Regulations"), and, when read together with the other information in
the Registration Statement and the Prospectus, at the time the
Registration Statement became effective, as of each Representation
Date or during the period specified in Section 4(c) hereof, did not
and will not include an untrue statement of a material fact or omit to
3
<PAGE> 4
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The financial statements of the Operating
Partnership set forth or incorporated by reference in the Registration
Statement and Prospectus fairly present the financial condition of the
Operating Partnership as of the dates indicated and the results of
operations and changes in financial position for the periods therein
specified in conformity with generally accepted accounting principles
consistently applied through the periods involved (except as otherwise
stated therein). The summary financial, pro forma financial and
statistical data included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the
information shown therein and, to the extent based upon or derived
from the financial statements, have been compiled on a basis
consistent with the financial statements presented therein. No other
financial statements are required to be set forth in the Registration
Statement or the Prospectus under the 1933 Act or the 1933 Act Rules
and Regulations.
(e) The only subsidiaries (as defined in the 1933
Act Rules and Regulations) of the Transaction Entities are the
subsidiaries listed on SCHEDULE B hereto (the "Subsidiaries"). Each
of the Transaction Entities and each of their Subsidiaries has been
duly incorporated or formed, as the case may be, and is an existing
corporation or general or limited partnership, as the case may be, in
good standing under the laws of its jurisdiction of incorporation or
formation, as the case may be. Each of the Transaction Entities and
each of its Subsidiaries has full power and authority (corporate and
other) to conduct its business as described in the Registration
Statement and Prospectus, and is duly qualified to do business in each
jurisdiction in which it owns or leases real property or in which the
conduct of its business requires such qualification, except where the
failure to be so qualified, considering all such cases in the
aggregate, does not involve a material risk to the business,
properties, financial position or results of operations of either of
the Transaction Entities; and, other than the Subsidiaries, the
Transaction Entities own no material amounts of stock or beneficial
interest in any corporation, partnership, joint venture or other
business entity and do not own 10% or more of the outstanding voting
stock of any entity separately taxable as a corporation under the
Internal Revenue Code of 1986, as amended (the "Code").
(f) All of the issued and outstanding capital
stock or ownership interests of each Subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable, [other
than _____________], and is wholly owned by one or both of the
Transaction Entities, directly or through subsidiaries, free and clear
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<PAGE> 5
of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity. All of the partnership interests of the Operating
Partnership have been duly and validly authorized and issued and are
fully paid and approximately 95% of such partnership interests are
owned of record and beneficially by the Company, free and clear of all
liens, encumbrances, equities or claims.
(g) The Securities will be as of the Closing Date
duly authorized by the Operating Partnership for issuance and sale
pursuant to this Underwriting Agreement and the Indenture; and when
duly authenticated and delivered by the Trustee in accordance with the
terms of the Indenture (assuming the due authorization, execution and
delivery of the Indenture by the Trustee), and delivered to, and paid
for by, the Underwriters pursuant to this Underwriting Agreement, the
Securities will be valid and legally binding obligations of the
Operating Partnership entitled to the benefit of the Indenture and
will be enforceable against the Operating Partnership in accordance
with their terms, subject to (a) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, (b) general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or law) and (c) the discretion of the court before which any
proceeding therefor may be brought (clauses (a), (b) and (c) are
collectively referred to as the "Enforceability Limitations"); the
Indenture has been duly qualified under the TIA and prior to the
issuance of the Securities will be duly authorized, executed and
delivered by the Operating Partnership, and assuming due
authorization, execution and delivery thereof by the Trustee, will
constitute a valid and legally binding obligation of the Operating
Partnership, enforceable against the Operating Partnership in
accordance with its terms, subject to the Enforceability Limitations;
the Securities and the Indenture will conform in all material respects
to the statements relating thereto contained in the Prospectus; and
the Securities are, in all material respects, in the form contemplated
by the Indenture.
(h) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Transaction
Entities have not incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary
course of business, that are material to the Transaction Entities on a
consolidated basis, and there has not been any material change in the
capital stock, short-term debt or long-term debt of the Transaction
Entities, or any material adverse change, or any development involving
a prospective material adverse change, in the condition (financial or
other), business, prospects, net worth or results of operations of the
Transaction Entities on a consolidated basis.
5
<PAGE> 6
(i) Except as set forth in the Prospectus, there
is not pending or, to the knowledge of the Transaction Entities,
threatened any action, suit or proceeding to which any of the
Transaction Entities is a party, before or by any court or
governmental agency or body, that might result in any material adverse
change in the condition (financial or other), business, prospects, net
worth or results of operations of the Transaction Entities, or might
materially and adversely affect the properties or assets thereof.
(j) There are no contracts or documents of the
Transaction Entities that are required to be filed as exhibits to the
Registration Statement or to any of the documents incorporated by
reference therein by the 1933 Act or the 1934 Act or by the 1933 Act
or 1934 Act Rules and Regulations that have not been so filed.
(k) The Agreement has been duly executed,
delivered and performed by each of the Transaction Entities, and the
Indenture has been duly authorized, executed delivered and performed
by the Operating Partnership. The execution of this Agreement and the
Indenture and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute,
any agreement or instrument to which either of the Transaction
Entities is a party or by which it is bound or to which any of the
property of either of the Transaction Entities is subject, the charter
or by-laws of either of the Transaction Entities, or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over either of the Transaction Entities or any of their
properties; no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the
consummation of the transactions contemplated by this Agreement and
the Indenture in connection with the issuance or sale of the
Securities by the Operating Partnership, except such as may be
required under the 1933 Act, the TIA or state securities laws; and the
Operating Partnership has full power and authority to authorize, issue
and sell the Securities as contemplated by this Agreement and the
Indenture, free of any preemptive rights.
(l) The Transaction Entities have complied in all
respects with all laws, regulations and orders applicable to them or
their respective businesses; Neither of the Transaction Entities are
in default under any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond debenture, note agreement or the
evidence of indebtedness, lease, contract or other agreement or
instrument to which either of the Transaction Entities are a party or
by which either of the Transaction Entities or any of their properties
are bound, violation of which would individually or in the aggregate
6
<PAGE> 7
have a material adverse effect on the Transaction Entities, and no
other party under any such agreement or instrument to which either of
the Transaction Entities is a party, to the knowledge of the
Transaction Entities, in default in any material respect thereunder;
and neither of the Transaction Entities are in violation of their
respective charter documents.
(m) Except as described in the Prospectus, and
except for defects or exceptions that are not material in relation to
the business of the Transaction Entities, their Subsidiaries and
Related Entities (as defined below): the Transaction Entities, each of
their Subsidiaries and any partnership or joint venture in which such
party is a participant (a "Related Entity") have good and marketable
title to all properties. If there are any liens, charges,
encumbrances, claims or restrictions affecting the properties and the
assets of any Transaction Entity, they are disclosed in the
Prospectus; the Transaction Entities, their Subsidiaries and Related
Entities have valid, subsisting and enforceable (subject to
limitations on enforceability of the type set forth in the following
Section 2(w) below) leases for the properties described in the
Prospectus as leased by them; no tenant under any of the leases
pursuant to which the Transaction Entities, their Subsidiaries and
Related Entities lease their properties has an option or right of
first refusal to purchase the premises demised under such lease; the
use and occupancy of each of the properties of the Transaction
Entities, their Subsidiaries and Related Entities complies in all
material respects with all applicable codes and zoning laws and
regulations; the Transaction Entities, their Subsidiaries and Related
Entities have no knowledge of any pending or threatened condemnation
or zoning change that will in any material respect affect the size of,
use of, improvement of, construction on, or access to any of the
properties of the Transaction Entities, their Subsidiaries or Related
Entities; and the Transaction Entities, their Subsidiaries and Related
Entities have no knowledge of any pending or threatened proceeding or
action that will in any manner materially affect the size of, use of,
improvements on, construction on, or access to any of the properties
of the Transaction Entities, their Subsidiaries or Related Entities.
(n) Title insurance in favor of the mortgagee,
the Transaction Entities, their Subsidiaries and Related Entities is
maintained with respect to each of the properties owned by the
Transaction Entities, their Subsidiaries and Related Entities in an
amount at least equal to the greater of (i) the cost of acquisition of
such property and (ii) the cost of construction by the Transaction
Entities, their Subsidiaries or Related Entities of the improvements
located on such property (measured at the time of such construction),
except, in each case, where the failure to maintain such title
7
<PAGE> 8
insurance would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Transaction Entities, their Subsidiaries and Related
Entities taken as a whole.
(o) The mortgages and deeds of trust encumbering
the properties and assets described in the Prospectus are not
convertible, nor do the Transaction Entities or their Subsidiaries
hold a participating interest therein.
(p) Except as set forth in the Prospectus, none
of the Transaction Entities has any knowledge of (i) the unlawful
presence of any hazardous substances, hazardous materials, toxic
substances or waste materials (collectively, "Hazardous Materials") on
any of the properties owned by each of them, or (ii) any unlawful
spills, releases, discharges or disposal of Hazardous Materials that
have occurred or are presently occurring off such properties as a
result of any construction on or operation and use of such properties,
which presence or occurrence would have a material adverse effect on
the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Transaction Entities taken as
whole. In connection with the construction on or operation and use of
the properties owned by the Transaction Entities, each of the
Transaction Entities represents that, as of the date of this
Agreement, it has no knowledge of any failure to comply with all
applicable local, state and federal environmental laws, regulations,
ordinances and administrative and judicial orders relating to the
generation, recycling, sale, storage, handling, transport and disposal
of any Hazardous Materials, which failure would have a material
adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Transaction
Entities taken as a whole.
(q) Property and casualty insurance in favor of
each of the Transaction Entities and each of their Subsidiaries is
maintained with respect to each of the properties owned by each of
them in an amount and on such items as is reasonable and customary for
businesses of this type.
(r) Each Transaction Entity has filed all
federal, state and foreign income tax returns which have been required
to be filed and has paid all taxes indicated by said returns and all
assessments received by it to the extent that such taxes have become
due.
(s) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with
the execution and delivery by the Operating Partnership of this
8
<PAGE> 9
Agreement and the consummation of the transactions herein contemplated
has been obtained or made and is in full force and effect.
(t) Each Transaction Entity holds all material
licenses, certificates and permits from governmental authorities which
are necessary to the conduct of its business; and neither of the
Transaction Entities have infringed any patents, patent rights, trade
names, trademarks or copyrights, which infringement is material to the
business of the Operating Partnership as a whole.
(u) For all applicable tax years as to which the
Company's tax returns are subject to audit and the Company is subject
to assessment for taxes reportable therein, the Company has
continuously been organized and operating in conformity with the
requirements for qualification as a real estate investment trust under
the Code. The Company's method of operation will permit it to
continue to meet the requirements for taxation as a real estate
investment trust under the Code. The Company has no intention of
changing its operations or engaging in activities which would
adversely affect its ability to qualify, or make economically
undesirable its continued qualification as, a real estate investment
trust.
(v) Neither Transaction Entity or any of their
subsidiaries, is an "investment company" within the meaning of the
Investment Operating Partnership Act of 1940, as amended.
(w) Each of the partnership and joint venture
agreements to which either of the Transaction Entities is a party, and
which relates to real property described in the Prospectus, has been
duly authorized, executed and delivered by such applicable party and
constitutes the valid agreement thereof, enforceable in accordance
with its terms, except to the extent that enforcement thereof may be
limited by (1) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (2) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity) and the executing, delivery and performance of any of such
agreements did not and will not, at the time of execution and
delivery, and does not and will not constitute a breach of, or a
default under, the charter, partnership agreement or bylaws of either
of the Transaction Entities or any material contract, lease or other
instrument to which the Operating Partnership or any of its
Subsidiaries is a party or to which any of their property may be bound
or any law, administrative regulation or administrative or court
decree.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES. On the basis of
the representations, warranties and agreements contained herein, but
9
<PAGE> 10
subject to the terms and conditions set forth herein, the Operating
Partnership agrees to issue and sell the Securities to the several
Underwriters, and each of the Underwriters, severally and not jointly,
agrees to purchase from the Operating Partnership the respective principal
amount of Securities set forth on SCHEDULE C hereto at the purchase price
set forth on SCHEDULE A hereto plus accrued interest, if any, from the date
specified on SCHEDULE A hereto to the date of payment and delivery.
The Operating Partnership understands that the Underwriters
intend (i) to make a public offering of the Securities and (ii) initially
to offer the Securities upon the terms set forth in the Prospectus.
Payment for the Securities shall be made to the Operating
Partnership or to its order in immediately available funds in the amount,
on the date and at the time and place set forth on SCHEDULE A hereto (or at
such other time and place on the same or such other date, not later than
the third Business Day thereafter, as you and the Operating Partnership may
agree in writing). Such payment will be made upon delivery to you of the
Securities registered in such names and in such denominations as you shall
request not less than two full Business Days prior to the date of delivery,
with transfer taxes, if any, payable in connection with transfer to the
Underwriters duly paid by the Operating Partnership. As used herein, the
term "Business Day" means any day other than a day on which banks are
permitted or required to be closed in New York City. The time and date of
such payment and delivery with respect to the Securities are referred to
herein as the "Closing Date." The Securities will be delivered through the
book entry facilities of The Depository Trust Company ("DTC") and will be
made available for inspection by you by 1:00 P.M. New York City time on the
Business Day prior to the Closing Date at such place in New York City as
you, DTC and the Operating Partnership shall agree.
4. COVENANTS. Each of the Transaction Entities jointly and
severally covenants and agrees to:
(a) Cause the Prospectus Supplement to be filed
as required by Section 2(a) hereof (but only if you or your counsel
have not reasonably objected thereto by notice to the Transaction
Entities after having been furnished a copy a reasonable time prior to
filing) and will notify you promptly of such filing. During the
period in which a prospectus relating to the Securities is required to
be delivered under the 1933 Act, each of the Transaction Entities will
notify you immediately, and confirm such notice in writing, of (i) the
effectiveness of any amendment to the Registration Statement, (ii) the
transmittal to the Commission for filing of any amendment or
supplement to the Prospectus or any document to be filed pursuant to
the 1934 Act, (iii) the receipt of any comments from the Commission
with respect to the Registration Statement or the Prospectus and (iv)
any request by the Commission for any amendment to the Registration
10
<PAGE> 11
Statement or any amendment or supplement to the Prospectus or for
additional information. In addition, the Operating Partnership will
prepare and file with the Commission, promptly upon your request, any
amendments or supplements to the Registration Statement or the
Prospectus that, in your opinion or the opinion of your counsel, may
be necessary or advisable in connection with your distribution of the
Securities;
(b) Notify you immediately, and confirm such
notice in writing, of (i) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose and (ii) any change
in the rating assigned by any nationally recognized statistical rating
organization to any debt securities of the Transaction Entities or the
public announcement by any nationally recognized statistical rating
organization that it has under surveillance or review, with possible
negative implications, its rating of any debt securities of the
Operating Partnership. Each of the Transaction Entities will make
every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment;
(c) Give you advance notice of its intention to
file or prepare any amendment to the Registration Statement or any
amendment or supplement to the Prospectus, whether by filing of
documents pursuant to the 1934 Act or the 1933 Act or otherwise, and
will furnish to you copies of any such amendment or supplement or
other documents proposed to be filed or used a reasonable time in
advance of such proposed filing or use, as the case may be, and will
not file any such amendment or supplement or other documents in a form
to which you or counsel for you shall reasonably object;
(d) Deliver to you as many signed and conformed
copies of the Registration Statement (as originally filed) and of each
amendment thereto (including exhibits filed therewith or incorporated
by reference therein and documents incorporated by reference in the
Prospectus) as you reasonably request. The Transaction Entities will
furnish to you as many copies of the Prospectus (as amended or
supplemented) as you reasonably request so long as you are required to
deliver a Prospectus in connection with sales or solicitations of
offers to purchase the Securities;
(e) Amend or supplement the Prospectus in order
that the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein not misleading in the light of the circumstances
existing at the time the Prospectus is delivered to a purchaser of
Securities sold by the Underwriters hereunder, or if it shall be
11
<PAGE> 12
necessary, in the opinion of either such counsel, to amend or
supplement the Registration Statement or the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Rules and
Regulations, the Transaction Entities shall give immediate notice,
confirmed in writing, to the Underwriters to cease the solicitation of
offers to purchase any of the Securities, and the Operating
Partnership will promptly amend the Registration Statement and the
Prospectus, whether by filing documents pursuant to the 1934 Act or
the 1933 Act or otherwise, as may be necessary to correct such untrue
statement or omission or to make the Registration Statement and
Prospectus comply with such requirements, if at any time during the
term of this Agreement any event shall occur or condition exist as a
result of which it is necessary, in the opinion of counsel for you or
counsel for the Operating Partnership, to amend or supplement the
Prospectus;
(f) Furnish such information to you, on or
prior to the date on which there shall be released to the general public
interim financial statement information related to the Operating
Partnership with respect to each of the first three quarters of any
fiscal year or preliminary financial statement information with respect to
any fiscal year, such information to you, confirmed in writing, and shall
cause the Prospectus to be amended or supplemented to include or
incorporate by reference financial information with respect thereto and
corresponding information for the comparable period of the preceding
fiscal year, as well as such other information and explanations as shall
be necessary for an understanding thereof or as shall be required by the
1933 Act or the 1933 Act Rules and Regulations;
(g) Furnish such information to you, on or
prior to the date on which there shall be released to the general public
financial information included in or derived from the audited financial
statements of the Operating Partnership for the preceding fiscal year,
confirmed in writing, and shall cause the Registration Statement and
the Prospectus to be amended, whether by the filing of documents
pursuant to the 1934 Act or the 1933 Act or otherwise, to include or
incorporate by reference such audited financial statements and the
report or reports, and consent or consents to such inclusion or
incorporation by reference, of the independent accountants with
respect thereto, as well as such other information and explanations as
shall be necessary for an understanding of such financial statements or as
shall be required by the 1933 Act or the 1933 Act Rules and Regulations;
(h) Make generally available to its security holders
as soon as practicable, but not later than 90 days after the close of the
period covered thereby, an earning statement (in form complying with the
provisions of Rule 158 of the 1933 Act Rules and Regulations) covering
each twelve month period beginning, in each case, not later than the first
day of the Operating Partnership's fiscal quarter next following the
"effective date" (as defined in such Rule 158) of the Registration
Statement with respect to each sale of Securities;
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<PAGE> 13
(i) Endeavor, in cooperation with you, to file any
notices or other documents required with respect to the offer and sale
of the Securities under the applicable securities laws of such states and
other jurisdictions of the United States as you may designate; PROVIDED,
HOWEVER, that the Operating Partnership shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. The
Operating Partnership will promptly advise you of the receipt by the
Operating Partnership of any notification by any governmental
authority responsible for administering such laws with respect to
the Securities in any such state or jurisdiction;
(j) File all documents required to be filed with
the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the
time periods prescribed by the 1934 Act and the 1934 Act Rules and
Regulations, during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act in connection with sales of
the Securities;
(k) Cause all affiliated purchasers within the
meaning of Rule 100 of Regulation M under the 1934 Act to, comply with
Regulation M under the 1934 Act, during the term of this Agreement;
(l) Use, in the case of the Company, its best
efforts to meet the requirements to qualify as a "real estate
investment trust" under the Code for the taxable year in which sales of
the Securities are to occur, unless otherwise specified in the
Prospectus; and
(m) Whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, (i) pay
the costs and charges of any transfer agent or registrar, as well
as the cost of preparing stock certificates, (ii) pay all other expenses
incident to the performance of its obligations hereunder, including, but
not limited to, the expenses of printing all documents relating to the
offering and (iii) reimburse the Underwriters for any filing fee of
the NASD relating to the Securities. If the sale of Securities provided
for herein is not consummated by reason of any failure, refusal
or inability on the part of the Operating Partnership to perform any of
its obligations hereunder, or because any other condition of your
13
<PAGE> 14
obligations hereunder required to be fulfilled by the Operating
Partnership is not fulfilled, the Operating Partnership will reimburse
the Underwriters for all reasonable out-of-pocket disbursements (including
reasonable fees and disbursements of counsel) incurred by the
Underwriters in connection with their investigation, preparing to market
and marketing the Securities or in contemplation of performing their
obligations hereunder. The Operating Partnership shall not in any event
be liable to the Underwriters for loss of anticipated profits from the
transactions covered by this Agreement.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS AT THE CLOSING. The
Underwriters' obligation to purchase and pay for the Securities at the
Closing as provided herein shall be subject to the accuracy of the
representations and warranties of the Transaction Entities herein and to
the performance by each Transaction Entity of its obligations hereunder and
to the following additional conditions:
(a) You shall have received the opinion of
Goodwin, Procter & Hoar LLP, counsel for the Operating Partnership,
dated the Closing Date, to the effect that:
(i) Each of the Transaction Entities and each
of their Subsidiaries has been duly incorporated or formed, as the
case may be, and is validly existing as a corporation or general
or limited partnership, as the case may be, and in good standing
under the laws of its jurisdiction of incorporation or formation,
as the case may be, has full power and authority to conduct
its business as described in the Registration Statement and
Prospectus, and is duly qualified to do business in each
jurisdiction in which it owns or leases real property or in
which the conduct of its business requires such qualification except
where the failure to be so qualified, considering all such cases
in the aggregate, does not involve a material risk to a business,
properties, financial position or results of operations of the
Transaction Entities taken as a whole;
(ii) All of the partnership interests of the
Operating Partnership owned by the Company are owned by the Company
free and clear of all liens, charges and encumbrances;
(iii) The Registration Statement has become
effective under the 1933 Act and the Prospectus Supplement
has been filed as required by Section 2(a) hereof; and no stop
order suspending the effectiveness of the Registration Statement
shall have been issued and no proceeding for that purpose shall
have been instituted or, to the knowledge of such counsel or of
either of the Transaction Entities, threatened by the Commission;
(iv) Each part of the Registration Statement,
when such part became effective, and the Prospectus and any amendment
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<PAGE> 15
or supplement thereto, on the date of filing thereof with the
Commission and at the Closing Date, complied as to form in all
material respects with the requirements of the 1933 Act and the 1933
Act Rules and Regulations; and such counsel has no reason to believe
that either any part of the Registration Statement, when such
part became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading
or that the Prospectus and any amendment or supplement thereto, on
the date of filing thereof with the Commission and at the Closing
Date, included an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and the documents incorporated by reference in the
Registration Statement or Prospectus or any amendment or supplement
thereto, when they became effective under the 1933 Act or were filed
with the Commission under the 1934 Act, as the case may be, complied
as to form in all material respects with the requirements of the
1933 Act or the 1934 Act, as applicable, and the 1933 Act or 1934
Act Rules and Regulations, as applicable; it being understood that
such counsel need express no opinion as to the financial statements
or other financial data included in any other documents
mentioned in this clause;
(v) The descriptions in the Registration
Statement and Prospectus of statutes, legal and governmental
proceedings, contracts and other documents are accurate and fairly
present the information required to be shown; and such counsel does
not know of any statutes or legal or governmental proceedings required
to be described in the Prospectus that are not described as required,
or of any contracts or documents of a character required to
be described in the Registration Statement or Prospectus (or
required to be filed under the 1934 Act if upon such filing they
would be incorporated by reference therein) or to be filed as
exhibits to the Registration Statement that are not described and
filed as required;
(vi) The Operating Partnership has the corporate
power and authority to enter into this Agreement, and this Agreement
has been duly authorized, executed and delivered by the Operating
Partnership; the performance of this Agreement and the consummation
of the transactions herein contemplated will not result in a breach
or violation of any of the terms and provisions of, or constitute a
default under, any statute, any agreement or instrument known to such
counsel to which the Operating Partnership is a party or by which it
15
<PAGE> 16
is bound or to which any of the property of the Operating
Partnership is subject, the Operating Partnership's charter or
by-laws, or any order, rule or regulation known to such counsel
of any court of governmental agency or body having jurisdiction
over the Operating Partnership or any of its properties; and no
consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the consummation
of the transactions contemplated by this Agreement in connection
with the issuance or sale of the Securities by the Operating
Partnership, except such as have been obtained under the 1933 Act
and such as may be required under state securities laws in
connection with the purchase and distribution of the Securities
by the Underwriters;
(vii) The Company has been duly formed and is
validly existing as a real estate investment trust in good standing
under and by virtue of the laws of the State of Maryland, is in good
standing with the State Department of Assessments and Taxation of
Maryland and as a foreign trust or corporation in those jurisdictions
listed in such opinion, and has all trust power and authority
necessary to own or hold its properties and to conduct the business
in which it is engaged as described in the Registration Statement and
the Prospectus, and to enter into and perform its obligations under
this Agreement;
(viii) None of the Transaction Entities or
their subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(ix) The Operating Partnership is classified as
a partnership (and is not taxed as a corporation) for federal income
tax purposes; and
(x) The Operating Partnership is eligible to use
a Form S-3 Registration Statement under the 1933 Act Rules and
Regulations.
(b) You shall have received from Rogers & Wells, your
counsel, such opinion or opinions, dated the Closing Date, with respect
to the organization of each of the Transaction Entities, the validity
of the Securities, the Registration Statement, the Prospectus and other
related matters as you reasonably may request, and such counsel shall
have received such papers and information as they request to enable them
to pass upon such matters.
(c) At the time of execution of this Agreement and
at the Closing Date, you shall have received a letter from KPMG Peat
16
<PAGE> 17
Marwick LLP, dated at the date of delivery thereof, to the effect set forth
in EXHIBIT I hereto.
(d) You shall have received from each of the
Transaction Entities a certificate, signed by the president or a vice
president and by the principal financial or accounting officer of the
Transaction Entity, dated the Closing Date, to the effect that, to the
best of their knowledge based upon reasonable investigation:
(i) The representations and warranties of the
Transaction Entities in this Agreement are true and correct, as
if made at and as of the Closing Date, and the Transaction Entities
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) No stop order suspending the effectiveness
of the Registration Statement has been issued, and no proceeding
for that purpose has been instituted or is threatened, by the
Commission; and
(iii) Since the effective date of the
Registration Statement, there has occurred no event required to
be set forth in an amendment or supplement to the Registration
Statement or Prospectus that has not been so set forth, and there has
been no document required to be filed under the 1934 Act and the 1934
Act Rules and Regulations that upon such filing would be deemed to
be incorporated by reference in the Prospectus that has not been so
filed.
(e) (i) None of the Transaction Entities or their
Subsidiaries or any Property shall have sustained since the date of the
latest audited financial statements included in the Prospectus any loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than
as set forth or contemplated in the Prospectus or (ii) since such date
there shall not have been any change in the capital stock or long-term
debt of either Transaction Entity or any change, or any development
involving a prospective change, in or affecting any Property
Affiliate or Property or the general affairs, management, financial
position, shareholders' equity or results of operations of either
Transaction Entity, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause
(i) or (ii), is, in the judgment of the Underwriters, so material
and adverse as to make it impracticable or inadvisable to proceed with
17
<PAGE> 18
the public offering or the delivery of the Securities being delivered
on the Closing Date on the terms and in the manner contemplated in the
Prospectus.
(f) Subsequent to the execution and delivery of
this Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market, or trading in
any securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental authority
having jurisdiction, (ii) a banking moratorium shall have been declared
by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been
a declaration of a national emergency or war by the United States
or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the effect
of international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of a majority in
interest of the several Underwriters, impracticable or inadvisable
to proceed with the public offering or delivery of the Securities being
delivered on the Closing Date on the terms and in the manner
contemplated in the Prospectus.
(g) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating accorded
the Operating Partnership's debt securities by any "nationally recognized
statistical rating organization," as that term is defined by the Commission
for purposes of Rule 436(g)(2) of the Rules and Regulations and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating
of any of the Operating Partnership's debt securities.
(h) On the date hereof and on the Closing
Date, counsel to you shall have been furnished with such documents and
opinions as such counsel may reasonably require for the purpose of
enabling such counsel to pass upon the issuance and sale of
Securities as herein contemplated and related proceedings, or in order
to evidence the accuracy and completeness of any of the representations
and warranties, or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Transaction Entities in
connection with the issuance and sale of Securities as herein contemplated
shall be satisfactory in form and substance to you and to counsel to you.
18
<PAGE> 19
[(i) To the extent required by its rules, the NASD
shall have approved the underwriting terms and arrangements and such
approval shall not have been withdrawn or limited.]
(j) All such opinions, certificates, letters and
other documents will be in compliance with the provisions hereof only
if they are satisfactory in form and substance to you and your counsel.
The Operating Partnership will furnish you with such conformed copies
of such opinions, certificates, letters and other documents as you shall
reasonably request and the Operating Partnership shall furnish to you
such further certificates and documents as you shall have reasonably
requested.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Transaction Entities jointly and
severally will indemnify and hold harmless each Underwriter and its
directors, officers, employees and agents and each person, if any, who
controls each Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act from and against any and all losses,
claims, liabilities, expenses and damages (including, but not limited
to, any and all investigative, legal and other expenses reasonably
incurred in connection with, and any and all amounts paid in
settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any
indemnified party and any third party, or otherwise, or any claim
asserted), as and when incurred, to which an Underwriter, or any such
person, may become subject under the 1933 Act, the 1934 Act or other
federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus or in any
documents filed under the 1934 Act and deemed to be incorporated by
reference into the Prospectus, or in any application or other document
executed by or on behalf of the Operating Partnership or based on
written information furnished by or on behalf of the Operating
Partnership filed in any jurisdiction in order to qualify the
Securities under the securities laws thereof or filed with the
Commission, (ii) the omission or alleged omission to state in such
document a material fact required to be stated in it or necessary to
make the statements in it not misleading or (iii) any act or failure
to act or any alleged act or failure to act by an Underwriter in
connection with, or relating in any manner to, the Securities or the
offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, liability, expense or damage arising
out of or based upon matters covered by clause (i) or (ii) above
(provided that the Transaction Entities shall not be liable under this
clause (iii) to the extent it is finally judicially determined by a
19
<PAGE> 20
court of competent jurisdiction that such loss, claim, liability,
expense or damage resulted directly from any such acts or failures to
act undertaken or omitted to be taken by an Underwriter through gross
negligence or willful misconduct); provided that the Transaction
Entities will not be liable to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Securities to
any person by an Underwriter and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on
and in conformity with information relating to an Underwriter
furnished in writing to the Transaction Entities by an Underwriter
expressly for inclusion in the Registration Statement or the
Prospectus.
(b) The Underwriters will indemnify and hold
harmless each Transaction Entity, its officers and employees, each of
its trustees and, each person, if any, who controls each Transaction
Entity within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act, each partner of the Transaction Entities and each
officer of the Transaction Entities who signs the Registration
Statement to the same extent as the foregoing indemnity from the
Transaction Entities to the Underwriters, but only insofar as losses,
claims, liabilities, expenses or damages arise out of or are based on
any untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information
relating to an Underwriter furnished in writing to the Transaction
Entities by an Underwriter expressly for use in the Registration
Statement or the Prospectus. This indemnity will be in addition to
any liability that the Underwriters might otherwise have; PROVIDED,
HOWEVER, that in no case shall the Underwriters be liable or
responsible for any amount in excess of the underwriting discounts and
commissions received by the Underwriters.
(c) Any party that proposes to assert the right
to be indemnified under this Section 6 will, promptly after receipt of
notice of commencement of any action against such party in respect of
which a claim is to be made against an indemnifying party or parties
under this Section 6, notify each such indemnifying party of the
commencement of such action, enclosing a copy of all papers served,
but the omission so to notify such indemnifying party will not relieve
it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 6 unless, and only to the
extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. If any such action is
brought against any indemnified party and it notifies the indemnifying
party of its commencement, the indemnifying party will be entitled to
participate in and, to the extent that it elects by delivering written
notice to the indemnified party promptly after receiving notice of the
20
<PAGE> 21
commencement of the action from the indemnified party, jointly with
any other indemnifying party similarly notified, to assume the defense
of the action, with counsel satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will not be
liable to the indemnified party for any legal or other expenses except
as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the
defense. The indemnified party will have the right to employ its own
counsel in any such action, but the fees, expenses and other charges
of such counsel will be at the expense of such indemnified party
unless (i) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (ii) the indemnified
party has reasonably concluded (based on advice of counsel) that there
may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the
indemnifying party, (iii) a conflict or potential conflict exists
(based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of
such action on behalf of the indemnified party) or (iv) the
indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice
of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood
that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees, disbursements and other charges of
more than one separate firm admitted to practice in such jurisdiction
at any time for all such indemnified party or parties. All such fees,
disbursements and other charges will be reimbursed by the indemnifying
party promptly as they are incurred. An indemnifying party will not
be liable for any settlement of any action or claim effected without
its written consent (which consent will not be unreasonably withheld).
No indemnifying party shall, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated by this Section 6 (whether or not
any indemnified party is a party thereto), unless such settlement,
compromise or consent includes a unconditional release of each
indemnified party form all liability arising or that may arise out of
such claim, action or proceeding. Notwithstanding any other provision
of this Section 6(c), if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement effected without its written
consent if (i) such settlement is entered into more than 45 days after
21
<PAGE> 22
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered
into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of
such settlement.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided
for in the foregoing paragraphs of this Section 6 is applicable in
accordance with its terms but for any reason is held to be unavailable
from the Transaction Entities or the Underwriters, the Transaction
Entities and the Underwriters will contribute to the total losses,
claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any
contribution received by the Transaction Entities from persons other
than the Underwriters, such as persons who control the Transaction
Entities within the meaning of the 1933 Act and officers of the
Transaction Entities who signed the Registration Statement, who also
may be liable for contribution) to which the Transaction Entities and
the Underwriters may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the
Transaction Entities on the one hand and the Underwriters on the
other. The relative benefits received by the Transaction Entities on
the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Transaction Entities bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page
of the Prospectus Supplement. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law,
the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in
the foregoing sentence but also the relative fault of the Transaction
Entities, on the one hand, and the Underwriters, on the other, with
respect to the statements or omissions which resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as
well as any other relevant equitable considerations with respect to
such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to
information supplied by the Transaction Entities or the Underwriters,
the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by an indemnified party as a
22
<PAGE> 23
result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 6(d) shall be
deemed to include, for purpose of this Section 6(d), any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6(d), the Underwriters
shall not be required to contribute any amount in excess of the
underwriting discounts, commissions and other compensation received by
the Underwriters and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933
Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this
Section 6(d), any person who controls a party to this Agreement within
the meaning of the 1933 Act will have the same rights to contribution
as that party, and each officer of the Transaction Entities who signed
the Registration Statement will have the same rights to contribution
as the Transaction Entities, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action against such party in respect of
which a claim for contribution may be made under this Section 6(d),
will notify any such party or parties from whom contribution may be
sought but the omission so to notify will not relieve the party or
parties from whom contribution may be sought from any other obligation
it or they may have under this Section 6(d). Except for a settlement
entered into pursuant to the last sentence of Section 6(c) hereof, no
party will be liable for contribution with respect to any action or
claim settled without its written consent (which consent will not be
unreasonably withheld).
(e) The indemnity and contribution agreements
contained in this Section 6 and the representations and warranties of
the Transaction Entities contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any
investigation made by the Underwriters or on their behalf, (ii)
acceptance of the Securities and payment therefore or (iii) any
termination of this Agreement.
7. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution hereof by the parties hereto; or (ii)
if, at the time this Agreement is executed and delivered, it is necessary
for the Registration Statement or a post-effective amendment thereto to be
declared effective before the offering of the Securities may commence, when
notification of the effectiveness of the Registration Statement or such
post-effective amendment has been released by the Commission.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Transaction Entities
contained herein or in certificates delivered pursuant hereto, and the
Underwriters' agreements contained in Section 6 hereof, shall remain
23
<PAGE> 24
operative and in full force and effect regardless of any investigation made
by or on behalf of the Underwriters or any controlling persons, or the
Transaction Entities or any of its officers or any controlling persons, and
shall survive delivery of and payment for the Securities hereunder.
9. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If, on the
Closing Date, any Underwriter defaults in the performance of its
obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Securities that the defaulting
Underwriter agreed but failed to purchase on the Closing Date in the
respective proportions which the principal amount of Securities set forth
opposite the name of each remaining non-defaulting Underwriter in SCHEDULE
A hereto bears to the total aggregate principal amount of Securities set
forth opposite the names of all the remaining non-defaulting Underwriters
in SCHEDULE A hereto; PROVIDED, HOWEVER, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Securities on
the Closing Date if the total aggregate principal amount of Securities
which the defaulting Underwriter or Underwriters agreed but failed to
purchase on such date exceeds 9.09% of the total aggregate principal amount
of Securities to be purchased on the Closing Date, and any remaining non-
defaulting Underwriter shall not be obligated to purchase more than 110% of
the aggregate principal amount of Securities which it agreed to purchase on
the Closing Date pursuant to the terms of Section 3. If the foregoing
maximums are exceeded, the remaining non-defaulting Underwriters, or those
other underwriters satisfactory to the Underwriters who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion
as may be agreed upon among them, all the Securities to be purchased on the
Closing Date. If the remaining Underwriters or other underwriters
satisfactory to the Underwriters do not elect to purchase the Securities
which the defaulting Underwriter or Underwriters agreed but failed to
purchase on the Closing Date, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Transaction
Entities, except that the Transaction Entities will continue to be liable
for the payment of expenses to the extent set forth in Sections 4 and 6.
As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party
not listed in SCHEDULE A hereto who, pursuant to this Section 9, purchases
Securities which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter
of any liability it may have to the Transaction Entities for damages caused
by its default. If other underwriters are obligated or agree to purchase
the Securities of a defaulting or withdrawing Underwriter, either the
Underwriters or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes that in the opinion of
counsel for the Operating Partnership or counsel for the Underwriters may
24
<PAGE> 25
be necessary in the Registration Statement, the Prospectus or in any other
document or arrangement.
10. TERMINATION. The obligations of the Underwriters hereunder
may be terminated by the Underwriters by notice given to and received by
the Operating Partnership prior to delivery of and payment for the
Securities if, prior to that time, any of the events described in Sections
5(e) or 5(f) shall have occurred or if the Underwriters shall decline to
purchase the Securities for any reason permitted under this Agreement.
11. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Operating
Partnership shall fail to tender the Securities for delivery to the
Underwriters by reason of any failure, refusal or inability on the part of
the Transaction Entities to perform any agreement on their part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Transaction Entities is not
fulfilled, the Transaction Entities will reimburse the Underwriters for all
reasonable out-of-pocket expenses (including fees and disbursements of
counsel) incurred by the Underwriters in connection with this Agreement and
the proposed purchase of the Securities, and upon demand the Transaction
Entities shall pay the full amount thereof to the Underwriters. If this
Agreement is terminated pursuant to Section 9 by reason of the default of
one or more Underwriters, the Transaction Entities shall not be obligated
to reimburse any defaulting Underwriter on account of those expenses.
12. NOTICES. All notices or communications hereunder shall be
in writing and if sent to you shall be mailed, delivered, telexed or
telecopied and confirmed to you at 1285 Avenue of the Americas, New York,
New York 10019, c/o Real Estate Investment Banking, attention: David R.
Jarvis (phone 212-713-7911; fax 212-713-7949), (with a copy to Jay L.
Bernstein, Esq., c/o Rogers & Wells, 200 Park Avenue, New York, New York
10166, phone 212-878-8527; fax 212-878-8375), or if sent to the Operating
Partnership, shall be mailed, delivered, telexed or telecopied and
confirmed to Thomas P. D'Arcy, CEO, or Irving E. Lingo, Jr., CFO, Bradley
Real Estate, Inc., 40 Skokie Boulevard, Suite 600, Northbrook, Illinois
60062 (phone 847-272-9800; fax 847-480-1893) (with copy to William B. King,
P.C., c/o Goodwin, Procter & Hoar LLP, Exchange Place, Boston, MA 02109;
phone 617-570-1530; fax 617-570-8150). Any party to this Underwriting
Agreement may change such address for notices by sending to the other party
to this Underwriting Agreement written notice of a new address for such
purpose.
13. PARTIES. This Agreement shall inure to the benefit of, and
be binding upon, the Transaction Entities and the Underwriters and our
respective successors and the controlling persons and officers referred to
in Section 6(a) hereof, and no other person will have any right or
obligation hereunder.
25
<PAGE> 26
14. APPLICABLE LAW. This Underwriting Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
26
<PAGE> 27
Very truly yours,
BRADLEY REAL ESTATE, INC.
By:______________________________________________
Name:
Title:
BRADLEY OPERATING LIMITED PARTNERSHIP
By:______________________________________________
Name:
Title:
ACCEPTED as of the date first above
written
PAINEWEBBER INCORPORATED
By:____________________________________
Name: David R. Jarvis
Title: Managing Director
For itself and on behalf of the Underwriters
27
<PAGE> 28
EXHIBIT I
FORM OF KPMG COMFORT LETTER
I-1
<PAGE> 29
SCHEDULE A
__________
Principal Amount
UNDERWRITERS OF 2004 NOTES
____________ _________________
PaineWebber Incorporated $ [_____]
BT Alex. Brown [_____]
Salomon Brothers Inc. [_____]
First Chicago Capital Markets, Inc. [_____]
Total $100,000,000
A-1
<PAGE> 30
SCHEDULE B
__________
LIST OF SUBSIDIARIES OF THE
TRANSACTION ENTITIES
B-1
<PAGE> 31
SCHEDULE C
__________
SENIOR NOTES DUE 2004
_____________________
Principal Amount $100,000,000.00
Coupon: [___]%
Settlement Date: [________], 1997
Price to Public: [____]%
Price to Public: $[_______]
Underwriting Discount: [____]%
Underwriting Discount: $[_____]
Price to Underwriter: [_____]%
Proceeds to the Company $[_______]
Maturity Date: [_______], 2004
2004 NOTES
__________
Total Price to Public: $[_________]
Total Underwriting Discount: $[_________]
Total Proceeds to the Company: $[_________]
C-1
<PAGE> 1
Exhibit 4.3
BRADLEY OPERATING LIMITED PARTNERSHIP
ISSUER
to
LaSALLE NATIONAL BANK
TRUSTEE
---------------------
Supplemental Indenture No. 1
Dated as of November __, 1997
---------------------
$100,000,000
____% Senior Notes due 2004
SUPPLEMENTAL INDENTURE NO. 1, dated as of November __, 1997 (the
"Supplemental Indenture"), between BRADLEY OPERATING LIMITED PARTNERSHIP, a
limited partnership organized and existing under the laws of the State of
Delaware (herein called the "Partnership"), and LaSALLE NATIONAL BANK, a
national banking corporation duly organized and existing under the laws of the
United States of America, as Trustee (herein called the "Trustee").
RECITALS OF THE PARTNERSHIP
The Partnership has heretofore delivered to the Trustee an Indenture
dated as of November __, 1997 (the "Senior Indenture"), a form of which has been
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, as Exhibit 4.1 to the Partnership's Registration Statement on
Form S-3 (Registration No. 333-36577), providing for the issuance from time to
time of Senior Debt Securities of the Partnership (the "Securities").
Section 301 of the Senior Indenture provides for various matters with
respect to any series of Securities issued under the Senior Indenture to be
established in an indenture supplemental to the Senior Indenture.
<PAGE> 2
Section 901(7) of the Senior Indenture provides for the Partnership and
the Trustee to enter into an indenture supplemental to the Senior Indenture to
establish the form or terms of Securities of any series as provided by Sections
201 and 301 of the Senior Indenture.
The Board of Trustees of the Partnership has duly adopted resolutions
authorizing the Partnership to execute and deliver this Supplemental Indenture.
All the conditions and requirements necessary to make this Supplemental
Indenture, when duly executed and delivered, a valid and binding agreement in
accordance with its terms and for the purposes herein expressed, have been
performed and fulfilled.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the series
of Securities provided for herein by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of
the Securities or of any series thereof, as follows:
ARTICLE ONE
RELATION TO SENIOR INDENTURE; DEFINITIONS
SECTION 1.1. RELATION TO SENIOR INDENTURE. This Supplemental Indenture
constitutes an integral part of the Senior Indenture.
SECTION 1.2. DEFINITIONS. For all purposes of this Supplemental
Indenture, except as otherwise expressly provided for or unless the context
otherwise requires:
(1) Capitalized terms used but not defined herein shall have
the respective meanings assigned to them in the Senior Indenture; and
(2) All references herein to Articles and Sections, unless
otherwise specified, refer to the corresponding Articles and Sections
of this Supplemental Indenture.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at
the time such Person becomes a Subsidiary, or (ii) assumed in connection with
the acquisition of assets from such Person, in each case, other than
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or such acquisition. Acquired Indebtedness shall be deemed
to be incurred on the date of the related acquisition of assets from any Person
or the date the acquired Person becomes a Subsidiary.
"Annual Service Charge" for any period means the aggregate interest
expense for such period in respect of, and the amortization during such period
of any original issue discount of, Indebtedness of the Partnership and its
Subsidiaries and the amount of dividends which are payable during such period in
respect of any Disqualified Stock.
2
<PAGE> 3
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in the City of
New York or in the City of Chicago are authorized or required by law, regulation
or executive order to close.
"Capital Stock" means, (i) with respect to any corporation, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such corporation's capital stock, whether now
outstanding or issued hereafter, including, without limitation, all common stock
and any series of preferred stock, and (ii) with respect to any other Person,
any partnership interest, joint venture interest, limited liability company
member interest or other form of equity sharing or participation interest, as
applicable, and (iii) warrants, options, participations or other equivalents of
or interests (however designated) in any of the items described in clauses (i)
or (ii) above.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the Partnership and its Subsidiaries plus amounts
which have been deducted, and minus amounts which have been added, for the
following (without duplication): (i) interest on Indebtedness of the Partnership
and its Subsidiaries, (ii) provision for taxes of the Partnership and its
Subsidiaries based on income, (iii) amortization of debt discount, (iv)
provisions for gains and losses on properties and property depreciation and
amortization, (v) the effect of any noncash charge resulting from a change in
accounting principles in determining Earnings from Operations for such period,
and (vi) amortization of deferred charges.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at 135 South LaSalle
Street, Chicago, Illinois 60603 and, for purposes of the Place of Payment
provisions of Sections 305 and 1002 of the Senior Indenture, is located at 135
South LaSalle Street, Chicago, Illinois 60603.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for Capital
Stock which is not Disqualified Stock or the redemption price of which may, at
the option of such Person, be paid in Capital Stock which is not Disqualified
Stock), (ii) is convertible into or exchangeable or exercisable for Indebtedness
or Disqualified Stock, or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for Capital Stock which is not Disqualified Stock or the
redemption price of which may, at the option of such person, be paid in Capital
Stock which is not Disqualified Stock), in each case on or prior to the Stated
Maturity of the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items, and net property
valuation losses, as
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reflected in the financial statements of the Partnership and its Subsidiaries
for such period determined on a consolidated basis in accordance with GAAP.
"Encumbrance" has the meaning specified in the definition of
"Indebtedness" set forth in this Section 1.2.
"Indebtedness" of the Partnership or any Subsidiary means any
indebtedness of the Partnership or any Subsidiary, whether or not contingent, in
respect of (i) borrowed money or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness for borrowed money of a Person other than
the Partnership or a Subsidiary which is secured by any mortgage, lien, charge,
pledge, or security interest of any kind existing on property owned by the
Partnership or any Subsidiary (each securing such debt, an "Encumbrance") to the
extent of the lesser of (x) the amount of indebtedness so secured and (y) the
fair market value of the property subject to such Encumbrance, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued or amounts representing the balance deferred
and unpaid of the purchase price of any property or services, except any such
balance that constitutes an accrued expense or trade payable, or all conditional
sale obligations or obligations under any title retention agreement, (iv) the
principal amount of all obligations of the Partnership or any Subsidiary with
respect to redemption, repayment or other repurchase of any Disqualified Stock,
(v) any lease of property by the Partnership or any Subsidiary as lessee which
is reflected on the Partnership's Consolidated Balance Sheet as a capitalized
lease in accordance with GAAP, or (vi) interest rate swaps, caps or similar
agreements and foreign exchange contracts, currency swaps or similar agreements,
to the extent, in the case of items of indebtedness under (i) through (iii)
above, that any such items (other than letters of credit) would appear as a
liability on the Partnership's Consolidated Balance sheet in accordance with
GAAP, and also includes, to the extent not otherwise included, any obligation by
the Partnership or any Subsidiary to be liable for, or to pay, as obligor,
guarantor or otherwise (other than for purposes of collection in the ordinary
course of business), Indebtedness of another Person (other than the Partnership
or any Subsidiary) (it being understood that Indebtedness shall be deemed to be
incurred by the Partnership or any Subsidiary whenever the Partnership or such
Subsidiary shall create, assume, guarantee or otherwise become liable in respect
thereof).
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Notes, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of each such dollar if such redemption or
accelerated payment had not been made, determined by discounting, on a
semi-annual basis, such principal and interest at the Reinvestment Rate
(determined on the third Business Day preceding the date such notice of
redemption is given or declaration of acceleration is made) from the respective
dates on which such principal and interest would have been payable if such
redemption or accelerated payment had not been made to the date of redemption or
accelerated payment, over (ii) the aggregate principal amount of the Notes being
redeemed or paid. For purposes of the Indenture, all references
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to any "premium" on the Notes shall be deemed to refer to any Make-Whole Amount,
unless the context otherwise requires.
"Notes" has the meaning specified in Section 2.1 hereof.
"Redemption Price" has the meaning specified in Section 2.5 hereof.
"Reinvestment Rate" means 0.25% (twenty-five one hundredths of one
percent) plus the arithmetic mean of the yields under the headings "This Week"
and "Last Week" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published maturities most closely corresponding to
such maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or extrapolated from such yields
on a straight-line basis, rounding in each of such relevant periods to the
nearest month. For the purposes of calculating the Reinvestment Rate, the most
recent Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which reports yields on actively
traded United States government securities adjusted to constant maturities, or,
if such statistical release is not published at the time of any determination of
the Make-Whole Amount, then such other reasonably comparable index which shall
be designated by the Partnership.
"Subsidiary" means, with respect to any Person, (a) any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests of which are owned directly
or indirectly, by such Person. For the purposes of this definition, "voting
equity securities" means equity securities having voting power for the election
of directors, whether at all times or only so long as no senior class of
security has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Partnership and its
Subsidiaries, determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Partnership and its Subsidiaries not subject to an
Encumbrance for borrowed money, determined in accordance with GAAP (but
excluding accounts receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the
Partnership and its Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in accordance with GAAP.
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"Unsecured Indebtedness" means Indebtedness which is not secured by any
Encumbrance upon any of the properties of the Partnership or any Subsidiary.
ARTICLE TWO
THE SERIES OF NOTES
SECTION 2.1. TITLE OF THE SECURITIES. There shall be a series of
Securities designated the "____% Senior Notes due 2004" (the "Notes").
SECTION 2.2. LIMITATIONS ON AGGREGATE PRINCIPAL AMOUNT. The aggregate
principal amount of the Notes shall be limited to $100,000,000, and, except
as provided in this Section and in Section 306 of the Senior Indenture, the
Partnership shall not execute and the Trustee shall not authenticate or deliver
Notes in excess of such aggregate principal amount.
Nothing contained in this Section 2.2 or elsewhere in this Supplemental
Indenture, or in the Notes, is intended to or shall limit execution by the
Partnership or authentication or delivery by the Trustee of the Notes under the
circumstances contemplated in Sections 303, 304, 306, 906, 1107 and 1305 of the
Senior Indenture.
SECTION 2.3. INTEREST AND INTEREST RATES; MATURITY DATE OF NOTES. The
Notes will bear interest at a rate of ____% per annum, from November __, 1997 or
from the immediately preceding Interest Payment Date to which interest has been
paid or duly provided for, payable semi-annually in arrears on March 15 and
September 15 of each year, commencing March 15, 1998 (each, an "Interest Payment
Date"), to the Person in whose name such Note is registered at the close of
business on March 1 or September 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date (each, a "Regular Record
Date"). Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months. The interest so payable on any Note which is not
punctually paid or duly provided for on any Interest Payment Date shall
forthwith cease to be payable to the Person in whose name such Note as
registered on the relevant Regular Record Date, and such defaulted interest
shall instead be payable to the Person in whose name such Note is registered on
the Special Record Date or other specified date determined in accordance with
the Senior Indenture.
If any Interest Payment Date or Maturity falls on a day that is not a
Business Day, the required payment shall be made on the next Business Day as if
it were made on the date
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such payment was due and no interest shall accrue on the amount so payable for
the period from and after such Interest Payment Date or Maturity, as the case
may be.
The Notes will mature on November __, 2004.
SECTION 2.4. LIMITATIONS ON INCURRENCE OF DEBT.
(a) The Partnership will not, and will not permit any
Subsidiary to, incur any Indebtedness if, immediately after giving effect to the
incurrence of such additional Indebtedness and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Indebtedness of the
Partnership and its Subsidiaries on a consolidated basis determined in
accordance with GAAP is greater than 60% of the sum of (without duplication) (i)
the Total Assets of the Partnership and its Subsidiaries as of the end of the
calendar quarter covered in the Partnership's Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, as the case may be, most recently filed with the
Commission (or, if such filing is not permitted under the Exchange Act, with the
Trustee) prior to the incurrence of such additional Indebtedness, and (ii) the
purchase price of any real estate assets or mortgages receivable acquired since
the end of the most recent calendar quarter, and (iii) the amount of any
securities offering proceeds received (to the extent such proceeds were not used
to acquire real estate assets or mortgages receivable or used to reduce
Indebtedness), by the Partnership or any Subsidiary since the end of such
calendar quarter, including those proceeds obtained in connection with the
incurrence of such additional Indebtedness, less (iv) the decrease, if any, in
the Total Assets of the Partnership and its Subsidiaries since the end of such
quarter.
(b) In addition to the limitation set forth in subsection (a)
of this Section 2.4, the Partnership will not, and will not permit any
Subsidiary to, incur any Indebtedness if the ratio of Consolidated Income
Available for Debt Service to the Annual Service Charge for the four consecutive
fiscal quarters most recently ended prior to the date on which such additional
Indebtedness is to be incurred shall have been less than 1.5:1 on a PRO FORMA
basis after giving effect thereto and to the application of the proceeds
therefrom, and calculated on the assumption that (i) such Indebtedness and any
other Indebtedness incurred by the Partnership and its Subsidiaries since the
first day of such four-quarter period and the application of the proceeds
therefrom, including to refinance other Indebtedness, had occurred at the
beginning of such period; (ii) the repayment or retirement of any other
Indebtedness by the Partnership and its Subsidiaries since the first day of such
four-quarter period had been repaid or retired at the beginning of such period
(except that, in making such computation, the amount of Indebtedness under any
revolving credit facility shall be computed based upon the average daily balance
of such Indebtedness during such period); (iii) in the case of Acquired
Indebtedness or Indebtedness incurred in connection with any acquisition since
the first day of such four-quarter period, the related acquisition had occurred
as of the first day of such period with the appropriate adjustments with respect
to such acquisition being included in such PRO FORMA calculation; and (iv) in
the case of any acquisition or disposition by the Partnership or its
Subsidiaries of any asset or group of assets since the first day of such
four-quarter period, whether by merger, stock purchase or sale, or
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asset purchase or sale, such acquisition or disposition or any related repayment
of Indebtedness had occurred as of the first day of such period with the
appropriate adjustments with respect to such acquisition or disposition being
included in such PRO FORMA calculation.
(c) In addition to the limitations set forth in subsections
(a) and (b) of this Section 2.4, the Partnership will not, and will not permit
any Subsidiary to, incur any Indebtedness secured by any Encumbrance upon any of
the property of the Partnership or any Subsidiary if, immediately after giving
effect to the incurrence of such additional Indebtedness and the application of
the proceeds thereof, the aggregate principal amount of all outstanding
Indebtedness of the Partnership and its Subsidiaries on a consolidated basis
which is secured by any Encumbrance on property of the Partnership or any
Subsidiary is greater than 40% of the sum of (without duplication) (i) the Total
Assets of the Partnership and its Subsidiaries as of the end of the calendar
quarter covered in the Partnership's Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, as the case may be, most recently filed with the Commission
(or, if such filing is not permitted under the Exchange Act, with the Trustee)
prior to the incurrence of such additional Indebtedness and (ii) the purchase
price of any real estate assets or mortgages receivable acquired since the end
of the most recent calendar quarter, and (iii) the amount of any securities
offering proceeds received (to the extent that such proceeds were not used to
acquire real estate assets or mortgages receivable or used to reduce
Indebtedness), by the Partnership or any Subsidiary since the end of such
calendar quarter, including those proceeds obtained in connection with the
incurrence of such additional Indebtedness, less (iv) the decrease, if any, in
the Total Assets of the Partnership and its Subsidiaries since the end of such
quarter.
(d) The Partnership and its Subsidiaries may not at any time
own Total Unencumbered Assets equal to less than 150% of the aggregate
outstanding principal amount of the Unsecured Indebtedness of the Partnership
and its Subsidiaries on a consolidated basis.
(e) For purposes of this Section 2.4, Indebtedness shall be
deemed to be "incurred" by the Partnership or a Subsidiary whenever the
Partnership or such Subsidiary shall create, assume, guarantee or otherwise
become liable in respect thereof.
(f) The covenants set forth in subsections (a), (b) and (c) of
this Section 2.4 shall not restrict the Partnership from refinancing existing
Indebtedness, provided that the outstanding principal amount of such
Indebtedness is not increased.
SECTION 2.5. REDEMPTION.
(a) The Notes shall be redeemable before their Stated Maturity
in accordance with this Section 2.5 and otherwise in accordance with the
provisions of Article Eleven of the Senior Indenture. In the event of any
conflict between this Section 2.5 (including the definitions of terms used
herein) and Article Eleven of the Senior Indenture (including the definitions of
terms used therein), this Section 2.5 shall control.
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(b) The Notes may be redeemed at any time at the option and in
the sole discretion of the Partnership in whole or from time to time in part, at
a redemption price equal to the sum of (i) the principal amount of the Notes
being redeemed plus accrued interest thereon to the Redemption Date, and (ii)
the Make-Whole Amount, if any, with respect to such Notes (the "Redemption
Price").
SECTION 2.6. PLACES OF PAYMENT. The Places of Payment where the Notes
may be presented or surrendered for payment, where the Notes may be surrendered
for registration of transfer or exchange and where notices and demands to and
upon the Partnership in respect of the Notes and the Senior Indenture may be
served shall be in (i) The City of Chicago, Illinois and the office or agency
for such purpose shall initially be 135 South LaSalle Street, Chicago, Illinois
60603.
SECTION 2.7. METHOD OF PAYMENT. Payment of the principal of and
interest on the Notes will be made at the office or agency of the Partnership
maintained for that purpose in The City of Chicago, Illinois (which shall
initially be an office or agency of the Trustee), in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts; PROVIDED, HOWEVER, that at the option of
the Partnership, payments of principal and interest on the Notes (other than
payments of principal and interest due at Maturity) may be made (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register or (ii) by wire transfer to an account
maintained by the Person entitled thereto located inside the United States.
SECTION 2.8. CURRENCY. Principal and interest on the Notes shall be
payable in Dollars.
SECTION 2.9. REGISTERED SECURITIES: GLOBAL FORM. The Notes shall be
issuable and transferable in fully registered form as Registered Securities,
without coupons. The Notes shall each be issued in the form of one or more
permanent Global Securities. The depositary for the Notes shall be DTC. The
Notes shall not be issuable in definitive form except as provided in Section 305
of the Senior Indenture.
SECTION 2.10. FORM OF NOTES. The Notes shall be substantially in
the form attached as EXHIBIT A hereto.
SECTION 2.11. REGISTRAR AND PAYING AGENT. The Trustee shall initially
serve as Registrar and Paying Agent for the Notes.
SECTION 2.12. DEFEASANCE. The provisions of Section 1402 and 1403 of
the Senior Indenture, together with the other provisions of Article Fourteen of
the Senior Indenture, shall be applicable to the Notes. The provisions of
Section 1403 of the Senior Indenture shall apply to the covenants set forth in
Section 2.4 of this Supplemental Indenture and to those covenants specified in
Section 1403 of the Senior Indenture.
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SECTION 2.13. EVENTS OF DEFAULT. The provisions of clause (5) of
Section 501 of the Senior Indenture as applicable with respect to the Notes
shall be deemed to be amended and restated in their entirety to read as follows:
(5) default under any bond, debenture, note, mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Partnership (or by any
Subsidiary, the repayment of which the Partnership has guaranteed or for which
the Partnership is directly responsible or liable as obligor or guarantor),
having an aggregate principal amount outstanding of at least $10,000,000,
whether such indebtedness now exists or shall hereafter be created, which
default shall have resulted in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged, or such acceleration
having been rescinded or annulled, within a period of 10 days after there shall
have been given written notice, by registered or certified mail, to the
Partnership by the Trustee or to the Partnership and the Trustee by the Holders
of at least 10% in principal amount of the Outstanding Securities of that series
a written notice specifying such default and requiring the Partnership to cause
such indebtedness to be discharged or cause such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default" hereunder; or
The provisions of Section 501 of the Senior Indenture as applicable
with respect to the Notes shall be further deemed to be amended by renumbering
existing clause (8) to be clause (9) and by adding the following new clause (8):
(9) the entry by a court of competent jurisdiction of one or more
judgments, orders or decrees against the Partnership or any of its Subsidiaries
in an aggregate amount (excluding amounts covered by insurance) in excess of
$10,000,000 and such judgements, orders or decrees remain undischarged, unstayed
and unsatisfied in an aggregate amount (excluding amounts covered by insurance)
in excess of $10,000,000 for a period of 30 consecutive days; or
SECTION 2.14. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. The provisions of the first paragraph of Section 502 of the Senior
Indenture as applicable with respect to the Notes shall be deemed to be amended
and restated in their entirety to read as follows:
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal (or, if any Securities are
Original Issue Discount Securities or Indexed Securities, such portion of the
principal as may be specified in the terms thereof) of, and the Make-Whole
Amount, if any, on, all the Securities of that series to be due and payable
immediately, by a notice in writing to the Partnership (and to the Trustee if
given by the Holders), and upon any such declaration such principal or specified
portion thereof shall become immediately due and payable. If an Event of Default
with respect to the Securities of any series set forth in Sections 501(6) or
501(7) of this Indenture occurs and is continuing,
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then in every such case all the Securities of that series shall become
immediately due and payable, without notice to the Partnership, at the principal
amount thereof (or, if any Securities are Original Issue Discount Securities or
Indexed Securities, such portion of the principal as may be specified in the
terms thereof) plus accrued interest to the date the Securities of that series
are paid plus the Make-Whole Amount, if any, on the Securities of that series.
SECTION 2.15. PROVISION OF FINANCIAL INFORMATION. Whether or not the
Partnership is subject to Section 13 or 15(d) of the Exchange Act, the
Partnership will, to the extent permitted under the Exchange Act, file with the
Commission the annual reports, quarterly reports and other documents which the
Partnership would have been required to file with the Commission pursuant to
such Section 13 or 15(d) if the Partnership were so subject, such documents to
be filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Partnership would have been required so to file such
documents if the Partnership were so subject.
The Partnership will also in any event (x) within 15 days of each
Required Filing Date (i) if the Partnership is not then subject to Section 13 or
15(d) of the Exchange Act, transmit by mail to all Holders of Notes, as their
names and addresses appear in the Security Register, without cost to such
Holders, copies of the annual reports and quarterly reports that the Partnership
would have been required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act if the Partnership were subject to such Sections, and
(ii) file with the Trustee copies of annual reports, quarterly reports and other
documents that the Partnership would have been required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act if the
Partnership were subject to such Sections and (y) if filing such documents by
the Partnership with the Commission is not permitted under the Exchange Act,
promptly upon written request and payment of the reasonable cost of duplication
and delivery, supply copies of such documents to any prospective Holder.
SECTION 2.16. WAIVER OF CERTAIN COVENANTS. Notwithstanding the
provisions of Section 1009 of the Senior Indenture, the Partnership may omit to
comply with any term, provision or condition set forth in Sections 1004 to 1008,
inclusive, of the Senior Indenture, with Sections 2.4 and 2.15 of this
Supplemental Indenture and with any other term, provision or condition with
respect to the Notes (except any such term, provision or condition which could
not be amended without the consent of all Holders of the Notes or such series
thereof, as applicable), if before or after the time for such compliance the
Holders of at least a majority in principal amount of all outstanding Notes or
such series thereof, as applicable, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition. Except to the extent so expressly waived, and until such waiver shall
become effective, the obligations of the Partnership and the duties of the
Trustee in respect of any such term, provision or condition shall remain in full
force and effect.
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ARTICLE THREE
MISCELLANEOUS PROVISIONS
SECTION 3.1. RATIFICATION OF SENIOR INDENTURE. Except as expressly
modified or amended hereby, the Senior Indenture continues in full force and
effect and is in all respects confirmed and preserved.
SECTION 3.2. GOVERNING LAW. This Supplemental Indenture and each Note
shall be governed by the construed in accordance with the laws of the State of
New York. This Supplemental Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended and shall, to the extent applicable, be
governed by such provisions.
SECTION 3.3. COUNTERPARTS. This Supplemental Indenture may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed by their respective officers hereunto duly
authorized, all as of the day and year first written above.
BRADLEY OPERATING LIMITED PARTNERSHIP
By: BRADLEY REAL ESTATE, INC., its
general partner
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
LaSALLE NATIONAL BANK, as Trustee
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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Exhibit A to
Supplemental Indenture No. 1
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY ("DTC"), 55 WATER STREET, NEW YORK, NEW YORK TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL THIS SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER
NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE
OF SUCH SUCCESSOR.
BRADLEY OPERATING LIMITED PARTNERSHIP
____% Senior Note Due 2004
Registered No. 001 PRINCIPAL AMOUNT
CUSIP No. _____________ --$100,000,000--
BRADLEY OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership
(herein referred to as the "Partnership" which term includes any successor
entity under the Indenture referred to), for value received, hereby promises to
pay to CEDE & CO., or registered assigns, upon presentation, the principal sum
of ONE HUNDRED MILLION AND NO/100 DOLLARS on November __, 2004 (the "Stated
Maturity Date") and to pay interest thereon from November __, 1997 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on March 15 and September 15 in each year (each, an
"Interest Payment Date"), commencing March 15, 1998, at the rate of ____% per
annum, until the principal hereof is paid or duly provided for. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Holder in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be the March
1 or September 1 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date at the office or agency of the Partnership
maintained for such purpose; PROVIDED, HOWEVER, that such interest may be paid,
at the Partnership's option, by mailing a check to such Holder at its registered
address or by transfer of funds to an account maintained by such Holder within
the United States. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may be paid
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to the Holder in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The principal of this Security payable on the Stated Maturity Date or
the principal of, premium or Make-Whole Amount, if any, and, if the Redemption
Date is not an Interest Payment Date, interest on this Security payable on the
Redemption Date will be paid against presentation of this Security at the office
or agency of the Partnership maintained for that purpose in Northbrook, Illinois
in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
Interest payable on this Security on any Interest Payment Date and on
the Stated Maturity Date or Redemption Date, as the case may be, will include
interest accrued from and including the next preceding Interest Payment Date in
respect of which interest has been paid or duly provided for (or from and
including November __, 1997, if no interest has been paid on this Security) to
but excluding such Interest Payment Date or the Stated Maturity Date or
Redemption Date, as the case may be. If any Interest Payment Date or the Stated
Maturity Date or Redemption Date falls on a day that is not a Business Day, as
defined below, principal, premium or Make-Whole Amount, if any, and/or interest
payable with respect to such Interest Payment Date or Stated Maturity Date or
Redemption Date, as the case may be, will be paid on the next succeeding
Business Day with the same force and effect as if it were paid on the date such
payment was due, and no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date or Stated Maturity Date or
Redemption Date, as the case may be. "Business Day" means any day, other than a
Saturday or Sunday, on which banks in the City of New York, New York are not
required or authorized by law or executive order to close.
All payments of principal, premium or Make-Whole Amount, if any, and
interest in respect of this Security will be made by the Partnership in
immediately available funds.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature of one of its authorized signatories, this
Security shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
A-2
<PAGE> 16
IN WITNESS WHEREOF, the Partnership has caused this instrument to be
duly executed under its facsimile corporate seal.
Dated:_______________
BRADLEY OPERATING LIMITED PARTNERSHIP
By: BRADLEY REAL ESTATE, INC., as
general partner
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Attest:
- -----------------------------------
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated:_______________
LaSALLE NATIONAL BANK
By:
----------------------------------------
Name:
Title:
A-3
<PAGE> 17
[Reverse of Security]
BRADLEY OPERATING LIMITED PARTNERSHIP
This Security is one of a duly authorized issue of securities of the
Partnership (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of November __, 1997, as supplemented
by Supplemental Indenture No. 1, dated as of November __, 1997 (as so
supplemented, herein called the "Indenture") between the Partnership and LaSalle
National Bank, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture with respect to the series of which this
Security is a part), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Partnership, the Trustee and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered. This Security is one of the duly
authorized series of Securities designated on the face hereof (collectively, the
"Securities"), and the aggregate principal amount of the Securities to be issued
under such series is limited to $100,000,000 (except for Securities
authenticated and delivered upon transfer of, or in exchange for, or in lieu of
other Securities). All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.
The Securities are subject to redemption at any time at the option and
in the sole discretion of the Partnership in whole or from time to time in part,
at a redemption price equal to the sum of (i) the principal amount of the Notes
being redeemed plus accrued interest thereon to the Redemption Date and (ii) the
Make-Whole Amount, if any, with respect to such Notes; PROVIDED, HOWEVER, that
installments of interest on this Security whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holder of this Security, or one
or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
Notice of redemption will be given by mail to Holders of Securities,
not less than 30 nor more than 60 days prior to the Redemption Date, all as
provided in the Indenture.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Partnership and the rights of the Holders of the Securities under the Indenture
at any time by the Partnership and the
A-4
<PAGE> 18
Trustee with the consent of the Holders of not less than a majority of the
aggregate principal amount of all Securities issued under the Indenture at the
time Outstanding and affected thereby. The Indenture also contains provisions
permitting the Holders of not less than a majority of the aggregate principal
amount of the Outstanding Securities, on behalf of the Holders of all such
Securities, to waive compliance by the Partnership with certain provisions of
the Indenture. Furthermore, provisions in the Indenture permit the Holders of
not less than a majority of the aggregate principal amount, in certain
instances, of the Outstanding Securities of any series to waive, on behalf of
all of the Holders of Securities of such series, certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and other Securities issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Partnership,
which is absolute and unconditional, to pay the principal of (and premium or
Make-Whole Amount, if any) and interest on this Security at the times, places
and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Security is registrable in the
Security Register of the Partnership upon surrender of this Security for
registration of transfer at the office or agency of the Partnership in any place
where the principal of (and premium or Make-Whole Amount, if any) and interest
on this Security are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Partnership and the Security
Registrar duly executed by, the Holder hereof or by his attorney duly authorized
in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Security is exchangeable for a like aggregate
principal amount of Securities of different authorized denominations but
otherwise having the same terms and conditions, as requested by the Holder
hereof surrendering the same.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
No service charge shall be made for any such registration of transfer
or exchange, but the Partnership may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Partnership, the Trustee and any agent of the Partnership or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this
A-5
<PAGE> 19
Security be overdue, and neither the Partnership, the Trustee nor any such agent
shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of or premium
or Make-Whole Amount, if any, or the interest on this Security, or for any claim
based hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any past, present or
future stockholder, employee, officer or director, as such, of the Partnership
or of any successor, either directly or through the Partnership or any
successor, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
The Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely in such State.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Partnership has caused "CUSIP" numbers
to be printed on the Securities of this series as a convenience to the Holders
of such Securities. No representation is made as to the correctness or accuracy
of such CUSIP numbers as printed on the Securities, and reliance may be placed
only on the other identification numbers printed hereon.
A-6
<PAGE> 20
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________.
_______________________________________________________________________________
(Please Print or Type Name and Address Including Zip Code of Assignee)
the within Security of Bradley Operating Limited Partnership and hereby does
irrevocably constitute and appoint _______________________ Attorney to transfer
said security on the books of the within-named Partnership with full power of
substitution in the premises.
Dated:_______________
___________________________________
___________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the LaSalle National Bank, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the LaSalle National Bank in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
NOTICE: The signature to this assignment must correspond with the name
as it appears on the first page of the within Security in every particular,
without alteration or enlargement of any change whatever.
A-7
<PAGE> 1
EXHIBIT 12.1
BRADLEY OPERATING LIMITED PARTNERSHIP
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994 1993 1992
---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings, as defined... $33,786,000 $ 42,153,000 $ 14,060,000 $ 14,025,000 $9,051,000 $4,667,000
----------- ------------ ------------ ------------ ---------- ----------
Fixed charges:
Interest expense....... 11,593,000 13,404,000 4,705,000 4,524,000 2,947,000 3,596,000
Interest capitalized
during the period.... 18,000 150,000 137,000 89,000 58,000 178,000
Amortization of
deferred debt
issuance costs....... 514,000 715,000 494,000 408,000 185,000 99,000
---------- ------------ ------------ ------------ ---------- ----------
12,125,000 14,269,000 5,336,000 5,021,000 3,190,000 3,873,000
Ratio of earnings to
fixed charges........ 2.79:1 2.95:1 2.63:1 2.79:1 2.84:1 1:21:1
======== ========== ========== ========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP
--------------------------------
The Board of Directors of Bradley Real Estate, Inc.
and Unit Holders of Bradley Operating Limited Partnership:
We consent to the use of our reports related to the consolidated financial
statements and schedule of Bradley Operating Limited Partnership and Predecessor
Business and Subsidiaries as of December 31, 1996 and 1995 and for each of the
years in the three-year period ended December 31, 1996 contained in the
Operating Partnership's Form 10/A-2 Registration Statement, the consolidated
financial statements and schedule of Bradley Real Estate, Inc. as of December
31, 1996 and 1995 and for each of the years in the three-year period ended
December 31, 1996 contained in the Company's Annual Report on Form 10-K, and
the combined statement of revenues and certain expenses of the Acquisition
Properties (as defined) for the year ended December 31, 1996 contained in the
Operating Partnership's Form 10/A-2 Registration Statement incorporated by
reference herein, and to the reference to our Firm under the heading "Experts"
in this Amendment No. 2 to Form S-3 Registration Statement.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
November 13, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
the Bradley Operating Limited Partnership on Amendment No. 2 to Form S-3
(File No. 333-36577) of our report dated March 13, 1996, on our audits of the
consolidated financial statements of the Tucker Properties Corporation as of
December 31, 1995 and 1994 and for the years then ended contained in the
Bradley Operating Limited Partnership Form 10/A-2 registration statement dated
November 14, 1997. We also consent to the reference to our firm under the
caption "Experts."
/s/ Coopers & Lybrand L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
November 14, 1997
<PAGE> 1
Exhibit 25.1
------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-----------------------
LASALLE NATIONAL BANK
(Exact name of trustee as specified in its charter)
36-0884183
(I.R.S. Employer
Identification No.)
135 South LaSalle Street, Chicago, Illinois 60603
(Address of principal executive offices) (Zip Code)
-----------------------
M. ROBERT K. QUINN
Senior Vice President and General Counsel
Telephone: (312) 904-2010
135 South LaSalle Street
Chicago, Illinois 60603
(Name, address and telephone number of agent for service)
-----------------------
Bradley Operating Limited Partnership
(Exact name of obligor as specified in its charter)
Delaware 04-3306041
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
40 Skokie Boulevard
Northbrook, Illinois
60062
(Address of Principal Executive Offices) (Zip Code)
-----------------------
$100,000,000 Senior Debt Securities due 2004
$100,000,000 Senior Debt Securities due 2007
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
1. Comptroller of the Currency, Washington D.C.
2. Federal Deposit Insurance Corporation, Washington, D.C.
3. The Board of Governors of the Federal Reserve Systems,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
If the obligor or any underwriter for the obligor is an affiliate of the
trustee, describe each such affiliation.
Neither the obligor nor any underwriter for the obligor is an
affiliate of the trustee.
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting securities of the
trustee:
Not applicable
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
(a) Title of the securities outstanding under each other indenture.
Not applicable
(b) A brief statement of the facts relied upon as a basis for the
claim that no conflicting interest within the meaning of Section 310(b)(1) of
the Act arises as a result of the trusteeship under such other indenture,
including a statement as to how the indenture securities will rank as compared
with the securities issued under such other indenture.
We have performed our annual conflict of interest check and found no
conflicts.
<PAGE> 3
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR
OR UNDERWRITERS.
If the trustee or any of the directors or executive officers of the trustee is a
director, officer, partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify each such person having
any such connection and state the nature of each such connection.
Not applicable
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner and executive
officer of the obligor.
Not applicable
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Furnish the following information as to the voting securities of the trustee
owned beneficially by each underwriter for the obligor and each director,
partner, and executive officer of each such underwriter.
Not applicable
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by the
trustee:
Not applicable
ITEM 9. SECURITIES OF THE UNDERWRITER OWNED OR HELD BY THE TRUSTEE.
If the trustee owns beneficially or holds as collateral security for obligations
in default any securities of an underwriter for the obligor, furnish the
following information as to each class of securities of such underwriter any of
which are so owned or held by the trustee.
Not applicable
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for obligations
in default voting securities of a person who, to the knowledge of the trustee
(1) owns 10 percent or more of the voting securities of the obligor or (2) is an
affiliate, other than a subsidiary, of the obligor, furnish the following
information as to the voting securities of such person.
Not applicable
<PAGE> 4
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for obligations
in default any securities of a person who, to the knowledge of the trustee, owns
50 percent or more of the voting securities of the obligor, furnish the
following information as to each class of securities of such person any of which
are so owned or held by the trustee.
Not applicable
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
If the obligor is indebted to the trustee, furnish the following information.
Not applicable
ITEM 13. DEFAULTS BY THE OBLIGOR.
a) State whether there is or has been a default with respect to the securities
under this indenture. Explain the nature of any such default.
Not applicable
b) If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
Not applicable
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not applicable
ITEM 15. FOREIGN TRUSTEE.
Identify the order or rule pursuant to which the foreign trustee is authorized
to act as sole trustee under indentures qualified or to be qualified.
Not applicable
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of eligibility and
qualification.
1. A copy of the Articles of Association of LaSalle National Bank
now in effect.
2. A copy of the certificate of authority to commence business.
3. A copy of the authorization to exercise corporate trust powers.
<PAGE> 5
4. A copy of the existing By-Laws of LaSalle National Bank.
5. Not applicable.
6. The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
8. Not applicable.
9. Not applicable.
<PAGE> 6
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,the trustee,
LaSalle National Bank, a corporation organized and existing under the laws of
the United States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Chicago, State of Illinois, on the 3rd day of
November 1997.
LASALLE NATIONAL BANK
By: /s/ Sarah H. Webb
--------------------
Sarah H. Webb
First Vice President
<PAGE> 7
EXHIBIT 1
ARTICLES OF ASSOCIATION
<PAGE> 8
ARTICLES
OF
ASSOCIATION
LA SALLE NATIONAL BANK (LOGO)
LA SALLE NATIONAL BANK
CHICAGO, ILLINOIS
<PAGE> 9
(LOGO)
LaSalle National Bank
ARTICLES OF ASSOCIATION
FIRST. The title of this association, which shall carry on the business
of banking under the laws of the United States shall be "LaSalle National Bank."
SECOND. The place where the main banking house or office of this
association shall be located, its operations of discount and deposit carried on,
and its general business conducted, shall be Chicago, County of Cook, State of
Illinois.
THIRD. The Board of Directors of this association shall consist of such
number of its shareholders, not less than five nor more than twenty-five, as
from time to time shall be determined by a majority of the votes to which all of
its shareholders are at the time entitled. A majority of the Board of Directors
shall be necessary to constitute a quorum for the transaction of business. The
Board of Directors, by vote of a majority of the full board, may, between annual
meetings of shareholders increase the membership of the Board where the number
of directors last elected by shareholders was 15 or less, by not more than two
members, and where the number of directors last elected by shareholders was 16
or more, by not more than four members and by a like vote appoint qualified
persons to fill the vacancies created thereby; provided that the number of
Directors shall at no time exceed twenty-five.
FOURTH. The regular annual meeting of the shareholders of this
association shall be held at its main banking house, or other convenient place
duly authorized by the board of directors on such day of each year as is
specified therefor in the bylaws.
FIFTH. The amount of capital stock which this association is authorized
to issue shall be Twenty Million Dollars ($20,000,000.00) divided into 2,000,000
shares of common capital stock of the par value of $10.00 each; but said capital
stock may be increased or decreased from time to time, in accordance with the
provisions of the laws of the United States.
If the capital stock is increased by the sale of additional shares
thereof, other than to key officers and employees of the association upon the
exercise of options granted pursuant to the terms of a stock option plan then in
effect, as to which sales all pre-emptive rights are waived, each shareholder
shall be entitled to subscribe for such additional shares in proportion to the
number of shares of said capital stock owned by him at the time the increase is
authorized by the shareholders, unless another time subsequent to the date of
the shareholders' meeting is specified in a resolution adopted by the
shareholders at the time the increase is authorized. The board of directors
shall have the power to prescribe a reasonable period of time within which the
pre-emptive rights to subscribe to the new shares of capital stock may be
exercised.
The association, at any time and from time to time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The board of directors shall appoint one of its members
president of this association, who shall be chairman of the board, but the board
of directors may appoint a director in lieu of the president to be chairman of
the board, who shall perform such duties as may be designated by the board of
directors. The board of directors shall have the power to appoint one or more
vice presidents, a cashier and such other officers as may be required to
transact the business of this association; to fix the salaries to be paid to all
officers of this association; and to dismiss such officers, or any of them.
The board of directors shall have the power to define the duties of
officers and employees of this association, to require bonds from them, and to
fix the penalty thereof; to regulate the manner in which directors shall be
elected
<PAGE> 10
or appointed, and to appoint judges of the election; to make all bylaws that it
may be lawful for them to make for the general regulation of the business of
this association and the management of its affairs; and generally to do and
perform all acts that it may be lawful for a board of directors to do and
perform.
SEVENTH. This association shall have succession from the date of its
organization certificate until such time as it be dissolved by act of its
shareholders in accordance with the provisions of the banking laws of the United
States, or until its franchise becomes forfeited by reason of violation of law,
or until terminated by either a general or a special act of Congress, or until
its affairs be placed in the hands of a receiver and finally wound up by him.
EIGHTH. The board of directors of this association, or any three or
more shareholders owning, in the aggregate, not less than ten per centum of the
stock of this association, may call a special meeting of shareholders at any
time: Provided, however, that, unless otherwise provided by law, not less than
ten days prior to the date fixed for any such meeting, a notice of the time,
place, and purpose of the meeting shall be given by first-class mail, postage
prepaid, to all shareholders of record of this association at their respective
addresses as shown upon the books of the association. These articles of
association may be amended at any regular or special meeting of the shareholders
by the affirmative vote of the shareholders owning at least a majority of the
stock of this association, subject to the provisions of the banking laws of the
United States. The notice of any shareholders' meeting, at which an amendment to
the articles of association of this association is to be considered, shall be
given as herein-above set forth.
NINTH. Any person, his heirs, executors, or administrators, may be
indemnified or reimbursed by the association for reasonable expenses actually
incurred in connection with any action, suit, or proceeding, civil or criminal,
to which he or they shall be made a party by reason of his being or having been
a director, officer, or employee of the association or of any firm, corporation,
or organization which he served in any such capacity at the request of the
association: Provided, however, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit, or proceeding as to
which he shall finally be adjudged to have been guilty of or liable for
negligence or wilful misconduct in the performance of his duties to the
association: And, provided further, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit, or proceeding which
has been made the subject of a compromise settlement except with the approval of
a court of competent jurisdiction, or the holders of record of a majority of the
outstanding shares of the association, or the board of directors, acting by vote
of directors not parties to the same or substantially the same action, suit, or
proceeding, constituting a majority of the whole number of the directors. The
foregoing right of indemnification or reimbursement shall not be exclusive of
other rights to which such person, his heirs, executors, or administrators, may
be entitled as a matter of law.
********
May 17, 1982
Form No. 181, Rev 5/17/82 GW
<PAGE> 11
EXHIBIT 2
CERTIFICATE OF AUTHORITY
TO COMMENCE BUSINESS
<PAGE> 12
STATE OF ILLINOIS
AUDITOR'S OFFICE
NO. 333 (LOGO)
NATIONAL BANK TRUST CERTIFICATE
Springfield, FEBRUARY 15th 1928
I, OSCAR NELSON, Auditor of Public Accounts of the State of Illinois,
do hereby certify that the NATIONAL BUILDERS BANK OF CHICAGO located at CHICAGO,
County of COOK and State of Illinois, a corporation organized under and by
authority of the statutes of the United States governing National Banks and
authority granted by the Federal Reserve Act for the purpose of accepting and
executing trusts, has this day deposited in this office, securities in the sum
of TWO HUNDRED THOUSAND Dollars, $200,000.00 of the character designated by
Section 6 of the Act of the Legislature of the State of Illinois entitled "An
Act to provide for and regulate the administration of trusts by trust
companies," The said deposit is made for the benefit of the creditors of said
NATIONAL BUILDERS BANK OF CHICAGO under and by virtue of the provisions of the
Act above referred to and the said securities are now held by me in this office
in my official capacity as such Auditor of Public Accounts, for the uses and
purposes aforesaid. I further certify that by virtue of the Acts aforesaid, the
NATIONAL BUILDERS BANK OF CHICAGO is hereby authorized to accept and execute
trusts and receive deposits of trust funds under the provisions and limitations
of "An Act to provide for and regulate the administration of trusts in Illinois.
IN TESTIMONY WHEREOF, I hereunto subscribe my name and affix
(SEAL) the seal of my office, the day and year first above written.
/s/ Oscar Nelson
---------------------------
AUDITOR OF PUBLIC ACCOUNTS.
STATE OF ILLINOIS.
<PAGE> 13
NO. 13146.
TREASURY DEPARTMENT (LOGO)
OFFICE OF COMPTROLLER OF THE CURRENCY
Washington, D.C., NOVEMBER 29, 1927.
WHEREAS, by satisfactory evidence presented to the undersigned, it has
been made to appear that "NATIONAL BUILDERS BANK OF CHICAGO" in the CITY of
CHICAGO in the County of COOK and State of ILLINOIS has complied with all the
provisions of the Statutes of the United States, required to be complied with
before an association shall be authorized to commence the business of Banking;
NOW THEREFORE I, J.W. MCINTOSH, Comptroller of the Currency, do hereby
certify that "NATIONAL BUILDERS BANK OF CHICAGO" in the CITY of CHICAGO in the
County of COOK and State of ILLINOIS is authorized to commence the business of
Banking as provided in Section Fifty one hundred and sixty nine of the Revised
Statutes of the United States.
IN TESTIMONY WHEREOF witness my hand and Seal of (SEAL)
(SEAL) office this TWENTY- NINTH day of NOVEMBER, 1927.
/s/ J.W. McIntosh
---------------------------
Comptroller of the Currency
<PAGE> 14
CERTIFICATE OF CHANGE OF CORPORATE TITLE
(LOGO)
NO. 13146.
TREASURY DEPARTMENT
OFFICE OF THE COMPTROLLER OF THE CURRENCY
WASHINGTON, D.C., MAY 1, 1940.
WHEREAS, by satisfactory evidence presented to me, it appears that
under authority of sections 2, 3, and 4, of the Act of Congress approved May 1,
1886, entitled "An Act to enable national banking associations to increase their
capital stock and to change their names or location," shareholders owning
two-thirds of the stock of the national banking association heretofore known
as-- "NATIONAL BUILDERS BANK OF CHICAGO," located in CHICAGO, County of COOK,
State of ILLINOIS, have voted to change the name of said association to--
"LASALLE NATIONAL BANK," and have complied with all the provisions of the said
Act relative to national banking associations changing their name.
NOW, THEREFORE, IT IS HEREBY CERTIFIED, that the name of the said
association has been changed to-- "LASALLE NATIONAL BANK," and that such change
of name is hereby approved under authority conferred by said Act.
IN TESTIMONY WHEREOF, witness my hand and seal of office
(SEAL) this FIRST day of MAY, 1940.
/s/
-----------------------------------
ACTING Comptroller of the Currency.
<PAGE> 15
EXHIBIT 3
AUTHORIZATION TO EXERCISE
CORPORATE TRUST POWERS
<PAGE> 16
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM [LETTERHEAD]
WASHINGTON
May 9, 1940
LaSalle National Bank,
Chicago, Illinois.
Gentlemen:
The Board of Governors of the Federal Reserve System has been
officially advised by the Comptroller of the Currency that on May 1, 1940,
National Builders Bank of Chicago, Chicago, Illinois, changed its title to
LaSalle National Bank, and accordingly there is enclosed herewith a certificate
showing that LaSalle National Bank has authority to exercise the fiduciary
powers enumerated therein.
Kindly acknowledge receipt of this certificate.
Very truly yours,
S. R. Carpenter
--------------------
S. R. Carpenter,
Assistant Secretary.
Enclosure
<PAGE> 17
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
I, S. R. Carpenter, Assistant Secretary of the Board of Governors of
the Federal Reserve System (formerly known as the Federal Reserve Board), do
hereby certify that it appears from the records of the Board of Governors of the
Federal Reserve System that:
(1) Pursuant to the authority vested in the Federal Reserve Board by an
Act of Congress approved December 23, 1913, known as the Federal Reserve Act, as
amended, the Federal Reserve Board on December 8, 1927, granted to National
Builders Bank of Chicago, Chicago, Illinois, the right to act, when not in
contravention of State or local law, as trustee, executor, administrator,
registrar of stocks and bonds, guardian of estates, assignee, receiver,
committee of estates of lunatics, or in any other fiduciary capacity in which
State banks, trust companies or other corporations which come into competition
with national banks are permitted to act under the laws of the State of
Illinois;
(2) Under the provisions of an Act of Congress approved May 1, 1886,
National Builders Bank of Chicago, Chicago, Illinois, on May 1, 1940, changed
its title to LaSalle National Bank; and
(3) By virtue of the foregoing, LaSalle National Bank, Chicago,
Illinois, has authority to act, when not in contravention of State or local law,
as trustee, executor, administrator, registrar of stocks and bonds, guardian of
estates, assignee, receiver, committee of estates of lunatics, or in any other
fiduciary capacity in which State banks, trust companies or other corporations
which come into competition with national banks are permitted to act under the
laws of the State of Illinois, subject to regulations prescribed by the Board of
Governors of the Federal Reserve System.
IN WITNESS WHEREOF, I have hereunto subscribed my name and caused the
seal of the Board of Governors of the Federal Reserve System to be affixed at
the City of Washington in the District of Columbia.
/s/ S. R. Carpenter
--------------------
Assistant Secretary.
Dated May 9, 1940
<PAGE> 18
EXHIBIT 4
BY-LAWS OF LA SALLE NATIONAL BANK
<PAGE> 19
<PAGE> 20
BYLAWS
OF
LA SALLE NATIONAL BANK
CHICAGO, ILLINOIS
LA SALLE NATIONAL BANK (LOGO)
Organized Under the National Banking Laws
of the United States
<PAGE> 21
BYLAWS
of the
LA SALLE NATIONAL BANK
(a National Banking Association which association
is herein referred to as the "bank")
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.1. ANNUAL MEETING. The regular annual meeting of the
shareholders for the election of directors and the transaction of whatever other
business may properly come before the meeting, shall be held at the main office
of the Bank, 135 South LaSalle Street, Chicago, Illinois, or such other place as
the Board of Directors may designate, at 9:00 A.M., on the third Wednesday of
March of each year. Notice of such meeting shall be mailed, postage prepaid, at
least ten days prior to the date thereof, addressed to each shareholder at his
address appearing on the books of the Bank. If for any cause, an election of
directors is not made on the said day, the Board of Directors shall order the
election to be held on some subsequent day as soon thereafter as practicable,
according to the provisions of law; and notice thereof shall be given in the
manner herein provided for the annual meeting.
SECTION 1.2. SPECIAL MEETINGS. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be called for any
purpose at anytime by the board of directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the stock of
the bank. Every such special meeting, unless otherwise provided by law, shall be
called by mailing, postage pre-paid, not less than ten days prior to the date
fixed for such meeting, to each shareholder at his address appearing on the
books of the bank, a notice stating the purpose of the meeting.
SECTION 1.3. NOMINATIONS FOR DIRECTOR. Nominations for election to the
board of directors may be made by the board of directors or by any shareholder
of any outstanding class of capital stock of the bank entitled to vote for the
election of directors. Nominations, other than those made by or on behalf of the
existing management of the bank, shall be made in writing and shall be delivered
or mailed to the president of the bank and to the Comptroller of the Currency,
Washington, D.C., not less than 14 days nor more than 50 days prior to any
meeting of shareholders called for the election of directors, provided, however,
that if less than 21 days' notice of the meeting is given to the shareholders,
such nomination shall be mailed or delivered to the president of the bank and to
the Comptroller of the Currency not later than the close of business on the
seventh day following the day on which the notice of meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of each proposed nominee; (d) the name and address of
the notifying shareholder; and (e) the number of shares of capital stock of the
bank owned by the notifying shareholder. Nominations not made in accordance
herewith, may, in his discretion, be disregarded by the chairman of the meeting,
and upon his instructions, the vote tellers may disregard all votes cast for
each such nominee.
SECTION 1.4. JUDGES OF ELECTION. Every election of directors shall be
managed by three judges, who shall be appointed by the board of directors prior
lo the time of said election. The judges of election shall hold and conduct the
election at which they are appointed to serve; and after the election, they
shall file with the cashier a certificate under their hands, certifying the
result thereof and the names of the directors elected. The judges of election.
at the request of the chairman of the meeting, shall act as tellers of any other
vote by ballot taken at such meeting, and shall certify the result thereof.
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SECTION 1.5. PROXIES. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or employee
of this bank shall act as proxy. Proxies shall be valid only for one meeting, to
be specified therein, and any adjournments of such meeting. Proxies shall be
dated and shall be filed with the records of the meeting.
SECTION 1.6. QUORUM. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the articles of association.
ARTICLE II
DIRECTORS
SECTION 2.1. BOARD OF DIRECTORS. The board of directors (hereinafter
referred to as the "board"), shall have power to manage and administer the
business affairs of the bank. Except as expressly limited by law, all corporate
powers of the bank shall be vested in and may be exercised by said board.
SECTION 2.2. NUMBER. The board shall consist of not less than five or
more than twenty-five shareholders, the exact number within such minimum and
maximum limits to be fixed and determined from time to time by resolution of a
majority of the full board or by resolution of the shareholders at any meeting
thereof; provided, however, that a majority of the full board may not increase
the number of directors by more than two if the number of directors last elected
by shareholders was fifteen or less and by not more than four where the number
of directors last elected by shareholders was sixteen or more, provided that in
no event shall the number of directors exceed twenty-five.
SECTION 2.3. ORGANIZATION MEETING. The cashier, upon receiving the
certificate of the judges, of the result of any election, shall notify the
directors-elect of their election and of the time at which they are required to
meet at the main office of the bank for the purpose of organizing the new board
and electing and appointing officers of the bank for the succeeding year. Such
meeting shall be appointed to be held on the day of election or as soon
thereafter as practicable, and, in any event, within thirty days thereof. If, at
the time fixed for such meeting, there shall not be a quorum present the
directors present may adjourn the meeting, from time to time, until a quorum is
obtained.
SECTlON 2.4 REGULAR MEETINGS. The regular meetings of the board shall
be held, without notice, on the third Wednesday of each month at the main
office. When any regular meeting of the board falls upon a holiday, the meeting
shall be held on the next banking business day unless the board shall designate
some other day.
SECTION 2.5 SPECIAL MEETINGS. Special meetings of the board may be
called by the chairman of the board, the president, or at the request of three
or more directors. Each member of the board shall be given notice stating the
time and place, by telegram, letter or in person, of each such special meeting.
SECTION 2.6. QUORUM. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less number
may adjourn any meeting from time to time, and the meeting may be held, as
adjourned, without further notice.
SECTION 2.7. VACANCIES. When any vacancy occurs among the directors,
the remaining members of the board, in accordance with the laws of the United
States, may appoint a director to fill such vacancy at any regular meeting of
the board, or at a special meeting called for that purpose.
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SECTION 2.8. RETIREMENT POLICY. A retirement policy adopted by the
board of directors shall be applicable to directors who are not active officers
of the bank.
ARTICLE III
COMMITTEES OF THE BOARD
SECTION 3.1. EXECUTIVE COMMITTEE. There shall be an executive committee
of the board. The members of the executive committee shall be chosen by the
board from time to time, shall hold office during its pleasure, and shall
consist of the chairman of the board, the chairman of the executive committee
selected by the board, who may but need not be the same person designated to be
president, and the president, ex officio, and not less than seven additional
members of the board who shall not be active officers of the bank. It shall be
the duty of this committee to exercise such powers and perform such duties in
respect to the making of loans and discounts as shall from time to time be
specified by resolution of the board. During such periods as the board shall not
be in session, the executive committee shall have and may exercise all the
powers of the board except such as are by law or by these bylaws required to be
exercised only by the board. The executive committee may make rules for holding
and conducting its meetings and keep in the minute book of the bank a report of
all action taken which shall be submitted for approval at each regular meeting
of the board and the action of the board shall be recorded in the minutes of
that meeting. A quorum of the executive committee shall consist of not less than
five of its members, at least three of whom shall not be active officers of the
bank. The chairman of the board, or in his absence in the order named if
present, the chairman of the executive committee or the president, may designate
any director who is not an active officer of the bank, or a designated member,
to serve as a member of the executive committee at any specified meeting.
Vacancies in the executive committee at any time existing may be filled by
appointment by the board. The board may at anytime revise or change the
membership and chairmanship of the executive committee and make new or
additional appointments thereto. The chairman of the executive committee shall
be ex officio a member of all committees except the examining committee and the
trust audit committee, and shall have such other duties as may from time to time
be assigned him by the board.
SECTION 3.2. OFFICERS' COMPENSATION COMMITTEE. There shall be an
officers' compensation committee of the board. The members of the officers'
compensation committee shall consist of the members ex officio provided for in
other sections of these bylaws and not less than three additional non-officer
members of the board who shall be appointed by the board each year at its first
meeting after the directors have been elected and qualified. It shall be the
duty of this committee to study the compensation of all officers of the bank and
from time to time report their recommendations to the board; and such other
duties, if any, as may from time to time be assigned to it by the board. A
majority of the committee, including at least two non-officer members, shall be
necessary for the committee to keep records of its action.
SECTION 3.3. EXAMINING COMMITTEE. There shall be an examining committee
of the board. The members of the examining committee shall consist of the
members ex officio provided for in other sections of these bylaws, but exclusive
of any active officer of the bank and not less than three additional non-officer
members of the board who shall be appointed by the board each year at its first
meeting after the directors have been elected and qualified. It shall be the
duty of this committee to make an examination at least twice each year into the
affairs of the bank or to cause the examinations to be made by accountants (who
may be the bank's own accountants) responsible only to the board in such
examinations, and to report the result of such examinations in writing to the
board at the next regular meeting thereafter, or it may, at its sole discretion,
submit the reports of the national bank examiner or of the Chicago Clearing
House Association examination, with or without additional comments by the
committee itself, for, and in lieu of its personal examinations. Such reports
shall state whether the bank is in sound condition, whether adequate internal
audit controls and procedures are being maintained and shall recommend to the
board such changes in the manner of doing business or conducting the affairs of
the bank as shall be deemed advisable.
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<PAGE> 24
SECTION 3.4. OTHER COMMITTEES. The board may appoint, from time to
time, from its own members, other committees of one or more persons, for such
purposes and with such powers as the board may determine.
ARTICLE IV
OFFICERS AND EMPLOYEES
SECTION 4.1. CHAIRMAN OF THE BOARD. The board shall appoint one of its
members to be chairman of the board. The chairman of the board shall supervise
the carrying out of the policies adopted or approved by the board. He shall have
general executive powers, as well as the specific powers conferred by these
bylaws. He shall be ex officio a member of all committees, except the examining
committee and the trust audit committee. He shall have general supervision and
direction of the business, affairs and personnel of the bank. He shall also have
and may exercise such further powers and duties as from time to time may be
conferred upon, or assigned to him by the board.
SECTION 4.2. VICE CHAIRMAN OF THE BOARD. The board may appoint one of
its members to be vice chairman of the board. He shall perform such duties as
may from time to time be assigned to him by the board.
SECTION 4.3. PRESIDENT. The board shall appoint one of its members to
be president of the bank. He shall be the chief executive officer and the chief
administrative officer of the bank and in the absence of the chairman of the
board, he shall preside at any meeting of the board at which he is present. The
president shall have general executive powers, and shall have and may exercise
any and all other powers and duties pertaining by law, regulation, or practice
to the office of president, or imposed by these bylaws. He shall be ex officio a
member of all committees, except the examining committee and trust audit
committee. He shall have general supervision of the business, affairs and
personnel of the bank and in the absence of the chairman of the board, shall
exercise the powers and perform the duties of the chairman of the board. He
shall also have and may exercise such further powers and duties as from time to
time may be conferred upon or assigned to him by the board.
SECTION 4.4. SENIOR OFFICERS. The board may appoint one or more
executive vice presidents and one or more senior vice presidents. Each such
senior officer shall have such powers and duties as may be assigned to him by
the board, the chairman of the board, or the president.
SECTION 4.5. VICE PRESIDENT. The board may appoint one or more vice
presidents. Each vice president shall have such powers and duties as may be
assigned to him by the board, the chairman of the board, or the president.
SECTION 4.6. CASHIER. The board shall appoint a cashier who shall have
such powers and duties as may be assigned to him by the board, the chairman of
the board, or the president. The cashier shall be custodian of the corporate
seal, records, documents and papers of the bank. He shall provide for keeping of
proper records of all transactions of the bank.
SECTION 4.7. SECRETARY. The board shall appoint a secretary who shall
be secretary of the bank. He shall also perform such duties as may be assigned
to him from time to time by the board. The board may appoint a secretary of the
board who shall keep accurate minutes of all meetings. He shall attend to the
giving of all notices; he shall also perform such other duties as may be
assigned to him from time to time by the board.
SECTION 4.8. OTHER OFFICERS. The board may appoint one or more
assistant vice presidents, one or more trust officers, one or more assistant
secretaries, one or more assistant cashiers, and such other officers and
attorneys-in-fact as from time to time may appear to the board to be required or
desirable to transact the business of
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the bank. Such officers, respectively, shall exercise such powers and perform
such duties as pertain to their several offices or as may be conferred upon or
assigned to them by the board the chairman of the board or the president.
SECTION 4.9. CLERKS AND AGENTS. The chairman of the board, the
president, or any other active officer of the bank authorized by the chairman of
the board, or the president, may appoint and dismiss all or any paying tellers
receiving tellers note tellers, vault custodians, bookkeepers and other clerks,
agents and employees as they may deem advisable for the prompt and orderly
transaction of the business of the bank, define their duties, fix the salaries
to be paid them and the conditions of their employment.
SECTION 4.10. RESPONSIBILITY FOR MONEYS, ETC. Each of the active
officers and clerks of this bank shall be responsible for all moneys, funds
valuables and property of every kind and description that may from time to time
be entrusted to his care or placed in his hands by the board or others, or that
otherwise may come into his possession as an active officer or clerk of this
bank.
SECTION 4.11. SURETY BONDS. All the active officers and clerks of this
bank may be covered by one of the blanket form bonds customarily written by the
surety companies, drawn for such an amount, and executed by such surety company,
as the board may from time to time require, and duly approve; or at the
discretion of the board, all such active officers and clerks shall, each for
himself, give such bond, with such security, and in such denominations as the
board may from time to time require and direct. All bonds approved by the board
shall assure the faithful and honest discharge of the respective duties of such
active officer or clerk and shall provide that such active officer or clerk
shall faithfully apply and account for all moneys, funds, valuables and property
of every kind and description that may from time to time come into his hands or
be entrusted to his care, and pay over and deliver the same to the order of the
board or to such other person or persons as may be authorized to demand and
receive the same.
SECTION 4.12. TERM OF OFFICE - OFFICER DIRECTOR. The chairman of the
board, the vice chairman of the board and the president, together with any other
active officers who may be duly elected members of the board, shall hold their
respective offices for the current year for which the board (of which they shall
be members) was elected and until their successors are appointed, unless they
shall resign, be disqualified, or be removed; and any vacancy occurring in the
office of the chairman of the board, the vice chairman of the board, the
president, or in the board, shall, if required by these bylaws, be filled by the
remaining members.
SECTION 4.13. TERM OF OFFICE - OFFICER. The executive vice presidents,
the senior vice presidents, the vice presidents, the assistant vice presidents,
the cashier, the secretary, the trust officers and all other officers and
attorneys-in-fact who are not duly elected members of the board, shall be
appointed to hold their offices, respectively, during the pleasure of the board.
ARTICLE V
TRUST DEPARTMENT
SECTION 5.1. TRUST DEPARTMENT. There shall be a department of the bank
known as the trust department which shall perform the fiduciary responsibilities
of the bank.
SECTION 5.2. TRUST OFFICER. There shall be a senior vice president and
trust officer, or vice president and trust officer of this bank, who shall be
designated as the managing officer of the trust department and whose duties
shall be to manage, supervise and direct all the activities of the trust
department. He shall do, or cause to be done, all things necessary or proper in
carrying on the business of the trust department in accordance with provisions
of law and regulations. He shall act pursuant to opinion of counsel where such
opinion is deemed necessary. Opinions of counsel shall be retained on file in
connection with all important matters pertaining to fiduciary activities. The
trust officer shall be responsible for all assets and documents held by the bank
in connection with fiduciary matters.
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The board may appoint such other officers of the trust department as it may deem
necessary, with such duties as may be assigned to them by the board, the
chairman of the board, or the president.
SECTION 5.3. TRUST INVESTMENT COMMITTEE. There shall be appointed by
the board a trust investment committee of this bank composed of not less than
four members, including members ex officio provided for in other sections of
these bylaws, who shall be capable and experienced officers or directors of the
bank. All investments of funds held in a fiduciary capacity shall be made,
retained or disposed of only with the approval of the trust investment
committee; and the committee shall keep minutes of all its meetings, showing the
disposition of all matters considered and passed upon by it. The committee
shall, promptly after the acceptance of an account for which the bank has
investment responsibilities, review the assets thereof, to determine the
advisability of retaining or disposing of such assets. The committee shall
conduct a similar review at least once during each calendar year thereafter and
within fifteen months of the last such review. A report of all such reviews,
together with the action taken as a result thereof, shall be noted in the
minutes of the committee. Three members of the trust investment committee shall
constitute a quorum, and any action approved by a majority of those present
shall constitute the action of the committee.
SECTION 5.4. TRUST AUDIT COMMITTEE. The board shall appoint a
committee of not less than three directors, including members ex officio
provided for in other sections of these bylaws, exclusive of any active officers
of the bank, which shall at least once during each calendar year and within
fifteen months of the last such audit make suitable audits of the trust
department, or cause suitable audits to be made, by auditors responsible only to
the board, and at such time shall ascertain whether the department has been
administered in accordance with law, Regulation 9, and sound fiduciary
principles. Notwithstanding the provisions of this Section, the board at any
time may assign to the Examining Committee, in addition to the duties of the
Examining Committee set forth in Section 3.3 of these bylaws, all of the duties
of the Trust Audit Committee and during such time as the Examining Committee is
performing the duties of both committees, the Trust Audit Committee shall cease
to function as a committee of this board. The board at any time may reassign the
duties provided for in this Section to the Trust Audit Committee.
SECTION 5.5. TRUST DEPARTMENT FILES. There shall be maintained in the
trust department, files containing all fiduciary records necessary to assure
that its fiduciary responsibilities have been properly undertaken and
discharged.
SECTION 5.6. TRUST INVESTMENTS. Funds held in a fiduciary capacity
shall be invested in accordance with the instrument establishing the fiduciary
relationship and local law. Where such instrument does not specify the character
and class of investments to be made and does not vest in the bank a discretion
in the matter, fund shield pursuant to such instrument shall be invested in
investments in which corporate fiduciaries may invest under local law.
ARTICLE VI
STOCK AND STOCK CERTIFICATES
SECTION 6.1. TRANSFERS. Shares of capital stock shall be transferable
on the books of the bank and a transfer book shall be kept in which all
transfers of stock shall be recorded. Every person becoming a shareholder be
such transfer shall in proportion to his shares, succeed to all rights and
liabilities of the prior holder of such shares.
SECTION 6.2. STOCK CERTIFICATES. Certificates of capital stock shall
bear the signature of any one of, the chairman of the board, or the president
(which may be engraved, printed or impressed) and shall be signed manually or by
facsimile process by the secretary, assistant secretary, cashier, assistant
cashier, or any other officer appointed by the board for that purpose, to be
known as an authorized officer and the seal of the bank shall be engraven
thereon. Each certificate shall recite on its face that the stock represented
thereby is transferable, properly endorsed, only on the books of the bank.
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ARTICLE VII
CORPORATE SEAL
SECTION 7.1. CORPORATE SEAL. The chairman of the board, the president,
the cashier, the secretary or any assistant cashier or assistant secretary, or
other officer thereunto designated by the board, shall have authority to affix
the corporate seal to any document requiring such seal, and to attest the same.
Such seal shall be substantially in the form set forth herein.
ARTICLE VIII
INDEMNIFYING OFFICERS AND DIRECTORS
SECTION 8.1. INDEMNIFYING OFFICERS AND DIRECTORS. Any person, his
heirs, executors or administrators, may be indemnified or reimbursed by the bank
for reasonable expenses actually incurred in connection with any action, suit or
proceeding, civil or criminal, to which he or they shall be made a party by
reason of his being or having been a director, officer or employee of the bank
or of any firm, corporation or organization which he served in any such capacity
at the request of the bank; provided, however, that no person shall be so
indemnified or reimbursed in relation to any matter in such action, suit or
proceeding as to which he shall finally be adjudged to have been guilty of or
liable for negligence or willful misconduct in the performance of his duties to
the bank; and, provided further, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit or proceeding which
has been made the subject of a compromise settlement except with the approval of
a court of competent jurisdiction, or the holders of record of a majority of the
outstanding shares of the bank, or the board, acting by vote of directors not
parties to the same or substantially the same action suit or proceeding,
constituting a majority of the whole number of the directors. The foregoing
right of indemnification or reimbursement shall not be exclusive of other rights
to which such person, his heirs, executors or administrators, may be entitled as
a matter of law.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. FISCAL YEAR. The fiscal year of the bank shall be the
calendar year.
SECTION 9.2. EXECUTION OF INSTRUMENTS. All agreements, indentures
mortgages, deeds, conveyances transfers certificates declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies and other instruments or
documents may be signed, executed, acknowledged, verified, delivered or accepted
for the bank by the chairman of the board, or the vice chairman of the board, or
the president, or any executive vice president, or any senior vice president, or
any vice president, or the secretary or the cashier, or, if in connection with
the exercise of fiduciary powers of the bank by any of said officers or by any
officer in the trust department. Any such instruments may also be signed,
executed, acknowledged, verified, delivered or accepted for the bank in such
other manner and by such other officers as the board may from time to time
direct. The provisions of this Section 9.2 are supplementary to any other
provisions of these bylaws.
SECTION 9.3. RECORDS. The articles of association, the bylaws, and the
proceedings of all meetings of the shareholders and of the board shall be
recorded in appropriate minute books provided for the purpose; where these
bylaws so provide, the proceedings of standing committees of the board shall be
recorded in appropriate minute books provided for the purpose.
7
<PAGE> 28
ARTICLE X
EMERGENCIES
SECTION 10.1. CONTINUATION OF BUSINESS. In the event of a state of
emergency of sufficient severity to interfere with the conduct and management of
the affairs of this bank, the officers and employees will continue to conduct
the affairs of the bank under such guidance from the directors as may be
available except as to matters which by statute require specific approval of the
board of directors and subject to conformance with any governmental directives
during the emergency.
SECTION 10.2. DESIGNATION OF PLACE OF BUSINESS. The offices of the bank
at which its business shall be conducted shall be the main office thereof
located at 135 South LaSalle Street, Chicago, Illinois, and any other legally
authorized location which may be leased or acquired by this bank to carry on its
business. During an emergency resulting in any authorized place of business of
this bank being unable to function, the business ordinarily conducted at such
location shall be relocated elsewhere in suitable quarters, in addition to or in
lieu of the locations heretofore mentioned, as may be designated by the board of
directors or by the executive committee or by such persons as are then, in
accordance with resolutions adopted from time to time by the board of directors
dealing with the exercise of authority in the time of such emergency, conducting
the affairs of this bank. Any temporarily relocated place of business of this
bank shall be returned to its legally authorized location as soon as practicable
and such temporary place of business shall then be discontinued.
ARTICLE XI
BYLAWS
SECTION 11.1 INSPECTION. A copy of the bylaws with all amendments
thereto, shall at all times be kept in a convenient place at the main office of
the bank and shall be open for inspection to all shareholders, during banking
hours.
SECTION 11.2 AMENDMENTS. The bylaws may be amended, altered or
repealed, at any regular meeting of the board, by a vote of a majority of the
whole number of the directors.
***
I _____________ hereby certify that I am the ________ Cashier/Secretary
of LaSalle National Bank, Chicago, Illinois and that the foregoing is a true and
correct copy of the bylaws of this bank as amended and that the same are in full
force and effect _____________ day of _________________ 19_____
------------------
Cashier/Secretary.
December 15, 1982
(SEAL)
8
<PAGE> 29
EXHIBIT 5
NOT APPLICABLE
<PAGE> 30
EXHIBIT 6
LaSalle National Bank hereby consents in accordance with the provisions of
Section 321(b) of the Trust Indenture Act of 1939, that reports of examinations
by Federal, State, Territorial and District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
LA SALLE NATIONAL BANK
By: /s/ Sarah H. Webb
------------------
Sarah H. Webb
Vice President
<PAGE> 31
EXHIBIT 7
Latest Report of Condition of
Trustee published pursuant to
law or the requirement of its
surviving or examining authority.
<PAGE> 32
EXHIBIT 8
NOT APPLICABLE
<PAGE> 33
EXHIBIT 9
NOT APPLICABLE
