<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 14, 1998)
$150,000,000
BRADLEY OPERATING LIMITED PARTNERSHIP
MEDIUM-TERM NOTES
Due Nine Months or More from Date of Issue
Bradley Operating Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"), may offer from time to time up to $150,000,000
aggregate initial offering price, or the equivalent thereof in one or more
foreign or composite currencies, of its Medium-Term Notes Due Nine Months or
More from Date of Issue (the "Notes"). Each Note will mature on any day nine
months or more from the date of issue, as specified in the applicable pricing
supplement hereto (each, a "Pricing Supplement"), and may be subject to
redemption at the option of the Operating Partnership or repayment at the
option of the Holder thereof, in each case, in whole or in part, prior to its
Stated Maturity Date, as specified in the applicable Pricing Supplement. In
addition, each Note may be denominated and/or payable in United States dollars
or a foreign or composite currency ("Foreign Currency Notes"), as specified in
the applicable Pricing Supplement. The Notes, other than Foreign Currency
Notes, will be issued in minimum denominations of $1,000 and integral
multiples thereof, unless otherwise specified in the applicable Pricing
Supplement, while Foreign Currency Notes will be issued in the minimum
denominations specified in the applicable Pricing Supplement.
Notes will bear interest at fixed rates ("Fixed Rate Notes") or at floating
rates ("Floating Rate Notes"). Unless otherwise specified in the applicable
Pricing Supplement, the rate of interest on each Floating Rate Note will be
reset daily, weekly, monthly, quarterly, semiannually or annually, as
specified in the applicable Pricing Supplement. Interest on each Fixed Rate
Note will accrue from its date of issue and will be payable in arrears as
specified in the applicable Pricing Supplement and on the Maturity Date. Notes
may also be issued that do not bear any interest currently or that bear
interest at a below market rate. See "Description of Notes."
The interest rate, or formula for the determination of the interest rate,
applicable to each Note and the other variable terms thereof will be
established by the Operating Partnership on the date of issue of such Note and
will be specified in the applicable Pricing Supplement. Interest rates or
formulas and other terms of Notes are subject to change by the Operating
Partnership, but no change will affect any Note already issued or as to which
an offer to purchase has been accepted by the Operating Partnership.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or in certificated form (a "Certificated Note"), as specified in the
applicable Pricing Supplement. Each Book-Entry Note will be represented by one
or more fully registered global securities (the "Global Securities") deposited
with or on behalf of The Depository Trust Company ("DTC") and registered in
the name of DTC or DTC's nominee. Interests in the Global Securities will be
shown on, and transfers thereof will be effected only through, records
maintained by DTC (with respect to its participants) and DTC's participants
(with respect to beneficial owners).
SEE "RISK FACTORS" COMMENCING ON PAGE S-2 OF THE PROSPECTUS SUPPLEMENT AND
PAGE 3 OF THE PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE NOTES.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE
PROSPECTUS OR ANY PRICING SUPPLEMENT HERETO. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Agents' discounts Proceeds to Operating
Price to public(1) and commissions(1)(2) Partnership(1)(3)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Per
Share.. 100% .125%-.750% 99.875%-99.25%
- -----------------------------------------------------------------------------------
$149,812,500-
Total... $150,000,000 $187,500-$1,125,000 $148,875,000
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price
equal to 100% of the principal amount thereof less a percentage of the
principal amount equal to the commission applicable to an agency sale (as
described below) of a Note of identical maturity. If agreed to by the
Operating Partnership and an Agent, such Agent may utilize its reasonable
efforts on an agency basis to solicit offers to purchase the Notes at 100%
of the principal amount thereof, unless otherwise specified in the
applicable Pricing Supplement. If the Operating Partnership issues any
Note at a discount from or at a premium over its principal amount, the
Price to Public of any Note issued at a discount or premium will be set
forth in the applicable Pricing Supplement. The Operating Partnership will
pay a commission to the applicable Agent, ranging from .125%-.750% of the
principal amount of any Note, depending upon its stated maturity, sold
through such Agent. See "Supplemental Plan of Distribution."
(2) The Operating Partnership and Bradley Real Estate, Inc., a self-
administered and self-managed real estate investment trust ("REIT") and
sole general partner of the Operating Partnership ("Bradley"), have agreed
to indemnify the Agents against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Supplemental Plan of
Distribution."
(3)Before deducting expenses payable by the Operating Partnership estimated at
$325,000.
(4)Or the equivalent thereof in one or more foreign or composite currencies.
--------------
The Notes are being offered on a continuous basis by the Operating
Partnership to or through the Agents. Unless otherwise specified in the
applicable Pricing Supplement, the Notes will not be listed on any securities
exchange and there can be no assurance that the Notes offered hereby will be
sold or that there will be a secondary market for the Notes or that there will
be liquidity in such market if one develops. The Operating Partnership
reserves the right to cancel or modify the offer made hereby without notice.
The Operating Partnership or an Agent, if it solicits the offer on an agency
basis, may reject any offer to purchase Notes in whole or in part. See
"Supplemental Plan of Distribution."
--------------
PAINEWEBBER INCORPORATED
BT ALEX. BROWN
FIRST CHICAGO CAPITAL MARKETS, INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
--------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS SEPTEMBER 28, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES.
SPECIFICALLY, THE AGENTS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING AND
MAY BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. SUCH ACTIVITY, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF DISTRIBUTION."
RISK FACTORS
This Prospectus Supplement does not describe all of the risks of an
investment in notes that result from such notes being denominated or payable
in or determined by reference to a currency or composite currency other than
United States dollars or to one or more interest rate, currency or other
indices or formulas. The operating partnership and the agents disclaim any
responsibility to advise prospective investors of such risks as they exist at
the date of this Prospectus Supplement or as they change from time to time.
Each prospective investor should consult his own financial and legal advisors
as to the risks entailed by an investment in notes denominated or payable in
or determined by reference to a currency or composite currency other than
United States dollars or to one or more interest rate, currency or other
indices or formulas. Such notes are not an appropriate investment for
investors who are unsophisticated with respect to foreign currency
transactions or transactions involving the applicable interest rate index or
currency index or other indices or formulas.
STRUCTURE RISKS
An investment in Notes indexed, as to principal, premium, if any, and/or
interest, to one or more currencies or composite currencies (including
exchange rates and swap indices between currencies or composite currencies),
commodities, interest rates or other indices or formulas, either directly or
inversely, entails significant risks that are not associated with similar
investments in a conventional fixed rate or floating rate debt security. Such
risks include, without limitation, the possibility that any such index or
formula may be subject to significant changes, that the resulting interest
rate will be less than that payable on a conventional fixed rate or floating
rate debt security issued by the Operating Partnership at the same time, that
the repayment of principal and/or premium, if any, can occur at times other
than that expected by the investor, and that the investor could lose all or a
substantial portion of principal and/or premium, if any, payable on the
Maturity Date (as defined below). Such risks depend on a number of
interrelated factors, including economic, financial and political events, over
which the Operating Partnership has no control. Additionally, if the formula
used to determine the amount of principal, premium, if any, and/or interest
payable with respect to such Notes contains a multiplier or leverage factor,
the effect of any change in the applicable index or indices or formula or
formulas will be magnified. In recent years, values of certain indices and
formulas have been highly volatile and such volatility may continue or
increase in the future. Fluctuations in the value of any particular index or
formula that have occurred in the past are not necessarily indicative,
however, of fluctuations that may occur in the future.
The secondary market for Notes will be affected by a number of factors
independent of the creditworthiness of the Operating Partnership and the value
of the applicable index or indices or formula or formulas, including the
complexity and volatility of each such index or formula, the method of
calculating the principal, premium, if any, and/or interest in respect of such
Notes, the time remaining to the maturity of such Notes, the outstanding
amount of such Notes, any redemption features of such Notes, the amount of
other debt securities linked to such index or formula and the level, direction
and volatility of market interest rates generally. Such factors also will
affect the market value of such Notes. In addition, certain Notes may be
designed for specific investment objectives or strategies and, therefore, may
have a more limited secondary market and experience more price volatility than
conventional debt securities. Investors may not be able to sell such Notes
readily or at prices that will enable investors to realize their anticipated
yield.
Any optional redemption feature of Notes might affect the market value of
such Notes. Since the Operating Partnership may be expected to redeem such
Notes when prevailing interest rates are relatively low, an investor might not
be able to reinvest the redemption proceeds at an effective interest rate as
high as the interest rate on such Notes.
S-2
<PAGE>
The Notes will not have an established trading market when issued, and there
can be no assurance of a secondary market for the Notes or the liquidity of
such market if one develops. See "Supplemental Plan of Distribution."
No investor should purchase Notes unless such investor understands and is
able to bear the risk that such Notes may not be readily saleable, that the
value of Notes will fluctuate over time and that such fluctuations may be
significant.
CREDIT RATINGS
The credit ratings assigned to the Operating Partnership's medium-term note
program may not reflect the potential impact of all risks related to structure
and other factors on the value of the Notes. Accordingly, prospective
investors should consult their own financial and legal advisors as to the
risks entailed by an investment in the Notes and the suitability of such Notes
in light of their particular circumstances.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes (as defined below) entails
significant risks that are not associated with a similar investment in a debt
security denominated and payable in United States dollars. Such risks include,
without limitation, the possibility of significant changes in the rate of
exchange between the United States dollar and the applicable foreign currency
or composite currency and the possibility of the imposition or modification of
exchange controls by the applicable governments or monetary authorities. Such
risks generally depend on factors over which the Operating Partnership has no
control, such as economic, financial and political events and the supply and
demand for the applicable currencies or composite currencies. In addition, if
the formula used to determine the amount of principal, premium, if any, and/or
interest payable with respect to Foreign Currency Notes contains a multiplier
or leverage factor, the effect of any change in the applicable currencies or
composite currencies will be magnified. In recent years, rates of exchange
between the United States dollar and foreign currencies or composite
currencies have been highly volatile and such volatility may continue or
increase in the future. Fluctuations in any particular exchange rate that have
occurred in the past are not necessarily indicative, however, of fluctuations
that may occur in the future. Depreciation of the foreign currency or
composite currency in which a Foreign Currency Note is payable against the
United States dollar would result in a decrease in the United States dollar-
equivalent yield of such Foreign Currency Note, in the United States dollar-
equivalent value of the principal and premium, if any, payable on the Maturity
Date of such Foreign Currency Note, and, generally, in the United States
dollar-equivalent market value of such Foreign Currency Note.
Governments or monetary authorities have imposed from time to time, and may
in the future impose or revise, exchange controls at or prior to the date on
which any payment of principal of, or premium, if any, or interest on, a
Foreign Currency Note is due, which could affect exchange rates as well as the
availability of the foreign currency or composite currency in which such
payment is to be made on such date. Even if there are no exchange controls, it
is possible that the foreign currency or composite currency in which a payment
in respect of any particular Foreign Currency Note is to be made would not be
available on the applicable payment date due to other circumstances beyond the
reasonable control of the Operating Partnership. In such cases, the Operating
Partnership will be entitled to satisfy its obligations in respect of such
Foreign Currency Note in United States dollars. See "Special Provisions
Relating to Foreign Currency Notes--Payment Currency."
S-3
<PAGE>
DESCRIPTION OF NOTES
The Notes will be issued as a series of Debt Securities (as defined below)
under an Indenture, dated as of September 28, 1998, as supplemented by the
Supplemental Indenture No. 1 dated as of September 28, 1998 and as further
amended, supplemented or modified from time to time (the "Indenture"), between
the Operating Partnership and U.S. Bank Trust National Association, as trustee
(the "Trustee"). The Indenture is subject to, and governed by, the Trust
Indenture Act of 1939, as amended. The following summary of certain provisions
of the Notes and the Indenture, does not purport to be complete and is
qualified in its entirety by reference to the actual provisions of the Notes
and the Indenture. Capitalized terms used but not defined herein shall have
the meanings given to them in the accompanying Prospectus, the Notes or the
Indenture, as the case may be. The term "Debt Securities," as used in this
Prospectus Supplement, refers to all debt securities, including the Notes,
issued and issuable from time to time under the Indenture. The following
description of the particular terms of the Notes offered hereby (referred to
in the accompanying Prospectus as the "Senior Securities") supplements, and to
the extent inconsistent therewith replaces, the description of the general
terms and provisions of the Senior Securities set forth in the Prospectus, to
which description reference is hereby made.
The following description of Notes will apply to each Note offered hereby
unless otherwise specified in the applicable Pricing Supplement.
GENERAL
All Debt Securities, including the Notes, will be unsecured obligations of
the Operating Partnership and will rank pari passu with all other unsecured
and unsubordinated indebtedness of the Operating Partnership from time to time
outstanding. The Notes are effectively subordinated to mortgages and other
secured indebtedness of the Operating Partnership (approximately $93.7 million
at August 31, 1998), which encumber certain assets of the Operating
Partnership and to indebtedness and other liabilities of subsidiaries of the
Operating Partnership. Accordingly, such 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 general partner or limited
partner of the Operating Partnership for repayment of the Notes.
The Indenture does not limit the aggregate initial offering price of Debt
Securities that may be issued thereunder and Debt Securities may be issued
thereunder from time to time in one or more series up to the aggregate initial
offering price from time to time authorized by the Operating Partnership for
each series. The Operating Partnership may, from time to time, without the
consent of the Holders of the Notes, provide for the issuance of Notes or
other Debt Securities under the Indenture in addition to the $150,000,000
aggregate initial offering price of Notes offered hereby.
The Notes are currently limited to up to $150,000,000 aggregate initial
offering price, or the equivalent thereof in one or more foreign or composite
currencies, except as such aggregate amount may be reduced by other debt
securities issued under the Prospectus. The Notes will be offered on a
continuous basis and will mature on any day nine months or more from their
dates of issue (each, a "Stated Maturity Date"), as specified in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, interest-bearing Notes will either be Fixed Rate Notes or
Floating Rate Notes, as specified in the applicable Pricing Supplement. Notes
may also be issued that do not bear any interest currently or that bear
interest at a below market rate.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in, and payments of principal, premium, if any, and/or
interest will be made in, United States dollars. The Notes also may be
denominated in, and payments of principal, premium, if any, and/or interest
may be made in, one or more foreign currencies or composite currencies
("Foreign Currency Notes"). See "Special Provisions Relating to Foreign
Currency Notes--Payment of Principal, Premium, if any, and Interest." The
currency or composite currency in which a Note is denominated, whether United
States dollars or otherwise, is herein referred to as the "Specified
Currency." References herein to "United States dollars," "U.S. dollars" and
"U.S. $" are to the lawful currency of the United States of America (the
"United States").
S-4
<PAGE>
Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for the Notes in the applicable Specified Currencies. At
the present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign currencies or composite
currencies and vice versa, and commercial banks do not generally offer non-
United States dollar checking or savings account facilities in the United
States. Each applicable Agent is prepared to arrange for the conversion of
United States dollars into the applicable Specified Currency to enable the
purchaser to pay for the related Foreign Currency Note, provided that a
request is made to such Agent on or prior to the fifth Business Day (as
defined below) preceding the date of delivery of such Foreign Currency Note,
or by such other day as determined by such Agent. Each such conversion will be
made by an Agent on such terms and subject to such conditions, limitations and
charges as such Agent may from time to time establish in accordance with its
regular foreign exchange practices. All costs of exchange will be borne by the
purchaser of each such Foreign Currency Note. See "Special Provisions Relating
to Foreign Currency Notes."
Interest rates offered by the Operating Partnership with respect to the
Notes may differ depending upon, among other things, the aggregate principal
amount of Notes purchased in any single transaction. Interest rates or
formulas and other terms of Notes are subject to change by the Operating
Partnership from time to time, but no such change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Operating
Partnership.
Each Note will be issued in fully registered form as a Book-Entry Note or a
Certificated Note. The authorized denominations of each Note other than a
Foreign Currency Note will be $1,000 and integral multiples thereof, unless
otherwise specified in the applicable Pricing Supplement, while the authorized
denominations of each Foreign Currency Note will be specified in the
applicable Pricing Supplement.
Payments of principal of, and premium, if any, and interest on, Book-Entry
Notes will be made by the Operating Partnership through the Trustee to DTC.
See "--Book-Entry Notes." In the case of Certificated Notes, payment of
principal and premium, if any, due on the Stated Maturity Date or any prior
date on which the principal, or an installment of principal, of each
Certificated Note becomes due and payable, whether by the declaration of
acceleration, notice of redemption at the option of the Operating Partnership,
notice of the Holder's option to elect repayment or otherwise (the Stated
Maturity Date or such prior date, as the case may be, is herein referred to as
the "Maturity Date" with respect to the principal of the applicable Note
repayable on such date) will be made in immediately available funds upon
presentation and surrender thereof (or, in the case of any repayment on an
Optional Repayment Date, upon presentation and surrender thereof and a duly
completed election form in accordance with the provisions described below) at
the office or agency maintained by the Operating Partnership for such purpose
in the Borough of Manhattan, The City of New York. Payment of interest due on
the Maturity Date of each Certificated Note will be made to the person to whom
payment of the principal and premium, if any, shall be made. Payment of
interest due on each Certificated Note on any Interest Payment Date (as
defined below) other than the Maturity Date will be made at the office or
agency referred to above maintained by the Operating Partnership for such
purpose or, at the option of the Operating Partnership, may be made by check
mailed to the address of the Holder entitled thereto as such address shall
appear in the Security Register of the Operating Partnership. Notwithstanding
the foregoing, a Holder of $10,000,000 (or, if the applicable Specified
Currency is other than United States dollars, the equivalent thereof in such
Specified Currency) or more in aggregate principal amount of Notes (whether
having identical or different terms and provisions) will be entitled to
receive interest payments on any Interest Payment Date other than the Maturity
Date by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by the Trustee not less
than fifteen calendar days prior to such Interest Payment Date. Any such wire
transfer instructions received by the Trustee shall remain in effect until
revoked by such Holder. For special payment terms applicable to Foreign
Currency Notes, see "Special Provisions Relating to Foreign Currency Notes--
Payment of Principal, Premium, if any, and Interest."
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law, regulation or executive order
to close in The City of New York; provided, however, that with respect to
Foreign Currency Notes, such day is
S-5
<PAGE>
also not a day on which banking institutions are authorized or required by
law, regulation or executive order to close in the Principal Financial Center
(as defined below) of the country issuing the Specified Currency (or if the
Specified Currency is European Currency Units ("ECU"), such day is not a day
that appears as an ECU non-settlement day on the display designated as "ISDE"
on the Reuter Monitor Money Rates Service (or a day so designated by the ECU
Banking Association), or, if ECU non-settlement days do not appear on that
page (and are not so designated), is not a day on which payments in ECU cannot
be settled in the international interbank market); provided, further, that,
with respect to Notes as to which LIBOR is an applicable Interest Rate Basis,
such day is also a London Business Day (as defined below). "London Business
Day" means any day (i) if the Index Currency (as defined below) is other than
ECU, on which dealings in such Index Currency are transacted in the London
interbank market or (ii) if the Index Currency is ECU, that does not appear as
an ECU non-settlement day on the display designated as "ISDE" on the Reuter
Monitor Money Rates Service (or a day so designated by the ECU Banking
Association, or, if ECU non-settlement days do not appear on that page (and
are not so designated), is not a day on which payments in ECU cannot be
settled in the international interbank market).
"Principal Financial Center" means the capital city of the country issuing
the Specified Currency or, solely with respect to the calculation of LIBOR,
the Index Currency, except that with respect to United States dollars,
Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs
and ECU, the Principal Financial Center shall be The City of New York, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
Book-Entry Notes may be transferred or exchanged only through DTC. See "--
Book-Entry Notes." Registration of transfer or exchange of Certificated Notes
will be made at the office or agency maintained by the Operating Partnership
for such purpose in the Borough of Manhattan, The City of New York. No service
charge will be made by the Operating Partnership, or the Trustee for any such
registration of transfer or exchange of Notes, but the Operating Partnership
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith (other than exchanges
pursuant to the Indenture not involving any transfer).
Notwithstanding any provisions described in this Prospectus Supplement to
the contrary, if a Note specifies that an Addendum is attached thereto or that
"Other/Additional Provisions" apply, such Note will be subject to the terms
specified in such Addendum or "Other/Additional Provisions," as the case may
be, and will be described in the applicable Pricing Supplement.
REDEMPTION AT THE OPTION OF THE OPERATING PARTNERSHIP
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The applicable Pricing Supplement
will indicate if the Notes will be redeemable prior to the Stated Maturity
Date and the terms on which such Notes will be redeemable at the option of the
Operating Partnership. If so specified, the Notes will be subject to
redemption at the option of the Operating Partnership on any date on and after
the applicable Initial Redemption Date in whole or from time to time in part
in increments of $1,000 or such other minimum denomination specified in such
Pricing Supplement (provided that any remaining principal amount thereof shall
be at least $1,000 or such minimum denomination), at the applicable Redemption
Price (as defined below), together with unpaid interest accrued to the date of
redemption, on notice given not more than 60 nor less than 30 calendar days
prior to the date of redemption and in accordance with the provisions of the
Indenture. Unless otherwise specified in the applicable Pricing Supplement,
"Redemption Price," with respect to a Note, means an amount equal to the
Initial Redemption Percentage specified in the applicable Pricing Supplement
(as adjusted by the Annual Redemption Percentage Reduction, if applicable,
specified in such Pricing Supplement) multiplied by the unpaid principal
amount to be redeemed. The Initial Redemption Percentage, if any, applicable
to a Note shall decline at each anniversary of the Initial Redemption Date by
an amount equal to the applicable Annual Redemption Percentage Reduction, if
any, until the Redemption Price is equal to 100% of the unpaid principal
amount to be redeemed. See also "--Original Issue Discount Notes."
S-6
<PAGE>
REPAYMENT AT THE NOTEHOLDERS' OPTION; REPURCHASES BY THE OPERATING PARTNERSHIP
The applicable Pricing Supplement will indicate if the Notes will be
repayable at the option of the Holders thereof on a date specified prior to
the applicable Maturity Date and, unless otherwise specified in the Pricing
Supplement, such Notes shall be repayable at a price equal to 100% of the
principal amount thereof, together with unpaid interest accrued to the date of
repayment.
In order for such a Note to be repaid, the Trustee must receive at least 30
days but not more than 60 days prior to the repayment date (i) such Note with
the form entitled "Option to Elect Repayment" on the reverse of such Note duly
completed or (ii) a telegram, telex, facsimile transmission, or a letter from
a member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States setting forth the name of the Holder of such Note, the principal amount
of such Note, the principal amount of such Note to be repaid, the certificate
number or a description of the tenor and terms of such Note, a statement that
the option to elect repayment is being exercised thereby, and a guarantee that
such Note to be repaid, together with the duly completed form entitled "Option
to Elect Repayment" on the reverse of such Note, will be received by the
Trustee not later than the fifth Business Day after the date of such telegram,
telex, facsimile transmission or letter; however, such telegram, telex,
facsimile transmission, or letter shall only be effective if such Note and
duly completed form are received by the Trustee or the Designated Agent by
such fifth Business Day. Unless otherwise specified in the applicable Pricing
Supplement, exercise of the repayment option by the Holder of a Note will be
irrevocable. The repayment option may be exercised by the Holder of a Note for
less than the entire principal amount of the Note unless otherwise specified
in the applicable Pricing Supplement, but in that event, the principal amount
of the Note remaining outstanding after repayment must be in an authorized
denomination.
If a Note is represented by a Global Security, DTC's nominee will be the
Holder of such Note and therefore will be the only entity that can exercise a
right to repayment. In order to ensure that DTC's nominee will timely exercise
a right to repayment with respect to a particular Note, the Beneficial Owner
of such Note must instruct the broker or other Direct Participant (as defined
below) or Indirect Participant (as defined below) through which it holds an
interest in such Note to notify DTC of its desire to exercise a right to
repayment. Different firms have different deadlines for accepting instructions
from their customers. Accordingly, each Beneficial Owner should consult the
broker or other Direct Participant or Indirect Participant through which it
holds an interest in a Note in order to ascertain the deadline by which such
an instruction must be given in order for timely notice to be delivered to
DTC.
If applicable, the Operating Partnership will comply with the requirements
of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and any other securities laws or regulations in connection
with any such repayment.
The Operating Partnership may at any time purchase Notes at any price or
prices in the open market or otherwise. Notes so purchased by the Operating
Partnership may, at the discretion of the Operating Partnership, be held,
resold or surrendered to the Trustee for cancellation.
INTEREST
General
Unless otherwise specified in the applicable Pricing Supplement, each
interest-bearing Note will bear interest from its date of issue at the rate
per annum, in the case of a Fixed Rate Note, or pursuant to the interest rate
formula, in the case of a Floating Rate Note, in each case, as specified in
the applicable Pricing Supplement, until the principal thereof is paid or duly
made available for payment. Unless otherwise specified in the applicable
Pricing Supplement, interest payments in respect of Fixed Rate Notes and
Floating Rate Notes will equal the amount of interest accrued from and
including the immediately preceding Interest Payment Date in respect of which
interest has been paid or duly made available for payment (or from and
including the date of issue, if no interest has been paid or duly made
available for payment with respect to the applicable Note) to but excluding
the applicable Interest Payment Date or the Maturity Date, as the case may be
(each, an "Interest Period").
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Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and on the Maturity Date. Unless
otherwise specified in the applicable Pricing Supplement, the first payment of
interest on any such Note originally issued between a Record Date (as defined
below) and the related Interest Payment Date will be made on the Interest
Payment Date immediately following the next succeeding Record Date to the
Holder on such next succeeding Record Date. Unless otherwise specified in the
applicable Pricing Supplement, a "Record Date" shall be the fifteenth calendar
day (whether or not a Business Day) immediately preceding the related Interest
Payment Date.
Fixed Rate Notes
Interest on Fixed Rate Notes will be payable in arrears as specified in the
applicable Pricing Supplement (each, an "Interest Payment Date") and on the
Maturity Date. Unless otherwise specified in the applicable Pricing
Supplement, interest on Fixed Rate Notes will be computed on the basis of a
360-day year of twelve 30-day months.
If any Interest Payment Date or the Maturity Date of a Fixed Rate Note falls
on a day that is not a Business Day, the required payment of principal,
premium, if any, and/or interest will be made on the next succeeding Business
Day with the same force and effect as if made on the date such payment was
due, and no interest will accrue on such payment for the period from and after
such Interest Payment Date or the Maturity Date, as the case may be, to the
date of such payment on the next succeeding Business Day.
Floating Rate Notes
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. The applicable Pricing
Supplement will specify certain terms with respect to which each Floating Rate
Note is being delivered, including: whether such Floating Rate Note is a
"Regular Floating Rate Note," a "Floating Rate/Fixed Rate Note" or an "Inverse
Floating Rate Note," the Fixed Rate Commencement Date, if applicable, Fixed
Interest Rate, if applicable, Interest Rate Basis or Bases, Initial Interest
Rate, if any, Initial Interest Reset Date, Interest Reset Period and Dates,
Interest Payment Period and Dates, Index Maturity, Maximum Interest Rate
and/or Minimum Interest Rate, if any, and Spread and/or Spread Multiplier, if
any, as such terms are defined below. If one or more of the applicable
Interest Rate Bases is LIBOR or the CMT Rate, the applicable Pricing
Supplement will specify the Index Currency, if any, and Designated LIBOR Page
or the Designated CMT Maturity Index and Designated CMT Telerate Page,
respectively, as such terms are defined below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," or an "Inverse Floating Rate Note" or as having an
Addendum attached or having "Other/Additional Provisions" apply relating to
a different interest rate formula, such Floating Rate Note will be
designated as a "Regular Floating Rate Note" and, except as described below
or in the applicable Pricing Supplement, will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Regular Floating Rate Note
shall be payable shall be reset as of each Interest Reset Date; provided,
however, that the interest rate in effect for the period, if any, from the
date of issue to the Initial Interest Reset Date will be the Initial
Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (y) the interest rate in effect for the period,
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if any, from the date of issue to the Initial Interest Reset Date will be
the Initial Interest Rate and (z) the interest rate in effect for the
period commencing on the Fixed Rate Commencement Date to the Maturity Date
shall be the Fixed Interest Rate, if such rate is specified in the
applicable Pricing Supplement or, if no such Fixed Interest Rate is
specified, the interest rate in effect thereon on the day immediately
preceding the Fixed Rate Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the Fixed
Interest Rate minus the rate determined by reference to the applicable
Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
provided, however, that, unless otherwise specified in the applicable
Pricing Supplement, the interest rate thereon will not be less than zero.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Inverse Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate
Note. The "Spread Multiplier" is the percentage of the related Interest Rate
Basis or Bases applicable to such Floating Rate Note by which such Interest
Rate Basis or Bases will be multiplied to determine the applicable interest
rate on such Floating Rate Note. The "Index Maturity" is the period to
maturity of the instrument or obligation with respect to which the related
Interest Rate Basis or Bases will be calculated.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or
in the applicable Pricing Supplement, the interest rate in effect on each day
shall be (i) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as defined below)
immediately preceding such Interest Reset Date or (ii) if such day is not an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date.
Interest on Floating Rate Notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may, as described
below, include (i) the CD Rate, (ii) the CMT Rate, (iii) the Commercial Paper
Rate, (iv) the Eleventh District Cost of Funds Rate, (v) the Federal Funds
Rate, (vi) LIBOR, (vii) the Prime Rate, (viii) the Treasury Rate, or (ix) such
other Interest Rate Basis or interest rate formula as may be specified in the
applicable Pricing Supplement; provided, however, that the interest rate in
effect on a Floating Rate Note for the period, if any, from the date of issue
to the Initial Interest Reset Date will be the Initial Interest Rate;
provided, further, that with respect to a Floating Rate/Fixed Rate Note the
interest rate in effect for the period commencing on the Fixed Rate
Commencement Date to the Maturity Date shall be the Fixed Interest Rate, if
such rate is specified in the applicable Pricing Supplement or, if no such
Fixed Interest Rate is specified, the interest rate in effect thereon on the
day immediately preceding the Fixed Rate Commencement Date.
The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually or on such other specified basis (each, an
"Interest Reset Period") and the dates on which such rate of interest will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be, in the case
of Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly,
the Wednesday of each week (with the exception of weekly reset Floating Rate
Notes as to which the Treasury Rate is an applicable Interest Rate Basis,
which will reset the Tuesday of each week, except as described below); (iii)
monthly, the third Wednesday of each month (with the exception of monthly
reset Floating Rate Notes as to which the Eleventh District Cost of Funds Rate
is an applicable Interest Rate Basis, which will reset on the first calendar
day of the month); (iv) quarterly, the third Wednesday of March, June,
September and December of each year; (v) semiannually, the third Wednesday of
the two months specified in the applicable Pricing Supplement; and
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(vi) annually, the third Wednesday of the month specified in the applicable
Pricing Supplement; provided, however, that, with respect to Floating
Rate/Fixed Rate Notes, the rate of interest thereon will not reset after the
applicable Fixed Rate Commencement Date. If any Interest Reset Date for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset Date will be postponed to the next succeeding Business Day,
except that in the case of a Floating Rate Note as to which LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Reset Date will be the immediately
preceding Business Day. In addition, in the case of a Floating Rate Note as to
which the Treasury Rate is an applicable Interest Rate Basis and the Interest
Determination Date would otherwise fall on an Interest Reset Date, then such
Interest Reset Date will be postponed to the next succeeding Business Day.
The interest rate applicable to each Interest Reset Period commencing on the
related Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date and calculated on or prior to the Calculation Date
(as defined below), except with respect to LIBOR and the Eleventh District
Cost of Funds Rate, which will be calculated as of such Interest Determination
Date. The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate
will be the second Business Day immediately preceding the applicable Interest
Reset Date; the "Interest Determination Date" with respect to the Eleventh
District Cost of Funds Rate will be the last business day of the month
immediately preceding the applicable Interest Reset Date on which the Federal
Home Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the
Index (as defined below); and the "Interest Determination Date" with respect
to LIBOR will be the second London Business Day immediately preceding the
applicable Interest Reset Date, unless the Index Currency is British pounds
sterling, in which case the "Interest Determination Date" will be the
applicable Interest Reset Date. With respect to the Treasury Rate, the
"Interest Determination Date" will be the day in the week in which the
applicable Interest Reset Date falls on which day Treasury Bills (as defined
below) are normally auctioned (Treasury Bills are normally sold at an auction
held on Monday of each week, unless that day is a legal holiday, in which case
the auction is normally held on the following Tuesday, except that such
auction may be held on the preceding Friday); provided, however, that if an
auction is held on the Friday of the week preceding the applicable Interest
Reset Date, the Interest Determination Date will be such preceding Friday. The
"Interest Determination Date" pertaining to a Floating Rate Note the interest
rate of which is determined by reference to two or more Interest Rate Bases
will be the most recent Business Day which is at least two Business Days prior
to the applicable Interest Reset Date for such Floating Rate Note on which
each Interest Rate Basis is determinable. Each Interest Rate Basis will be
determined as of such date, and the applicable interest rate will take effect
on the applicable Interest Reset Date.
A Floating Rate Note may also have either or both of the following: (i) a
Maximum Interest Rate, or ceiling, that may accrue during any Interest Period
and (ii) a Minimum Interest Rate, or floor, that may accrue during any
Interest Period. In addition to any Maximum Interest Rate that may apply to
any Floating Rate Note, the interest rate on Floating Rate Notes will in no
event be higher than the maximum rate permitted by New York law, as the same
may be modified by United States law of general application.
Except as provided below or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which reset: (i) daily,
weekly or monthly, on the third Wednesday of each month or the third Wednesday
of March, June, September and December of each year, as specified in the
applicable Pricing Supplement; (ii) quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) semiannually, on the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and (iv) annually, on the third Wednesday of the month of
each year specified in the applicable Pricing Supplement (each, an "Interest
Payment Date") and, in each case, on the Maturity Date. If any Interest
Payment Date other than the Maturity Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Payment Date will
be postponed to the next succeeding Business Day, except that in the case of a
Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis and
such Business Day falls in the next succeeding calendar month, such Interest
Payment Date will be the immediately preceding Business Day. If the Maturity
Date of a Floating Rate Note falls on a day that is not a Business Day, the
required payment of principal, premium, if any, and interest will be made on
the next succeeding Business Day with the
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same force and effect as if made on the date such payment was due, and no
interest will accrue on such payment for the period from and after the
Maturity Date to the date of such payment on the next succeeding Business Day.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used
in or resulting from such calculation on Floating Rate Notes will be rounded,
in the case of United States dollars, to the nearest cent or, in the case of a
foreign currency or composite currency, to the nearest unit (with one-half
cent or unit being rounded upwards).
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Floating Rate Notes for which an applicable Interest Rate Basis is the
CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of
days in the year in the case of Floating Rate Notes for which an applicable
Interest Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise
specified in the applicable Pricing Supplement, the interest factor for
Floating Rate Notes for which the interest rate is calculated with reference
to two or more Interest Rate Bases will be calculated in each period in the
same manner as if only one of the applicable Interest Rate Bases applied as
specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, U.S. Bank
Trust National Association will be the "Calculation Agent" with respect to any
Floating Rate Note. Upon request of the Holder of any Floating Rate Note, the
Calculation Agent will disclose the interest rate then in effect and, if
determined, the interest rate that will become effective as a result of a
determination made for the next succeeding Interest Reset Date with respect to
such Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after
such Interest Determination Date, or, if such day is not a Business Day, the
next succeeding Business Day or (ii) the Business Day immediately preceding
the applicable Interest Payment Date or the Maturity Date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
CD Rate. Unless otherwise specified in the applicable Pricing Supplement,
"CD Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CD Rate (a "CD Rate Interest Determination Date"), the rate on such date
for negotiable United States dollar certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)")
under the heading "CDs (Secondary Market)," or, if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates
of deposit of the Index Maturity specified in the applicable Pricing
Supplement as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication ("Composite Quotations") under the
heading "Certificates of Deposit." If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the CD Rate on such CD Rate Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New
York City time, on such CD Rate Interest Determination Date, of three leading
nonbank dealers in negotiable United States dollar certificates of deposit in
The City of New York (which may include any of the Agents or their affiliates)
selected by the Calculation Agent for negotiable United States dollar
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certificates of deposit of major United States money center banks in the
market for negotiable United States dollar certificates of deposit with a
remaining maturity closest to the Index Maturity specified in the applicable
Pricing Supplement in an amount that is representative for a single
transaction in that market at that time; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate determined as of such CD Rate Interest
Determination Date will be the CD Rate in effect on such CD Rate Interest
Determination Date.
CMT Rate. Unless otherwise specified in the applicable Pricing Supplement,
"CMT Rate" means, with respect to any Interest Determination Date relating to
a Floating Rate Note for which the interest rate is determined with reference
to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed
on the Designated CMT Telerate Page under the caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
Approximately 3:45 P.M.," under the column for the Designated CMT Maturity
Index for (i) if the Designated CMT Telerate Page is 7055, the rate on such
CMT Rate Interest Determination Date and (ii) if the Designated CMT Telerate
Page is 7052, the weekly or monthly average, as specified in the applicable
Pricing Supplement, for the week or the month, as applicable, ended
immediately preceding the week or month, as applicable, in which the related
CMT Rate Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page or is not displayed by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index as published in the relevant H.15(519). If
such rate is no longer published or is not published by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate on such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index (or other United States Treasury rate for
the Designated CMT Maturity Index) for the CMT Rate Interest Determination
Date with respect to such Interest Reset Date as may then be published by
either the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided
by 3:00 P.M., New York City time, on the related Calculation Date, then the
CMT Rate on the CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately
3:30 P.M., New York City time, on such CMT Rate Interest Determination Date
reported, according to their written records, by three leading primary United
States government securities dealers (each, a "Reference Dealer") in The City
of New York (which may include any of the Agents or their affiliates) selected
by the Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct noncallable
fixed rate obligations of the United States ("Treasury Notes") with an
original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent is unable to obtain three such
Treasury Note quotations, the CMT Rate on such CMT Rate Interest Determination
Date will be calculated by the Calculation Agent and will be a yield to
maturity based on the arithmetic mean of the secondary market offer side
prices as of approximately 3:30 P.M., New York City time, on such CMT Rate
Interest Determination Date of three Reference Dealers in The City of New York
(from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100,000,000. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer
than three Reference Dealers so selected by the Calculation Agent are quoting
as mentioned herein, the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the Calculation
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Agent will obtain quotations for the Treasury Note with the shorter remaining
term to maturity and will use such quotations to calculate the CMT Rate as set
forth above.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on that service
(or any successor service) for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519)) for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519). If no such page is specified in
the applicable Pricing Supplement, the Designated CMT Telerate Page shall be
7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either one, two, three, five, seven, 10, 20 or 30
years) specified in the applicable Pricing Supplement with respect to which
the CMT Rate will be calculated. If no such maturity is specified in the
applicable Pricing Supplement, the Designated CMT Maturity Index shall be two
years.
Commercial Paper Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest
rate is determined with reference to the Commercial Paper Rate (a "Commercial
Paper Rate Interest Determination Date"), the Money Market Yield (as defined
below) on such date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the heading "Commercial Paper--Non-Financial." In the event that such rate is
not published by 3:00 P.M., New York City time, on the related Calculation
Date, then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be the Money Market Yield of the rate for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
as published in Composite Quotations under the heading "Commercial Paper--Non
Financial" (with an Index Maturity of one month or three months being deemed
to be equivalent to an Index Maturity of 30 days or 90 days, respectively). If
such rate is not yet published in either H.15(519) or Composite Quotations by
3:00 P.M., New York City time, on the related Calculation Date, then the
Commercial Paper Rate on such Commercial Paper Rate Interest Determination
Date will be calculated by the Calculation Agent and will be the Money Market
Yield of the arithmetic mean of the offered rates at approximately 11:00 A.M.,
New York City time, on such Commercial Paper Rate Interest Determination Date
of three leading dealers of commercial paper in The City of New York (which
may include any of the Agents or their affiliates) selected by the Calculation
Agent for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement placed for an industrial issuer whose bond
rating is "AA," or the equivalent, from a nationally recognized statistical
rating organization; provided, however, that if the dealers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate determined as of such Commercial Paper Rate Interest
Determination Date will be the Commercial Paper Rate in effect on such
Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
D X 360
Money Market Yield = X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the Interest Period for which interest is being
calculated.
Eleventh District Cost of Funds Rate. Unless otherwise specified in the
applicable Pricing Supplement, "Eleventh District Cost of Funds Rate" means,
with respect to any Interest Determination Date relating to a Floating Rate
Note for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh
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District Cost of Funds Rate Interest Determination Date falls, as set forth
under the caption "11th District" on Telerate Page 7058 as of 11:00 A.M., San
Francisco time, on such Eleventh District Cost of Funds Rate Interest
Determination Date. If such rate does not appear on Telerate Page 7058 on such
Eleventh District Cost of Funds Rate Interest Determination Date then the
Eleventh District Cost of Funds Rate on such Eleventh District Cost of Funds
Rate Interest Determination Date shall be the monthly weighted average cost of
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by the FHLB of San
Francisco, as such cost of funds for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date. If the
FHLB of San Francisco fails to announce the Index on or prior to such Eleventh
District Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
Federal Funds Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest
rate is determined with reference to the Federal Funds Rate (a "Federal Funds
Rate Interest Determination Date"), the rate on such date for United States
dollar federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not published by 3:00 P.M., New York City time, on
the related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of federal funds transactions in The City of New York (which may include any
of the Agents or their affiliates) selected by the Calculation Agent prior to
9:00 A.M., New York City time, on such Federal Funds Rate Interest
Determination Date; provided, however, that if the brokers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate determined as of such Federal Funds Rate Interest Determination
Date will be the Federal Funds Rate in effect on such Federal Funds Rate
Interest Determination Date.
LIBOR. Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
(i) With respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference
to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be either: (a)
if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page by
its terms provides only for a single rate, in which case such single rate
shall be used) for deposits in the Index Currency having the index Maturity
specified in such Pricing Supplement, commencing on the applicable Interest
Reset Date, that appear (or, if only a single rate is required as
aforesaid, appears) on the Designated LIBOR Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date, or (b) if "LIBOR Telerate"
is specified in the applicable Pricing Supplement or if neither "LIBOR
Reuters" nor "LIBOR Telerate" is specified in the applicable Pricing
Supplement as the method for calculating LIBOR, the rate for deposits in
the Index Currency having the Index Maturity specified in such Pricing
Supplement, commencing on such Interest Reset Date, that appears on the
Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date. If fewer than two such offered rates appear, or if no
such rate appears, as applicable, LIBOR on such LIBOR Interest
Determination Date will be determined in accordance with the provisions
described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on
the Designated LIBOR Page as specified in clause (i) above, the Calculation
Agent will request the principal London offices of each of four major
reference
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banks in the London interbank market, as selected by the Calculation Agent,
to provide the Calculation Agent with its offered quotation for deposits in
the Index Currency for the period of the Index Maturity specified in the
applicable Pricing Supplement, commencing on the applicable Interest Reset
Date, to prime banks in the London interbank market at approximately 11:00
A.M., London time, on such LIBOR Interest Determination Date and in a
principal amount that is representative for a single transaction in such
Index Currency in such market at such time. If at least two such quotations
are so provided, then LIBOR on such LIBOR Interest Determination Date will
be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of the rates quoted at approximately 11:00
A.M., in the applicable Principal Financial Center, on such LIBOR Interest
Determination Date by three major banks in such Principal Financial Center
selected by the Calculation Agent for loans in the Index Currency to
leading European banks, having the Index Maturity specified in the
applicable Pricing Supplement and in a principal amount that is
representative for a single transaction in such Index Currency in such
market at such time; provided, however, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Interest Determination Date will be LIBOR in
effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency or composite currency specified in the
applicable Pricing Supplement as to which LIBOR shall be calculated. If no
such currency or composite currency is specified in the applicable Pricing
Supplement, the Index Currency shall be United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such page or such service (or any
successor service)) for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate"
is specified in the applicable Pricing Supplement or neither "LIBOR Reuters"
nor "LIBOR Telerate" is specified in the applicable Pricing Supplement as the
method for calculating LIBOR, the display on the Dow Jones Telerate Service
(or any successor service) on the page specified in such Pricing Supplement
(or any other page as may replace such page or such service (or any successor
service)) for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency.
Prime Rate. Unless otherwise specified in the applicable Pricing Supplement,
"Prime Rate" means, with respect to any Interest Determination Date relating
to a Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the
rate on such date as is published in H.15(519) under the heading "Bank Prime
Loan." If such rate is not published prior to 3:00 P.M., New York City time,
on the related Calculation Date, then the Prime Rate shall be the arithmetic
mean of the rates of interest publicly announced by each bank that appears on
the Reuters Screen USPRIME1 Page (as defined below) as such bank's prime rate
or base lending rate as in effect for such Prime Rate Interest Determination
Date. If fewer than four such rates appear on the Reuters Screen USPRIME1 Page
for such Prime Rate Interest Determination Date, then the Prime Rate shall be
the arithmetic mean of the prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent. If
fewer than four such quotations are so provided, then the Prime Rate shall be
the arithmetic mean of four prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date as furnished in The
City of New York by the major money center banks, if any, that have provided
such quotations and by a reasonable number of substitute banks or trust
companies to obtain four such prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of
the United States, or any State thereof, each having total equity capital of
at least $500,000,000 and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates; provided, however, that if the banks or trust companies so
selected by the Calculation Agent are not quoting as
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mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on such Prime
Rate Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or any successor
service) or such other page as may replace the USPRIME1 Page on the Reuter
Monitor Money Rates Service (or any successor service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
Treasury Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is
determined by reference to the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the
United States ("Treasury Bills") having the Index Maturity specified in the
applicable Pricing Supplement, as such rate is published in H.15(519) under
the heading "Treasury bills-auction average (investment)" or, if not published
by 3:00 P.M., New York City time, on the related Calculation Date, the auction
average rate of such Treasury Bills (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the Treasury.
In the event that the results of the Auction of Treasury Bills having the
Index Maturity specified in the applicable Pricing Supplement are not reported
as provided by 3:00 P.M., New York City time, on the related Calculation Date,
or if no such Auction is held, then the Treasury Rate will be calculated by
the Calculation Agent and will be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Treasury
Rate Interest Determination Date, of three leading primary United States
government securities dealers (which may include any of the Agents or their
affiliates) selected by the Calculation Agent, for the issue of Treasury Bills
with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate determined as of such Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on such Treasury Rate
Interest Determination Date.
AMORTIZING NOTES
The Operating Partnership may from time to time offer amortizing notes
("Amortizing Notes"). Unless otherwise specified in the applicable Pricing
Supplement, interest on each Amortizing Note will be computed on the basis of
a 360-day year of twelve 30-day months. Payments with respect to Amortizing
Notes will be applied first to interest due and payable thereon and then to
the reduction of the unpaid principal amount thereof. Further information
concerning additional terms and provisions of Amortizing Notes will be
specified in the applicable Pricing Supplement, including a table setting
forth repayment information for such Amortizing Notes.
ORIGINAL ISSUE DISCOUNT NOTES
The Operating Partnership may offer Notes ("Discount Notes") from time to
time that have an Issue Price (as specified in the applicable Pricing
Supplement) that is less than 100% of the principal amount thereof
(i.e., par). Discount Notes may not bear any interest currently or may bear
interest at a rate that is below market rates at the time of issuance. The
difference between the Issue Price of a Discount Note and par is referred to
herein as the "Discount." In the event of redemption, repayment or
acceleration of maturity of a Discount Note, the amount payable to the Holder
of such Discount Note will be equal to the sum of: (i) the Issue Price
(increased by any accruals of Discount) and, in the event of any redemption of
such Discount Note (if applicable), multiplied by the Initial Redemption
Percentage specified in the applicable Pricing Supplement (as adjusted by the
Annual Redemption Percentage Reduction, if applicable, specified in the
applicable Pricing Supplement); and (ii) any unpaid interest on such Discount
Note accrued from the date of issue to the date of such redemption, repayment
or acceleration of maturity.
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Unless otherwise specified in the applicable Pricing Supplement, for
purposes of determining the amount of Discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity occurs for a
Discount Note, such Discount will be accrued using a constant yield method.
The constant yield will be calculated using a 30-day month, 360-day year
convention, a compounding period that, except for the Initial Period (as
defined below), corresponds to the shortest period between Interest Payment
Dates for the applicable Discount Note (with ratable accruals within a
compounding period), a coupon rate equal to the initial coupon rate applicable
to such Discount Note and an assumption that the maturity of such Discount
Note will not be accelerated. If the period from the date of issue to the
initial Interest Payment Date for a Discount Note (the "Initial Period") is
shorter than the compounding period for such Discount Note, a proportionate
amount of the yield for an entire compounding period will be accrued. If the
Initial Period is longer than the compounding period, then such period will be
divided into a regular compounding period and a short period with the short
period being treated as provided in the preceding sentence. The accrual of the
applicable Discount may differ from the accrual of original issue discount for
purposes of the Internal Revenue Code of 1986, as amended (the "Code"),
certain Discount Notes may not be treated as having original issue discount
within the meaning of the Code, and Notes other than Discount Notes may be
treated as issued with original issue discount for federal income tax
purposes. See "Certain United States Federal Income Tax Considerations"
herein.
INDEXED NOTES
Notes may be issued with the amount of principal, premium and/or interest
payable in respect thereof to be determined with reference to the price or
prices of specified commodities or stocks, to the exchange rate of one or more
designated currencies (including a composite currency such as the ECU)
relative to an indexed currency or to such other price(s) or exchange rate(s)
("Indexed Notes"), as specified in the applicable Pricing Supplement. In
certain cases, Holders of Indexed Notes may receive a principal payment on the
Maturity Date that is greater than or less than the principal amount of such
Indexed Notes depending upon the relative value on the Maturity Date of the
specified indexed item. Information as to the method for determining the
amount of principal, premium, if any, and/or interest payable in respect of
Indexed Notes, certain historical information with respect to the specified
indexed item and certain tax considerations associated with an investment in
Indexed Notes will be specified in the applicable Pricing Supplement. See also
"Risk Factors."
CERTAIN COVENANTS
Limitations on Incurrence of Indebtedness. The Operating Partnership will
not, and will not permit any Subsidiary (as defined below) 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 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, and 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.
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 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
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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, and 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.
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 limitation 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 that
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.
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 were subject to such Section 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.
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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 Notes (except any such
term, provision or condition which could not be amended without the consent of
all Holders of Notes or 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 the outstanding Notes or series thereof, 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 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, net 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.
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"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 an 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 an 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 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 Debt Securities--Certain Covenants" in the accompanying
Prospectus for a description of additional covenants applicable to the
Operating Partnership.
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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 any Notes when due
and payable; (c) default in the deposit of any sinking fund payment, if
applicable, when and as due by the terms of any Notes, (d) 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; (e) 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, without such
indebtedness having been discharged, or 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; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Operating Partnership or any Significant
Subsidiary; and (g) 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 of $10,000,000 for a period of 30
consecutive days. The Term "Significant Subsidiary" has the meaning ascribed
to such term in Regulation S-X promulgated under the Securities Act of 1933,
as amended. If an Event of Default specified in clause (f) above, relating to
the Operating Partnership or any Significant Subsidiary occurs, the principal
amount of all outstanding Notes shall become due and payable without any
declaration or other act on the part of the Trustee or of the Holders.
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 Debt
Securities--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 Debt Securities--Certain
Covenants" in the accompanying Prospectus will be subject to covenant
defeasance.
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 Bradley or any other past, present or future partner in the
Operating Partnership, (ii) against any other person or entity which owns an
interest, directly or indirectly, in any partner of the Operating Partnership,
or (iii) against any past, present or future stockholder, employee, officer or
director, as such, of Bradley or any successor, either directly or through the
Operating Partnership or Bradley 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.
BOOK-ENTRY NOTES
The Operating Partnership has established a depositary arrangement with DTC
with respect to the Book-Entry Notes, the terms of which are summarized below.
Any additional or differing terms of the depositary arrangement with respect
to the Book-Entry Notes will be described in the applicable Pricing
Supplement.
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Upon issuance, all Book-Entry Notes up to $150,000,000 aggregate principal
amount bearing interest at the same rate or pursuant to the same formula and
having the same date of issue, Specified Currency, Interest Payment Dates,
Stated Maturity Date, redemption provisions (if any), repayment provisions (if
any) and other terms will be represented by a single Global Security. Each
Global Security representing Book-Entry Notes will be deposited with, or on
behalf of, DTC and will be registered in the name of DTC or a nominee of DTC.
No Global Security may be transferred except as a whole by a nominee of DTC to
DTC or to another nominee of DTC, or by DTC or such nominee to a successor of
DTC or a nominee of such successor.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be the sole Holder of the Book-
Entry Notes represented thereby for all purposes under the Indenture. Except
as otherwise provided in this section, the Beneficial Owners of the Global
Security or Securities representing Book-Entry Notes will not be entitled to
receive physical delivery of Certificated Notes and will not be considered the
Holders thereof for any purpose under the Indenture, and no Global Security
representing Book-Entry Notes shall be exchangeable or transferable.
Accordingly, each Beneficial Owner must rely on the procedures of DTC and, if
such Beneficial Owner is not a Participant (as defined below), on the
procedures of the Participant through which such Beneficial Owner owns its
interest in order to exercise any rights of a Holder under such Global
Security or the Indenture. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and such laws may impair the ability to
transfer beneficial interests in a Global Security representing Book-Entry
Notes.
Unless otherwise specified in the applicable Pricing Supplement, each Global
Security representing Book-Entry Notes will be exchangeable for Certificated
Notes of like tenor and terms and of differing authorized denominations
aggregating a like principal amount, only if (i) DTC notifies the Operating
Partnership that it is unwilling or unable to continue as depository for the
Global Securities or DTC ceases to be a clearing agency registered under the
Exchange Act (if so required by applicable law or regulation) and, in each
case, a successor depository is not appointed by the Operating Partnership
within 90 days after the Operating Partnership receives such notice or becomes
aware of such unwillingness, inability or ineligibility, (ii) the Operating
Partnership in its sole discretion determines that the Global Securities shall
be exchangeable for Certificated Notes or (iii) there shall have occurred and
be continuing an Event of Default under the Indenture with respect to the
Notes and Beneficial Owners representing a majority in aggregate principal
amount of the Book-Entry Notes represented by Global Securities advise DTC to
cease acting as depository. Upon any such exchange, the Certificated Notes
shall be registered in the names of the Beneficial Owners of the Global
Security or Securities representing Book-Entry Notes, which names shall be
provided by DTC's relevant Participants (as identified by DTC) to the Trustee.
The information below concerning DTC and DTC's system has been furnished by
DTC. The Operating Partnership believes that the sources of this information
are reliable, but the Operating Partnership takes no responsibility for the
accuracy thereof.
DTC will act as securities depository for the Book-Entry Notes. The Book-
Entry Notes will be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee). One fully registered Global
Security will be issued for each issue of Book-Entry Notes, each in the
aggregate principal amount of such issue, and will be deposited with DTC. If,
however, the aggregate principal amount of any issue exceeds $150,000,000, one
Global Security will be issued with respect to each $150,000,000 of principal
amount and an additional Global Security will be issued with respect to any
remaining principal amount of such issue.
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 participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities
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certificates. Direct Participants of DTC ("Direct Participants") include
securities brokers and dealers (including the Agents), 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 DTC's 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, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under DTC's system must be made by or through
Direct Participants, which will receive a credit for such Book-Entry Notes on
DTC's records. The ownership interest of each actual purchaser of each Book-
Entry Note represented by a Global Security ("Beneficial Owner") is in turn to
be recorded on the Direct Participants' and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Direct Participants or Indirect Participants through which
such Beneficial Owner entered into the transaction. Transfers of ownership
interests in a Global Security representing Book-Entry Notes are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners of a Global Security representing Book-
Entry Notes will not receive Certificated Notes representing their ownership
interests therein, except in the event that use of the book-entry system for
such Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities representing Book-
Entry Notes which are deposited with, or on behalf of, DTC are registered in
the name of DTC's partnership nominee, Cede & Co. The deposit of Global
Securities with, or on behalf of, DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Global Securities representing the Book-
Entry Notes; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Book-Entry Notes are credited, which may
or may not be the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Global
Securities representing the Book-Entry Notes. Under its usual procedures, DTC
mails an Omnibus Proxy to the Operating Partnership as soon as possible after
the applicable record date. The Omnibus Proxy assigns Cede & Co.'s consenting
or voting rights to those Direct Participants to whose accounts the Book-Entry
Notes are credited on the applicable record date (identified in a listing
attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest payments on Global Securities
representing the Book-Entry Notes will be made to DTC. DTC's practice is to
credit Direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on such date. Payments
by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts
of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trustee or the
Operating Partnership, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal, premium, if any,
and/or interest to DTC is the responsibility of the Operating Partnership or
the Trustee, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct Participants and Indirect
Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less than
all of the Book-Entry Notes within an issue are being redeemed, DTC's practice
is to determine by lot the amount of the interest of each Direct Participant
in such issue to be redeemed.
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A Beneficial Owner shall give notice of any option to elect to have its
Book-Entry Notes repaid by the Operating Partnership, through its Participant,
to the Trustee, and shall effect delivery of such Book-Entry Notes by causing
the Direct Participant to transfer the Participant's interest in the Global
Security or Securities representing such Book-Entry Notes, on DTC's records,
to the Trustee. The requirement for physical delivery of Book-Entry Notes in
connection with a demand for repayment will be deemed satisfied when the
ownership rights in the Global Security or Securities representing such Book-
Entry Notes are transferred by Direct Participants on DTC's records.
DTC may discontinue providing its services as securities depository with
respect to the Book-Entry Notes at any time by giving reasonable notice to the
Operating Partnership or the Trustee. Under such circumstances, in the event
that a successor securities depository is not obtained, Certificated Notes are
required to be printed and delivered.
The Operating Partnership may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depository). In
that event, Certificated Notes will be printed and delivered.
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SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable Pricing Supplement, Foreign
Currency Notes will not be sold in, or to residents of, the country issuing
the applicable currency. The information set forth in this Prospectus
Supplement is directed to prospective purchasers who are United States
residents and, with respect to Foreign Currency Notes, is by necessity
incomplete. The Operating Partnership disclaims any responsibility to advise
prospective purchasers who are residents of countries other than the United
States with respect to any matters that may affect the purchase, holding or
receipt of payments of principal of, and premium, if any, and interest on, the
Foreign Currency Notes. Such persons should consult their own financial and
legal advisors with regard to such matters. See "Risk Factors--Exchange Rates
and Exchange Controls."
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
Unless otherwise specified in the applicable Pricing Supplement, the
Operating Partnership is obligated to make payments of principal of, and
premium, if any, and interest on, Foreign Currency Notes in the applicable
Specified Currency (or, if such Specified Currency is not at the time of such
payment legal tender for the payment of public and private debts, in such
other coin or currency of the country which issued such Specified Currency as
at the time of such payment is legal tender for the payment of such debts).
Any such amounts payable by the Operating Partnership in a foreign currency or
composite currency will, unless otherwise specified in the applicable Pricing
Supplement, be converted by the exchange rate agent named in the applicable
Pricing Supplement (the "Exchange Rate Agent") into United States dollars for
payment to Holders. However, the Holder of a Foreign Currency Note may elect
to receive such amounts in the applicable Foreign Currency or composite
currency as hereinafter described.
Any United States dollar amount to be received by a Holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New
York received by the Exchange Rate Agent at approximately 11:00 A.M., New York
City time, on the second Business Day preceding the applicable payment date
from three recognized foreign exchange dealers (one of whom may be the
Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the
Operating Partnership for the purchase by the quoting dealer of the Specified
Currency for United States dollars for settlement on such payment date in the
aggregate amount of such Specified Currency payable to all Holders of Foreign
Currency Notes scheduled to receive United States dollar payments and at which
the applicable dealer commits to execute a contract. All currency exchange
costs will be borne by the Holders of such Foreign Currency Notes by
deductions from such payments. If three such bid quotations are not available,
payments will be made in the Specified Currency.
A Holder of a Foreign Currency Note may elect to receive all or a specified
portion of any payment of the principal of, and premium, if any, and/or
interest on, such Foreign Currency Note in the Specified Currency by
submitting a written request for such payment to the Operating Partnership at
the office or agency maintained by the Operating Partnership for such purpose
in the Borough of Manhattan, The City of New York on or prior to the
applicable Record Date or at least fifteen calendar days prior to the Maturity
Date, as the case may be. Such written request may be mailed or hand delivered
or sent by cable, telex or other form of facsimile transmission. A Holder of a
Foreign Currency Note may elect to receive all or a specified portion of all
future payments in the Specified Currency in respect of such principal,
premium, if any, and/or interest and need not file a separate election for
each payment. Such election will remain in effect until revoked by written
notice to the Trustee, but written notice of any such revocation must be
received by the Trustee on or prior to the applicable Record Date or at least
fifteen calendar days prior to the Maturity Date, as the case may be. Holders
of Foreign Currency Notes whose Notes are to be held in the name of a broker
or nominee should contact such broker or nominee to determine whether and how
an election to receive payments in the Specified Currency may be made.
Payments of the principal of, and premium, if any, and/or interest on,
Foreign Currency Notes which are to be made in United States dollars will be
made in the manner specified herein with respect to Notes denominated in
United States dollars. See "Description of Notes--General." Payments of
interest on Foreign Currency Notes
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which are to be made in the Specified Currency on an Interest Payment Date
other than the Maturity Date will be made by check mailed to the address of
the Holders of such Foreign Currency Notes as they appear in the Security
Register, subject to the right to receive such interest payments by wire
transfer of immediately available funds under certain circumstances described
under "Description of Notes--General." Payments of principal of, and premium,
if any, and/or interest on, Foreign Currency Notes which are to be made in the
Specified Currency on the Maturity Date will be made by wire transfer of
immediately available funds to an account with a bank designated at least
fifteen calendar days prior to the Maturity Date by each Holder thereof,
provided that such bank has appropriate facilities therefor and that the
applicable Foreign Currency Note is presented and surrendered at the principal
corporate trust office of the Trustee in time for the Trustee to make such
payments in such funds in accordance with its normal procedures.
Unless otherwise specified in the applicable Pricing Supplement, a
Beneficial Owner of a Global Security or Securities representing Book-Entry
Notes payable in a Specified Currency other than United States dollars that
elects to receive payments of principal, premium, if any, and/or interest in
such Specified Currency must notify the Participant through which it owns its
interest on or prior to the applicable Record Date or at least fifteen
calendar days prior to the Maturity Date, as the case may be, of such
Beneficial Owner=s election. Such Participant must notify DTC of such election
on or prior to the third Business Day after such Record Date or at least
twelve calendar days prior to the Maturity Date, as the case may be, and DTC
will notify the Trustee of such election on or prior to the fifth Business Day
after such Record Date or at least ten calendar days prior to the Maturity
Date, as the case may be. If complete instructions are received by the
Participant from the Beneficial Owner and forwarded by the Participant to DTC,
and by DTC to the Trustee, on or prior to such dates, then such Beneficial
Owner will receive payments in the applicable Specified Currency.
PAYMENT CURRENCY
If the Specified Currency for a Foreign Currency Note is not available for
the required payment of principal, premium, if any, and/or interest due to the
imposition of exchange controls or other circumstances beyond the reasonable
control of the Operating Partnership, the Operating Partnership will be
entitled to satisfy its obligations to the Holder of such Foreign Currency
Note by making such payment in United States dollars on the basis of the
Market Exchange Rate (as defined below) on the second Business Day prior to
such payment or, if such Market Exchange Rate is not then available, on the
basis of the most recently available Market Exchange Rate or as otherwise
specified in the applicable Pricing Supplement.
If payment in respect of a Foreign Currency Note is required to be made in
any composite currency (e.g., ECU), and such composite currency is unavailable
due to the imposition of exchange controls or other circumstances beyond the
reasonable control of the Operating Partnership, the Operating Partnership
will be entitled to satisfy its obligations to the Holder of such Foreign
Currency Note by making such payment in United States dollars. The amount of
each payment in United States dollars shall be computed by the Exchange Rate
Agent on the basis of the equivalent of the composite currency in United
States dollars. The component currencies of the composite currency for this
purpose (collectively, the "Component Currencies" and each, a "Component
Currency") shall be the currency amounts that were components of the composite
currency as of the last day on which the composite currency was used. The
equivalent of the composite currency in United States dollars shall be
calculated by aggregating the United States dollar equivalents of the
Component Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Exchange Rate Agent on the
basis of the most recently available Market Exchange Rate for each such
Component Currency, or as otherwise specified in the applicable Pricing
Supplement.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in
such single currency equal to the sum of the amounts of the consolidated
Component Currencies expressed in such single currency. If any Component
Currency is divided into two or more currencies, the amount of the original
Component Currency shall be replaced by the
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amounts of such two or more currencies, the sum of which shall be equal to the
amount of the original Component Currency.
The "Market Exchange Rate" for a Specified Currency other than United States
dollars means the noon dollar buying rate in The City of New York for cable
transfers for such Specified Currency as certified for customs purposes by (or
if not so certified, as otherwise determined by) the Federal Reserve Bank of
New York. Any payment made in United States dollars under such circumstances
where the required payment is in a Specified Currency other than United States
dollars will not constitute an Event of Default under the Indenture with
respect to the Notes.
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
GOVERNING LAW; JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. Under current New York law, where a cause of action is
based upon an obligation denominated in a non-United States currency, a state
court in the State of New York rendering a judgment on such an obligation
would be required to render such judgment in the non-United States currency,
and such judgment would be converted into United States dollars at the
exchange rate prevailing on the date of entry of the judgment. The holders of
such Notes could be subject to exchange rate fluctuations occurring after such
judgment is rendered. It is not certain, however, that a non-New York court
would follow the same rules with respect to conversion.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, tax-exempt organizations, regulated
investment companies, dealers in securities or currencies, persons holding
Notes as a hedge against currency risks or as a position in a "straddle" for
tax purposes, or persons whose functional currency is not the United States
dollar. It also does not deal with Holders other than original purchasers
(except where otherwise specifically noted). BECAUSE THE EXACT PRICING AND
OTHER TERMS OF THE NOTES WILL VARY, NO ASSURANCE CAN BE GIVEN THAT THE
CONSIDERATIONS DESCRIBED BELOW WILL APPLY TO A PARTICULAR ISSUANCE OF NOTES.
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE
OWNERSHIP OF PARTICULAR NOTES (WHERE APPLICABLE) WILL BE SUMMARIZED IN THE
PRICING SUPPLEMENT RELATING TO SUCH NOTES. PERSONS CONSIDERING THE PURCHASE OF
NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF
UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL
AS ANY CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
As used herein, the term "U.S. Holder" means a Beneficial Owner of a Note
that is for United States Federal income tax purposes (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof (other than a partnership that is not treated as
a United States person under any applicable Treasury regulations), (iii) an
estate or trust the income of which is subject to United States Federal income
taxation regardless of its source, (iv) a trust if (a) a U.S. court may
exercise primary supervision over its administration and (b) one or more U.S.
persons have authority to control all substantial decisions of the trust, or
(v) any other person whose income or gain in respect of a Note is effectively
connected with the conduct of a United States trade or business.
Notwithstanding the preceding sentence, to the extent provided in Treasury
regulations, certain trusts in existence on August 20, 1996, and treated as
United States persons under the United States Internal Revenue Code of 1986,
as amended (the "Code"), and applicable Treasury regulations thereunder prior
to such date, that elect to continue to be treated as United States persons
under the Code or applicable Treasury regulations thereunder also will be U.S.
Holders. In the case of a holder of Notes that is a partnership for United
States Federal income tax purposes, each partner will take into account its
allocable share of income or loss from the Notes, and will take such income or
loss into account under the rules of taxation applicable to such partner,
taking into account the activities of the partnership and the partner. As used
herein, the term "non-U.S. Holder" means a Beneficial Owner of a Note that is
not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Except as set forth below, payments of interest on a
Note generally will be taxable to a U.S. Holder as ordinary interest income at
the time such payments are accrued or received (in accordance with the U.S.
Holder's regular method of tax accounting).
Original Issue Discount. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Notes issued with original issue
discount ("Discount Notes"). The following summary is based upon final
Treasury regulations (the "'OID Regulations") released by the Internal Revenue
Service on January 27, 1994 under the original issue discount provisions of
the Code.
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of
1% of the Note's stated redemption price at maturity multiplied by the number
of complete years to its
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maturity from its issue date or, in the case of a Note providing for the
payment of any amount other than qualified stated interest (as defined below)
prior to maturity, multiplied by the weighted average maturity of such Note).
The issue price of each Note in an issue of Notes equals the first price at
which a substantial amount of such Notes has been sold to the public (ignoring
sales to bond houses, brokers, or similar persons or organizations acting in
the capacity of underwriters, placement agents, or wholesalers). The stated
redemption price at maturity of a Note is the sum of all payments provided by
the Note other than "qualified stated interest" payments. The term "qualified
stated interest" generally means stated interest that is unconditionally
payable in cash or property (other than debt instruments of the issuer) at
least annually at a single fixed rate. In addition, under the OID Regulations,
if a Note bears interest for one or more accrual periods at a rate below the
rate applicable for the remaining term of such Note (e.g., Notes with teaser
rates or interest holidays), and if the greater of either the resulting
foregone interest on such Note or any "true" discount on such Note (i.e., the
excess of the Note's stated principal amount over its issue price) equals or
exceeds a specified de minimis amount, then a portion, or in some
circumstances all, of the stated interest on the Note would be treated as
original issue discount rather than qualified stated interest.
Payments of qualified stated interest on a Note are taxable to a U.S. Holder
as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). In addition, a U.S. Holder of a Discount Note must include
original issue discount in income as ordinary interest for United States
Federal income tax purposes as it accrues under a constant yield method in
advance of receipt of the cash payments attributable to such income,
regardless of such U.S. Holder's regular method of tax accounting. In general,
the amount of original issue discount included in income by the initial U.S.
Holder of a Discount Note is the sum of the daily portions of original issue
discount with respect to such Discount Note for each day during the taxable
year (or portion of the taxable year) in which such U.S. Holder held such
Discount Note. The "daily portion" of original issue discount on any Discount
Note is determined by allocating to each day in any accrual period a ratable
portion of the original issue discount allocable to that accrual period. An
"accrual period" may be of any length and the accrual periods may vary in
length over the term of the Discount Note, provided that each accrual period
is no longer than one year and each scheduled payment of principal or interest
occurs either on the final day of an accrual period or on the first day of an
accrual period. The amount of original issue discount allocable to each
accrual period is generally equal to the difference between (i) the product of
the Discount Note's adjusted issue price at the beginning of such accrual
period and its yield to maturity (determined on the basis of compounding at
the close of each accrual period and appropriately adjusted to take into
account the length of the particular accrual period) and (ii) the amount of
any qualified stated interest payments allocable to such accrual period. The
"adjusted issue price" of a Discount Note at the beginning of any accrual
period is the sum of the issue price of the Discount Note plus the amount of
original issue discount allocable to all prior accrual periods minus the
amount of any prior payments on the Discount Note that were not qualified
stated interest payments. Under these rules, U.S. Holders generally will have
to include in income increasingly greater amounts of original issue discount
in successive accrual periods than the amounts that would be included on a
straight-line basis. These same rules apply to any Note that is not otherwise
a Discount Note, but nonetheless has been issued with original issue discount.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal
to the sum of all amounts payable on the Discount Note after the purchase
date, other than payments of qualified stated interest, will be considered to
have purchased the Discount Note at an "acquisition premium." Under the
acquisition premium rules, the amount of original issue discount such U.S.
Holder must include in its gross income with respect to such Discount Note for
any taxable year (or portion thereof in which the U.S. Holder holds the
Discount Note) will be reduced (but not below zero) by the portion of the
acquisition premium properly allocable to the period. These same rules apply
to any Note that is not otherwise a Discount Note, but nonetheless has been
issued with original issue discount. U.S. Holders may generally, upon
election, include in income all interest (including stated interest,
acquisition discount, original issue discount, de minimis original issue
discount, market discount, de minimis market discount, and unstated interest,
as adjusted by any amortizable bond premium or acquisition premium) that
accrues on a debt instrument by using the constant yield method applicable to
original issue discount, subject to certain limitations and exceptions.
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U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
Variable Rate Debt Instruments. Under the OID Regulations, Floating Rate
Notes and Indexed Notes ("Variable Notes") are subject to special rules
whereby a Variable Note will qualify as a "variable rate debt instrument" if
(a) its issue price does not exceed the total noncontingent principal payments
due under the Variable Note by more than a specified de minimis amount and (b)
it provides for stated interest, paid or compounded at least annually, at
current values of (i) one or more qualified floating rates, (ii) a single
fixed rate and one or more qualified floating rates, (iii) a single objective
rate, or (iv) a single fixed rate and a single objective rate that is a
qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple
that is greater than .65 but not more than 1.35 will constitute a qualified
floating rate. A variable rate equal to the product of a qualified floating
rate and a fixed multiple that is greater than .65 but not more than 1.35,
increased or decreased by a fixed rate, will also constitute a qualified
floating rate. In addition, under the OID Regulations, two or more qualified
floating rates that can reasonably be expected to have approximately the same
values throughout the term of the Variable Note (e.g., two or more qualified
floating rates with values within 25 basis points of each other as determined
on the Variable Note's issue date) will be treated as a single qualified
floating rate. Notwithstanding the foregoing, a variable rate that would
otherwise constitute a qualified floating rate but which is subject to one or
more restrictions such as a maximum numerical limitation (i.e., a cap) or a
minimum numerical limitation (i.e., a floor) may, under certain circumstances,
fail to be treated as a qualified floating rate under the OID Regulations
unless such cap or floor is fixed throughout the term of the Note. An
"objective rate" is a rate that is not itself a qualified floating rate but
which is determined using a single fixed formula and which is based upon
objective financial or economic information (e.g., a rate that is based on one
or more qualified floating rates or on the yield of actively traded personal
property, other than stock or debt of the issuer or a related party). A rate
will not qualify as an objective rate if it is based on information that is
within the control of the issuer (or a related party) or that is unique to the
circumstances of the issuer (or a related party), such as dividends, profits,
or the value of the issuer's stock (although a rate does not fail to be an
objective rate merely because it is based on the credit quality of the
issuer). The OID Regulations also provide that other variable interest rates
may be treated as objective rates if so designated by the IRS in the future.
Despite the foregoing, a variable rate of interest on a Variable Note will not
constitute an objective rate if it is reasonably expected that the average
value of such rate during the first half of the Variable Note's term will be
either significantly less than or significantly greater than the average value
of the rate during the final half of the Variable Note's term. A "qualified
inverse floating rate" is any objective rate where such rate is equal to a
fixed rate minus a qualified floating rate, as long as variations in the rate
can reasonably be expected to inversely reflect contemporaneous variations in
the qualified floating rate. That OID Regulations also provide that if a
Variable Note provides for stated interest at a fixed rate for an initial
period of less than one year followed by a variable rate that is either a
qualified floating rate or an objective rate and if the variable rate on the
Variable Note's issue date is intended to approximate the fixed rate (e.g.,
the value of the variable rate on the issue date does not differ from the
value of the fixed rate by more than 25 basis points), then the fixed rate and
the variable rate together will constitute either a single qualified floating
rate or objective rate, as the case may be.
If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, and
if the interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually, then
all stated interest on the Note will constitute qualified stated interest and
will be taxed accordingly. Thus, a Variable Note that provides for stated
interest at either a single
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qualified floating rate or a single objective rate throughout the term thereof
and that qualifies as a "variable rate debt instrument" under the OID
Regulations will generally not be treated as having been issued with original
issue discount unless the Variable Note is issued at a "true" discount (i.e.,
at a price below the Note's stated principal amount) in excess of a specified
de minimis amount. The amount of qualified stated interest and the amount of
original issue discount, if any, that accrues during an accrual period on such
a Variable Note is determined under the rules applicable to fixed rate debt
instruments by assuming that the variable rate is a fixed rate equal to (i) in
the case of a qualified floating rate or qualified inverse floating rate, the
value as of the issue date, of the qualified floating rate or qualified
inverse floating rate, or (ii) in the case of an objective rate (other than a
qualified inverse floating rate), a fixed rate that reflects the yield that is
reasonably expected for the Variable Note. The amount of qualified stated
interest allocable to an accrual period is increased (or decreased) if the
interest actually paid during an accrual period exceeds (or is less than) the
interest assumed to be paid during the accrual period.
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
Note with a fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed
rate that reflects the yield that is reasonably expected for the Variable
Note. In the case of a Variable Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or
a qualified inverse floating rate, if the Variable Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Variable Note as of the
Variable Note's issue date is approximately the same as the fair market value
of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Subsequent to converting the fixed rate into either a qualified
floating rate or a qualified inverse floating rate, the Variable Note is then
converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest are determined for the "equivalent"
fixed rate debt instrument by applying the general original issue discount
rules to the "equivalent" fixed rate debt instrument and a U.S. Holder of the
Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that such amounts differ from the actual amount of
interest accrued or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. On June 11, 1996, the IRS released final
Treasury regulations dealing with the treatment of contingent payment
obligations (the "Contingent Debt Regulations").
Generally, if a Variable Note is treated as a contingent payment obligation,
interest payments thereon will be treated as "contingent interest" payments.
Any contingent interest payments on a Variable Note would be includible in
income in a taxable year whether or not the amount of any payment is fixed or
determinable in that year. The amount of interest included in income in any
particular accrual period would be determined by estimating a projected
payment schedule (as determined under the Contingent Debt Regulations) for the
Variable Note based on a comparable yield based on a hypothetical fixed rate
instrument having similar terms and
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conditions as the Variable Note and applying daily accrual rules similar to
those for accruing original issue discount on Notes issued with original issue
discount (as discussed above). If the actual amount of contingent interest
payments is not equal to the projected amount, an adjustment to income at the
time of the payment must be made to reflect the difference.
Certain of the Notes (i) may be redeemable at the option of the Operating
Partnership prior to their stated maturity (a "call option") and/or (ii) may
be repayable at the option of the Holder prior to their stated maturity (a
"put option"). Notes containing such features may be subject to rules that
differ from the general rules discussed above. Investors intending to purchase
Notes with such features should consult their own tax advisors, since the
original issue discount consequences will depend, in part, on the particular
terms and features of the purchased Notes.
Short-Term Notes. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, a cash method U.S. Holder is not required to accrue such
original issue discount unless the U.S. Holder elects to do so. If such an
election is not made, any gain recognized by the U.S. Holder on the sale,
exchange or maturity of the Short-Term Note will be ordinary income to the
extent of the original issue discount accrued on a straight-line basis, or
upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions
otherwise allowable to the U.S. Holder for interest on borrowings allocable to
the Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other Holders including banks
and dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
Market Discount. If a U.S. Holder purchases a Note, other than a Note issued
with original issue discount, for an amount that is less than its issue price
(or, in the case of a subsequent purchaser, its stated redemption price at
maturity) or, in the case of a Note issued with original issue discount, for
an amount that is less than its adjusted issue price as of the purchase date,
such U.S. Holder will be treated as having purchased such Note at a "market
discount," unless such market discount is less than a specified de minimis
amount.
Under the market discount rules, a U.S. Holder will be required to treat any
partial principal payment (or, in the case of a Note issued with original
issue discount, any payment that is part of its "revised issue price") on, or
any gain realized on the sale, exchange, retirement or other disposition of, a
Note as ordinary income to the extent of the lesser of (i) the amount of such
payment or realized gain or (ii) the market discount which has not previously
been included in income and is treated as having accrued on such Note at the
time of such payment or disposition. Market discount will be considered to
accrue ratably during the period from the date of acquisition to the Maturity
Date of the Note, unless the U.S. Holder elects to accrue market discount on
the basis of a constant interest rate.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note
or certain earlier dispositions, because a current deduction is only allowed
to the extent the interest expense exceeds an allocable portion of market
discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or a constant interest rate
basis), in which case the rules described above regarding the treatment as
ordinary income of gain upon the disposition of the Note and upon the receipt
of certain cash payments and regarding the deferral of interest deductions
will not apply. Generally, such currently included market discount is treated
as ordinary interest for United States Federal income tax purposes. Such an
election will apply to all debt instruments acquired by the U.S. Holder on or
after the first day of the taxable year to which such election applies and may
be revoked only with the consent of the IRS.
Premium. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest, such U.S. Holder
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will be considered to have purchased the Note with "amortizable bond premium"
equal in amount to such excess. A U.S. Holder may elect to amortize such
premium using a constant yield method over the remaining term of the Note and
may offset interest otherwise required to be included in respect of the Note
during any taxable year by the amortized amount of such excess for the taxable
year. However, if the Note may be optionally redeemed after the U.S. Holder
acquires it at a price in excess of its stated redemption price at maturity,
special rules would apply which could result in a deferral of the amortization
of some bond premium until later in the term of the Note. Any election to
amortize bond premium applies to all taxable debt obligations then owned and
thereafter acquired by the U.S. Holder and may be revoked only with the
consent of the IRS.
On December 30, 1997, the IRS issued new Treasury regulations concerning the
proper tax treatment of amortizable bond premium. These regulations
substantially revise the prior regulations concerning the amortization of bond
premium. The new regulations are effective for debt instruments acquired on or
after March 2, 1998. If a holder makes the election to amortize bond premium
for a taxable year that includes March 2, 1998, or for any subsequent year,
the new regulations apply to all bonds held on or after the first day of the
taxable year in which the election is made. A holder is deemed to have made
the election to amortize bond premium for the taxable year that includes March
2, 1998 if the holder had previously elected to amortize bond premium and that
election is effective on March 2, 1998. Holders are granted automatic consent
to change their accounting method for bond premium as required under the new
regulations. U.S. Holders of Notes should consult their own tax advisers
concerning the appropriate treatment of amortizable bond premium.
Disposition of a Note. Except as discussed above, upon the sale, exchange or
retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest)
and such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's
adjusted tax basis in a Note generally will equal such U.S. Holder's initial
investment in the Note increased by any original issue discount included in
income (and accrued market discount, if any, if the U.S. Holder has included
such market discount in income) and decreased by the amount of any payments,
other than qualified stated interest payments, received and amortizable bond
premium taken with respect to such Note. In general, any gain or loss realized
upon a taxable disposition of a Note by a U.S. Holder who is not a dealer in
securities will be treated as long-term capital gain or loss if the Note has
been held for more than one year and otherwise as short-term capital gain or
loss. Prospective Holders should consult their own tax advisors with respect
to the tax consequences to them of the disposition of a Note.
NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS PAYABLE, IN A FOREIGN
CURRENCY
As used herein, "Foreign Currency" means a currency or currency unit other
than U.S. dollars.
Cash Method. A U.S. Holder who uses the cash method of accounting for United
States Federal income tax purposes and who receives a payment of interest on a
Note (other than original issue discount or market discount) will be required
to include in income the U.S. dollar value of the Foreign Currency payment
(determined on the date such payment is received) regardless of whether the
payment is in fact converted to U.S. dollars at that time, and such U.S.
dollar value will be the U.S. Holder's tax basis in such Foreign Currency.
Accrual Method. A U.S. Holder who uses the accrual method of accounting for
United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the
U.S. dollar value of the amount of interest income (including original issue
discount or market discount and reduced by amortizable bond premium to the
extent applicable) that has accrued and is otherwise required to be taken into
account with respect to a Note during an accrual period. The U.S. dollar value
of such accrued income will be determined by translating such income at the
average rate of exchange for the accrual period or, with respect to an accrual
period that spans two taxable years, at the average rate for the partial
period within the taxable year. A U.S. Holder may elect, however, to translate
such accrued interest income using the rate of exchange on the last day of the
accrual period or, with respect to an accrual period that spans two taxable
years, using the rate of exchange on the last day of the taxable year. If the
last day of an accrual period is within five business days of the date of
receipt of the accrued interest, a U.S. Holder may translate such interest
using
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the rate of exchange on the date of receipt. The above election will apply to
other debt obligations held by the U.S. Holder and may not be changed without
the consent of the IRS. A U.S. Holder should consult a tax advisor before
making the above election. A U.S. Holder will recognize exchange gain or loss
(which will be treated as ordinary income or loss) with respect to accrued
interest income on the date such income is received. The amount of ordinary
income or loss recognized will equal the difference, if any, between the U.S.
dollar value of the Foreign Currency payment received (determined on the date
such payment is received) in respect of such accrual period and the U.S.
dollar value of interest income that has accrued during such accrual period
(as determined above).
Purchase, Sale and Retirement of Notes. A U.S. Holder who purchases a Note
with previously owned Foreign Currency will recognize ordinary income or loss
in an amount equal to the difference, if any, between such U.S. Holder's tax
basis in the Foreign Currency and the U.S. dollar fair market value of the
Foreign Currency used to purchase the Note, determined on the date of
purchase.
Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the Note. Such gain
or loss generally will be capital gain or loss (except to the extent of any
accrued market discount not previously included in the U.S. Holder's income)
and will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Note has been held by such U.S. Holder for more than one year.
To the extent the amount realized represents accrued but unpaid interest,
however, such amounts must be taken into account as interest income, with
exchange gain or loss computed as described in "Payments of Interest in a
Foreign Currency" above. If a U.S. Holder receives Foreign Currency on such a
sale, exchange or retirement, the amount realized will be based on the U.S.
dollar value of the Foreign Currency on the date the payment is received or
the Note is disposed of (or deemed disposed of in the case of a taxable
exchange of the Note for a new Note). In the case of a Note that is
denominated in Foreign Currency and is traded on an established securities
market, a cash basis U.S. Holder (or, upon election, an accrual basis U.S.
Holder) will determine the U.S. dollar value of the amount realized by
translating the Foreign Currency payment at the spot rate of exchange on the
settlement date of the sale. A U.S. Holder's adjusted tax basis in a Note will
equal the cost of the Note to such Holder, increased by the amounts of any
market discount or original issue discount previously included in income by
the Holder with respect to such Note and reduced by any amortized acquisition
or other premium and any principal payments received by the Holder. A U.S.
Holder's tax basis in a Note, and the amount of any subsequent adjustments to
such Holder's tax basis, will be the U.S. dollar value of the Foreign Currency
amount paid for such Note, or of the Foreign Currency amount of the
adjustment, determined on the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain
or loss attributable to fluctuations in exchange rates will equal the
difference between the U.S. dollar value of the Foreign Currency principal
amount of the Note, determined on the date such payment is received or the
Note is disposed of, and the U.S. dollar value of the Foreign Currency
principal amount of the Note, determined on the date the U.S. Holder acquired
the Note. Such Foreign Currency gain or loss will be recognized only to the
extent of the total gain or loss realized by the U.S. Holder on the sale,
exchange or retirement of the Note.
Original Issue Discount. In the case of a Note issued with original issue
discount, (i) original issue discount is determined in units of the Foreign
Currency, (ii) accrued original issue discount is translated into U.S. dollars
as described in "Payments of Interest in a Foreign Currency--Accrual Method"
above and (iii) the amount of Foreign Currency gain or loss on the accrued
original issue discount is determined by comparing the amount of income
received attributable to the discount (either upon payment, maturity or an
earlier disposition), as translated into U.S. dollars at the rate of exchange
on the date of such receipt, with the amount of original issue discount
accrued, as translated above.
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Premium and Market Discount. In the case of a Note with market discount, (i)
market discount is determined in units of the Foreign Currency, (ii) accrued
market discount taken into account upon the receipt of any partial principal
payment or upon the sale, exchange, retirement or other disposition of the
Note (other than accrued market discount required to be taken into account
currently) is translated into U.S. dollars at the exchange rate on such
disposition date (and no part of such accrued market discount is treated as
exchange gain or loss) and (iii) accrued market discount currently includible
in income by a U.S. Holder for any accrual period is translated into U.S.
dollars on the basis of the average exchange rate in effect during such
accrual period, and the exchange gain or loss is determined upon the receipt
of any partial principal payment or upon the sale, exchange, retirement or
other disposition of the Note in the manner described in "Payments of Interest
in a Foreign Currency--Accrual Method" above with respect to computation of
exchange gain or loss on accrued interest.
With respect to a Note issued with amortizable bond premium, such premium is
determined in the relevant Foreign Currency and reduces interest income in
units of the Foreign Currency. Although not entirely clear, a U.S. Holder
should recognize exchange gain or loss equal to the difference between the
U.S. dollar value of the bond premium amortized with respect to a period,
determined on the date the interest attributable to such period is received,
and the U.S. dollar value of the bond premium determined on the date of the
acquisition of the Note.
Exchange of Foreign Currencies. A U.S. Holder will have a tax basis in any
Foreign Currency received as interest or on the sale, exchange or retirement
of a Note equal to the U.S. dollar value of such Foreign Currency, determined
at the time the interest is received or at the time of the sale, exchange or
retirement. Any gain or loss realized by a U.S. Holder on a sale or other
disposition of Foreign Currency (including its exchange for U.S. dollars or
its use to purchase Notes) will be ordinary income or loss.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original
issue discount, if any) on a Note, unless such non-U.S. Holder is a direct or
indirect 10% or greater securityholder of the Operating Partnership, a
controlled foreign corporation related to the Operating Partnership or a bank
receiving interest described in Section 881(c)(3)(A) of the Code. To qualify
for the exemption from taxation, the last United States payor in the chain of
payment prior to payment to a non-U.S. Holder (the "Withholding Agent") must
have received in the year in which a payment of interest or principal occurs,
or in either of the two preceding calendar years, a statement that (i) is
signed by the Beneficial Owner of the Note under penalties of perjury, (ii)
certifies that such owner is not a U.S. Holder and (iii) provides the name and
address of the Beneficial Owner. The statement may be made on an IRS Form W-8
or a substantially similar form, and the Beneficial Owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However,
in such case, the signed statement must be accompanied by a copy of the IRS
Form W-8 or the substitute form provided by the Beneficial Owner to the
organization or institution.
Final regulations dealing with withholding tax on income paid to foreign
persons, backup withholding and related matters (the "New Withholding
Regulations") were issued by the Treasury Department on October 6, 1997. The
New Withholding Regulations generally will be effective for payments made
after December 31, 1999, subject to certain transition rules. Prospective U.S.
Holders are strongly urged to consult their own tax advisors with respect to
the New Withholding Regulations.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
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The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater securityholder of the
Operating Partnership or, at the time of such individual's death, payments in
respect of the Notes would have been effectively connected with the conduct by
such individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are
not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Notes to a U.S. Holder must be reported to the
IRS, unless the U.S. Holder is an exempt recipient or establishes an
exemption. Compliance with the identification procedures described in the
preceding section would establish an exemption from backup withholding for
those non-U.S. Holders who are not exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-
U.S. Holder (and certain other conditions are met). Such a sale must also be
reported by the broker to the IRS, unless either (i) the broker determines
that the seller is an exempt recipient or (ii) the seller certifies its non-
U.S. status (and certain other conditions are met). Certification of the
registered owner's non-U.S. status would be made normally on an IRS Form W-8
under penalties of perjury, although in certain cases it may be possible to
submit other documentary evidence. In addition, prospective Noteholders are
strongly urged to consult their own tax advisors with respect to the New
Withholding Regulations.
Any amounts withheld under the backup withholding rule from a payment to a
Beneficial Owner would be allowed as a refund or a credit against such
Beneficial Owner's United States Federal income tax provided the required
information is furnished to the IRS.
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SUPPLEMENTAL PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis for sale by the Operating
Partnership to or through PaineWebber Incorporated, BT Alex. Brown
Incorporated, First Chicago Capital Markets, Inc., NationsBanc Montgomery
Securities LLC, Salomon Smith Barney Inc. or through one or more other member
firms of the NASD, as may be designated or approved by the Operating
Partnership and identified in the applicable Pricing Supplement (collectively,
the "Agents" and each individually, an "Agent"). The Agents may purchase
Notes, as principal, from the Operating Partnership from time to time for
resale to investors and other purchasers at varying prices relating to
prevailing market prices at the time of resale as determined by the applicable
Agent(s), or, if so specified in the applicable Pricing Supplement, for resale
at a fixed offering price. If agreed to by the Operating Partnership and an
Agent, such Agent may also utilize its reasonable efforts on an agency basis
to solicit offers to purchase the Notes at 100% of the principal amount
thereof, unless otherwise specified in the applicable Pricing Supplement. The
Operating Partnership will pay a commission to an Agent, ranging from .125%-
.750% of the principal amount of each Note, depending upon its stated
maturity, sold through such Agent. Commissions with respect to Notes with
stated maturities in excess of 30 years that are sold through an Agent will be
negotiated between the Operating Partnership and such Agent at the time of
such sale.
Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. An Agent may sell Notes it has purchased from the
Operating Partnership as principal to other dealers for resale to investors
and other purchasers, and may allow all or any portion of the discount
received in connection with such purchase from the Operating Partnership to
such dealers. After the initial offering of Notes, the offering price (in the
case of Notes to be resold on a fixed price basis), the concession and the
discount may be changed.
The Operating Partnership has reserved the right to sell the Notes directly
to investors, and may solicit and accept offers to purchase Notes directly
from investors from time to time on its own behalf. No commission will be paid
on Notes sold directly by the Operating Partnership. In certain instances, the
Operating Partnership may offer Notes to or through additional agents named in
the applicable Pricing Supplement.
The Operating Partnership reserves the right to withdraw, cancel or modify
the offer made hereby without notice and may reject offers in whole or in part
(whether placed directly with the Operating Partnership or through the
Agents). Each Agent will have the right, in its discretion reasonably
exercised, to reject in whole or in part any offer to purchase Notes received
by it on an agency basis.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in the Specified Currency in The City of New York on the date
of settlement. See "Description of Notes--General."
Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange. The Agents may from time
to time purchase and sell Notes in the secondary market, but the Agents are
not obligated to do so, and there can be no assurance that there will be a
secondary market for the Notes or that there will be liquidity in such
secondary market if one develops. From time to time, the Agents may make a
market in the Notes, but the Agents are not obligated to do so and may
discontinue any market-making activity at any time.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Operating
Partnership and Bradley have agreed to indemnify the Agents against certain
liabilities (including liabilities under the Securities Act) or contribute to
payments the Agent may be required to make in respect thereof. The Operating
Partnership and the Company have agreed to reimburse the Agents for certain
other expenses.
In the ordinary course of their respective businesses, the Agents and their
affiliates have engaged in, and may in the future engage in, investment and
commercial banking transactions with the Operating Partnership and certain of
its affiliates, including Bradley. The First National Bank of Chicago, an
affiliate of First Chicago Capital Markets, Inc., is lender and administrative
agent under a revolving credit facility, dated as of
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December 23, 1998, with the Operating Partnership. The Operating Partnership
may use the proceeds from any Notes offered hereby to repay indebtedness,
including indebtedness under such revolving credit facility.
In connection with this offering, the Agents may engage in transactions that
stabilize, maintain or otherwise affect the price of the Notes. Specifically,
the Agents may overallot in connection with such offering, creating a
syndicate short position. In addition, the Agents may bid for and purchase the
Notes in the open market to cover syndicate short positions or to stabilize
the price of the Notes. Finally, the syndicate may reclaim selling concessions
allowed for distributing Notes in the offering, if the syndicate repurchases
previously distributed Notes in the market to cover overallotments or to
stabilize the price of the Notes. Any of these activities may stabilize or
maintain the market price of the Notes above independent market levels. The
Agents are not required to engage in any of these activities and may end any
of them at any time.
Concurrently with the offering of Notes described herein, the Operating
Partnership may issue other Securities described in the accompanying
Prospectus.
LEGAL MATTERS
Certain legal matters relating to the Notes will be passed upon for the
Operating Partnership by Goodwin, Procter & Hoar LLP, Boston, Massachusetts
and for the Agents by Rogers & Wells LLP, New York, New York. The opinions of
Goodwin, Procter & Hoar LLP and Rogers & Wells LLP will be based upon, and
subject to, certain assumptions as to future actions required to be taken in
connection with the issuance and sale of the Notes and as to other events that
may affect the validity of the Notes but that cannot be ascertained on the
date of such opinions.
S-38
<PAGE>
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NO DEALER, SALESPERSON, OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED IN OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING
SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPEC-
TUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE OPERATING PARTNERSHIP OR THE AGENTS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR
THE PROSPECTUS, NOR ANY SALE MADE HEREUNDER AND THEREUNDER, SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF-
FAIRS OF THE OPERATING PARTNERSHIP SINCE THE DATE HEREOF OR THEREOF. THIS PRO-
SPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................................................... S-2
Description of Notes....................................................... S-4
Special Provisions Relating to Foreign Currency Notes...................... S-25
Certain United States Federal Income Tax Considerations.................... S-28
Supplemental Plan of Distribution.......................................... S-37
Legal Matters.............................................................. S-38
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
Risk Factors................................................................ 4
The Operating Partnership................................................... 10
Use of Proceeds............................................................. 12
Ratio of Earnings to Fixed Charges.......................................... 12
Description of Debt Securities ............................................. 12
Plan of Distribution........................................................ 22
Legal Matters............................................................... 22
Experts..................................................................... 23
</TABLE>
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$150,000,000
BRADLEY OPERATING
LIMITED PARTNERSHIP
MEDIUM TERM NOTES DUE
NINE MONTHS OR MORE
FROM DATE OF ISSUE
----------------------------
PROSPECTUS SUPPLEMENT
----------------------------
PAINEWEBBER INCORPORATED
BT ALEX. BROWN
FIRST CHICAGO CAPITAL MARKETS, INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC
SALOMON SMITH BARNEY
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SEPTEMBER 28, 1998
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