<PAGE> 1
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE NOT AN
OFFER TO SELL, AND WE ARE NOT SOLICITING ANY OFFERS TO BUY, THESE SECURITIES IN
ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED JANUARY 14, 1999
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 22, 1998)
$600,000,000
EOP OPERATING LIMITED PARTNERSHIP
$300,000,000 % NOTES DUE 2004
$300,000,000 % NOTES DUE 2009
------------------------
We are offering two series of Notes. One series will bear interest at
% per year and, unless we redeem them earlier, will mature on January ,
2004. The other series will bear interest at % per year and, unless we
redeem them earlier, will mature on January , 2009. We will pay interest on
the Notes on January 15 and July 15 of each year, beginning July 15, 1999. We
may redeem the Notes at any time before maturity.
The Notes will be unsecured and will rank equally with all of our other
unsecured senior indebtedness.
------------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Public Offering Price per Note due 2004(1)............... % $
Underwriting Discount per Note due 2004.................. % $
Proceeds, before expenses, to EOP Operating Limited
Partnership from Notes due 2004........................ % $
Public Offering Price per Note due 2009(1)............... % $
Underwriting Discount per Note due 2009.................. % $
Proceeds, before expenses, to EOP Operating
Limited Partnership from Notes due 2009................ % $
</TABLE>
(1) Plus accrued interest from January , 1999, if settlement occurs
after that date
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The Notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about January , 1999.
------------------------
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
------------------------
The date of this prospectus supplement is January , 1999.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
EOP Operating Limited Partnership........................... S-3
Use of Proceeds............................................. S-3
Description of Notes........................................ S-3
Underwriting................................................ S-5
Legal Matters............................................... S-6
PROSPECTUS
Special Note Regarding Forward-Looking Statements........... 2
Available Information....................................... 2
Incorporation of Certain Documents by Reference............. 2
The Company................................................. 4
Use of Proceeds............................................. 4
Ratios of Earnings to Combined Fixed Charges................ 4
Description of Debt Securities.............................. 4
Description of Warrants..................................... 16
Plan of Distribution........................................ 16
Experts..................................................... 17
Legal Matters............................................... 18
</TABLE>
----------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the accompanying
prospectus is accurate as of their dates. Our business, financial condition,
results of operations and prospects may have changed since then.
S-2
<PAGE> 3
EOP OPERATING LIMITED PARTNERSHIP
We and our managing general partner, Equity Office Properties Trust, were
formed to continue and expand the national office property business organized by
Samuel Zell, Chairman of the Board of Equity Office. We have a national
portfolio of 286 buildings comprising 75.8 million square feet in 24 states and
the District of Columbia. We have an ownership presence in 36 metropolitan
statistical areas and 81 submarkets, enabling us to provide premium office space
for a wide range of local, regional and national customers.
USE OF PROCEEDS
We will use the net proceeds from the offering of these Notes, which we
expect to be $595.5 million, to repay $240.0 million of mortgage indebtedness,
pay a prepayment penalty estimated to be $14.1 million on such mortgage
indebtedness and repay $341.4 million under our revolving credit facility. As of
January 13, 1998, the outstanding amount of indebtedness under the credit
facility to be repaid with the proceeds from this offering bore interest at an
annual rate of 5.6% and had a remaining maturity of approximately 2.5 years. The
mortgage indebtedness to be repaid bore interest at 8.09% with a remaining
maturity of three years.
DESCRIPTION OF NOTES
The following description of the particular terms of each of the two series
of Notes offered hereby supplements the description of the general terms and
provisions of Debt Securities set forth in the accompanying prospectus under the
caption "Description of Debt Securities."
GENERAL
Each series of Notes is to be issued as a separate series of Debt
Securities under the Indenture, which is more fully described in the
accompanying prospectus. Certain terms used herein are defined in the
accompanying prospectus.
One series will bear interest at % per year and, unless redeemed
earlier, will mature on January , 2004. The other series will bear interest
at % per year and, unless redeemed earlier, will mature on January ,
2009. We will pay interest on each series of the Notes semi-annually in arrears
on January 15 and July 15 of each year, commencing July 15, 1999, to the
registered holders of the Notes on the preceding January 1 or July 1, as the
case may be.
Neither series of Notes is repayable at the option of any holder before
maturity.
The Notes will be issued as global Debt Securities. See the section
captioned "Description of Debt Securities -- Global Securities" in the
accompanying prospectus. The Depository Trust Company, or "DTC," will be the
Depository with respect to the Notes. The Notes will be issued as fully
registered securities in the name of Cede & Co., DTC's partnership nominee, and
will be deposited with DTC.
OPTIONAL REDEMPTION
We may redeem the Notes of either series at any time in whole or from time
to time in part at a redemption price equal to the sum of 100% of the principal
amount of the Notes being redeemed, accrued interest thereon to the redemption
date, and the Make-Whole Amount, if any, with respect to such Notes. We will,
however, pay the interest installment due on the interest payment date which
occurs on or before any redemption date to those holders of the Notes who were
registered holders as of the close of business on the record date immediately
preceding such interest payment date.
If we have given notice as provided in the Indenture and made funds
available for the redemption of any Notes called for redemption on the
redemption date referred to in such notice, such Notes will cease to bear
interest on such redemption date and the only right of the holders of such Notes
will be to receive payment of the redemption price.
S-3
<PAGE> 4
We will give notice of any optional redemption of any Notes to holders of
the Notes at their addresses, as shown in the security register for the Notes,
not more than 60 nor less than 30 days prior to the date fixed for redemption.
The notice of redemption will specify, among other items, the redemption price
and the aggregate principal amount of the Notes to be redeemed.
If we choose to redeem less than all the Notes of a particular series, we
will notify the Trustee at least 45 days prior to giving notice of redemption,
or such shorter period as is satisfactory to the Trustee, of the series and
aggregate principal amount of Notes to be redeemed and their redemption date.
The Trustee shall select, in such manner as it shall deem fair and appropriate,
Notes to be redeemed of such series in whole or in part.
As used herein:
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Notes, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of
each dollar of principal being redeemed or paid and the amount of interest,
exclusive of interest accrued to the date of redemption or accelerated
payment, that would have been payable in respect of each such dollar if
such redemption or accelerated payment had not been made, determined by
discounting, on a semiannual basis, such principal and interest at the
Reinvestment Rate, as determined on the third Business Day preceding the
date such notice of redemption or accelerated payment is given, from the
respective dates on which such principal and interest would have been
payable if such redemption or accelerated payment had not been made to the
date of redemption or accelerated payment, over (ii) the aggregate
principal amount of the Notes being redeemed or paid.
"Reinvestment Rate" means .25% plus the arithmetic mean of the yields
under the heading "Week Ending" published in the most recent Statistical
Release under the caption "Treasury Constant Maturities" for the maturity,
rounded to the nearest month, corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid.
If no maturity exactly corresponds to such maturity, yields for the two
published maturities most closely corresponding to such maturity shall be
calculated pursuant to the immediately preceding sentence and the
Reinvestment Rate shall be interpolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest month. For
the purposes of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used. If the format or content of the
Statistical Release changes in a manner that precludes determination of the
Treasury yield in the above manner, then the Treasury yield shall be
determined in the manner that most closely approximates the above manner,
as reasonably determined by us.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which reports yields on actively traded United
States government securities adjusted to constant maturities, or, if such
statistical release is not published at the time of any required
determination, then such other reasonably comparable index which shall be
designated by us.
"Business Day" means any day, other than a Saturday or Sunday, on which
banking institutions in New York, New York and Boston, Massachusetts are
open for business.
SAME-DAY SETTLEMENT AND PAYMENT
The underwriters will pay for the Notes in immediately available funds. We
will make all payments due on the Notes in immediately available funds so long
as such Notes are in book-entry form.
S-4
<PAGE> 5
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
among Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc.,
Goldman, Sachs & Co., J.P. Morgan Securities Inc., Morgan Stanley & Co.
Incorporated, NationsBanc Montgomery Securities LLC and Salomon Smith Barney
Inc., as underwriters, and us, we have agreed to sell to the underwriters, and
the underwriters have severally agreed to purchase, the respective principal
amounts of each series of the Notes set forth opposite their names below. The
underwriting agreement provides that the obligations of the underwriters are
subject to certain conditions precedent and that when such conditions are
satisfied the underwriters will be obligated to purchase all of the Notes.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF NOTES DUE 2004 OF NOTES DUE 2009
----------- ----------------- -----------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................... $ $
Chase Securities Inc..........................
Goldman, Sachs & Co...........................
J.P. Morgan Securities Inc....................
Morgan Stanley & Co. Incorporated.............
NationsBanc Montgomery Securities LLC.........
Salomon Smith Barney Inc......................
------------ ------------
Total............................ $300,000,000 $300,000,000
============ ============
</TABLE>
The underwriters have advised us that they propose initially to offer the
Notes to the public at the applicable public offering price set forth on the
cover of this prospectus supplement, and to certain dealers at such price less
concessions not in excess of % of the aggregate principal amount of the
Notes due 2004 and % of the aggregate principal amount of the Notes due 2009.
The underwriters may allow, and such dealers may reallow, discounts not in
excess of % of the aggregate principal amount of the Notes due 2004 and
% of the aggregate principal amount of the Notes due 2009 to certain other
dealers. After the initial public offering of the Notes, the public offering
price, concession and discount may be changed.
The Notes are new issues of securities with no established trading market.
We have been advised by the underwriters that they intend to make a market in
the Notes, but are not obligated to do so and may discontinue market making at
any time without notice. We can give no assurance as to the liquidity of or any
trading market for the Notes.
In connection with the offering, the underwriters are permitted to engage
in certain transactions that stabilize the price of the Notes. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Notes. If the underwriters create a short position in the Notes
of a particular series in connection with the offering, i.e., if they sell a
greater aggregate principal amount of Notes of either series than is set forth
on the cover of this prospectus supplement, the underwriters may reduce that
short position by purchasing Notes of the particular series in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither we nor any underwriter makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the Notes. In addition, neither we nor any underwriter
makes any representation that the underwriters will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.
We have agreed to indemnify the several underwriters against, or contribute
to payments that the underwriters may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of 1933.
From time to time, the underwriters and certain of their affiliates have
engaged, and may in the future engage, in transactions with, and perform
services for, us and our affiliates in the ordinary course of business.
S-5
<PAGE> 6
We estimate that our share of the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $200,000.
LEGAL MATTERS
The legality of the Notes will be passed upon for EOP Operating Limited
Partnership by Hogan & Hartson L.L.P., Washington, D.C. Certain tax matters will
be passed upon by Hogan & Hartson L.L.P., special tax counsel to EOP Operating
Limited Partnership. Brown & Wood LLP, New York, New York, will act as counsel
to the underwriters.
S-6
<PAGE> 7
PROSPECTUS
$2,000,000,000
EOP OPERATING LIMITED PARTNERSHIP
DEBT SECURITIES AND DEBT WARRANTS
------------------------
We may from time to time offer in one or more series our unsecured senior
debt securities (the "Debt Securities") and our warrants exercisable for Debt
Securities ("Warrants" and, together with the Debt Securities, the "Securities")
in an aggregate principal amount not to exceed $2,000,000,000 (or its equivalent
in a foreign currency based on the exchange rate at the time of sale) in
amounts, at initial prices and on terms determined at the time of offering. We
may offer the Securities separately or together, in separate series in amounts,
at prices and on terms described in one or more supplements to this Prospectus
(each, a "Prospectus Supplement").
We will deliver this Prospectus together with a Prospectus Supplement
setting forth the specific terms of the Securities we are offering. The specific
terms of the Debt Securities will include the specific title, series, aggregate
principal amount, currency form (which may be registered, bearer, or global),
authorized denominations, maturity, rate (or manner of calculation thereof) and
time of payment of interest, terms for redemption at our option or repayment at
your option, if applicable, terms for sinking fund payments, covenants and any
initial public offering price. The specific terms of the Warrants will include
the number and terms thereof, the designation, terms and principal amount of
Debt Securities issuable upon exercise, the exercise price, the exercise date(s)
or period(s), the terms of the offering and sale thereof, and, where applicable,
the duration and detachability thereof. In the case of all Securities, the
specific terms will include whether the Securities will be offered separately or
as a unit with other securities.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain U. S. federal income tax considerations relating to,
and any listing on a securities exchange of, the Securities covered by the
Prospectus Supplement.
We may offer the Securities directly, through agents, or to or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of any of the Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement with them, will be set forth, or will be
calculable from the information set forth, in any accompanying Prospectus
Supplement. See "Plan of Distribution" on page 17. No Securities may be sold
without delivery of a Prospectus Supplement describing the method and terms of
the offering of those Securities.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL YOU OTHERWISE.
The date of this Prospectus is July 22, 1998.
<PAGE> 8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information contained in or incorporated by reference into this Prospectus
and the accompanying Prospectus Supplement contains "forward-looking statements"
which relate to, without limitation, future economic performance, our plans and
objectives for future operations and projections of revenue and other financial
items, which can be identified by the use of forward-looking terminology such as
"may," "will," "should," "expect," "anticipate," "estimate" or "continue" or the
negative thereof or other variations thereon or comparable terminology. The
cautionary statements incorporated by reference from our 1997 Annual Report on
Form 10-K under the caption "Risk Factors" and other similar statements
contained in this Prospectus or the accompanying Prospectus Supplement identify
important factors with respect to such forward-looking statements, including
certain risks and uncertainties, that could cause actual results to differ
materially from those in such forward-looking statements.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, is required to file reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the Public
Reference Room of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World
Trade Center, Suite 1300, New York, New York 10048. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. Copies of the reports, proxy statements and other
information can be obtained from the Public Reference Room of the Commission,
Washington, D.C. 20549, upon payment of prescribed rates, or in certain cases by
accessing the Commission's World Wide Web site at http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement"), of which this Prospectus is a part, under
the Securities Act, with respect to the Securities offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete, and
in each instance, reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and schedules
thereto. For further information regarding the Company and the Securities,
reference is hereby made to the Registration Statement and such exhibits and
schedules which may be obtained from the Commission at its principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission. The
Commission maintains a "web site" that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission. The address of such site is "http://www.sec.gov."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
a. The Company's Annual Report on Form 10-K for the year ended December
31, 1997, as amended.
b. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
c. The Company's Current Report on Form 8-K/A, filed with the Commission
on February 18, 1998 (amending the Company's Current Report on Form
8-K filed with the Commission on December 30, 1997) and the Company's
Current Report on Form 8-K filed with the Commission on March 18,
1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of a particular offering of Securities
2
<PAGE> 9
to which this Prospectus relates shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the date of filing such
documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in the
Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), in any
applicable Prospectus Supplement relating to a specific offering of Securities,
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus or any accompanying
Prospectus Supplement. Subject to the foregoing, all information appearing in
this Prospectus and each accompanying Prospectus Supplement is qualified in its
entirety by the information appearing in the documents incorporated by
reference.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered upon written or oral request. Requests should be
directed to EOP Operating Limited Partnership c/o Equity Office Properties
Trust, Two North Riverside Plaza, Suite 2200, Chicago, Illinois 60606,
Attention: Diane Morefield (telephone number: (312) 466-3300).
3
<PAGE> 10
As used herein and in the accompanying Prospectus Supplement, "Company"
means EOP Operating Limited Partnership, a Delaware limited partnership, and
predecessors thereof (the "Equity Office Predecessors") or, as the context may
require, EOP Operating Limited Partnership only. All references to the
historical activities of the Company prior to July 11, 1997, refer to the
activities of the Equity Office Predecessors.
THE COMPANY
The Company, together with Equity Office Properties Trust (the "Trust"), a
Maryland real estate investment trust ("REIT"), was formed to continue and
expand the national office property business organized by Samuel Zell, chairman
of the Board of Trustees of the Trust. The Trust is the managing general partner
of the Company. The Trust owns all of its assets and conducts substantially all
of its business through the Company and its subsidiaries.
The Company's executive offices are located at Two North Riverside Plaza,
Suite 2200, Chicago, Illinois 60606, and its telephone number is (312) 466-3300.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from any sale of Securities for general
business purposes, including, without limitation, the repayment of outstanding
debt and the acquisition or development of additional properties.
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
The Company's ratios of earnings to combined fixed charges and preferred
unit distributions are as follows:
<TABLE>
<CAPTION>
EQUITY OFFICE
THREE MONTHS PREDECESSORS EQUITY OFFICE PREDECESSORS
ENDED COMPANY (COMBINED (COMBINED HISTORICAL)
MARCH 31, (HISTORICAL) HISTORICAL) YEARS ENDED DECEMBER 31,
------------- JULY 11, 1997 TO JANUARY 1, 1997 TO --------------------------------
1998 1997 DECEMBER 31, 1997 JULY 10, 1997 1996 1995 1994 1993 1992
----- ----- ----------------- ------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Combined Fixed
Charges and Preferred
Unit Distributions... 1.94 1.90 2.11 1.52 1.49 1.21 1.24 1.23 1.24
</TABLE>
The ratios of earnings to combined fixed charges were computed by dividing
earnings by fixed charges. For this purpose, earnings consist of income (loss)
before gains from sales of property and extraordinary items plus fixed charges.
Fixed charges consist of interest expense (including interest costs
capitalized), the amortization of debt issuance costs, the portion of rental
expense deemed to represent interest expense.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Indenture (as defined below) under which the Debt Securities are to be
issued. The particular terms of the Debt Securities will be set forth in a
Prospectus Supplement relating to such Debt Securities and in the applicable
form of Note.
The Debt Securities will be issued under the Indenture dated as of
September 2, 1997, as amended or supplemented (the "Indenture"), between the
Company and State Street Bank and Trust Company, as trustee (together with any
other trustee(s) appointed with respect to a particular series of Debt
Securities, the "Trustee"). A copy of the Indenture is available for inspection
at the corporate trust office of the Trustee, or as described below under
"Available Information." The Indenture is subject to, and governed by, the Trust
Indenture Act of 1939, as amended (the "TIA"). The statements made below
relating to the Indenture and the Debt Securities to be issued thereunder are
summaries of certain provisions thereof and do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all
provisions of the
4
<PAGE> 11
Indenture and such Debt Securities. All section references appearing herein are
to sections of the Indenture, and capitalized terms used but not defined herein
have the respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company
and will rank equally with all other unsecured and unsubordinated indebtedness
of the Company. Unless otherwise specified in the applicable Prospectus
Supplement, the Trust has no obligation for payment of principal of or interest
on the Debt Securities. The Debt Securities may be issued in one or more series,
in each case as established from time to time in or pursuant to authority
granted by a resolution of the Board of Trustees of the Trust, as managing
general partner of the Company, or as established in the Indenture or in one or
more indentures supplemental to the Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of the Holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series (Section
301).
The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect to
such series (Section 608). If two or more persons are acting as Trustee with
respect to different series of Debt Securities, each such Trustee shall be a
Trustee of a trust under the applicable Indenture separate and apart from the
trust administered by any other Trustee (Section 609), and, except as otherwise
indicated herein, any action described herein to be taken by the Trustee may be
taken by each such Trustee with respect to, and only with respect to, the one or
more series of Debt Securities for which it is Trustee under the Indenture.
Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including without
limitation:
(1) the title and series designation of the Debt Securities;
(2) the aggregate principal amount of the Debt Securities and any limit on
the aggregate principal amount;
(3) the percentage of the principal amount at which the Debt Securities
will be issued and, if other than the principal amount thereof, the
portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof;
(4) the date or dates, or the method of determining the date or dates, on
which the principal of the Debt Securities will be payable;
(5) the rate or rates (which may be fixed or variable), or the method by
which the rate or rates shall be determined, at which the Debt
Securities will bear interest, if any;
(6) the date or dates, or the method for determining such date or dates,
from which any interest will accrue, the Interest Payment Dates on
which any interest will be payable, the Regular Record Dates for
Interest Payment Dates, or the method by which those dates shall be
determined, the Person to whom the interest shall be payable, and the
basis upon which interest shall be calculated if other than that of a
360-day year of twelve 30-day months;
(7) the place or places where (i) the principal of (and premium and
Make-Whole Amount (as defined below), if any) and interest, if any, on
the Debt Securities will be payable, (ii) the Debt Securities may be
surrendered for conversion or registration of transfer or exchange and
(iii) notices or demands to or upon the Company in respect of such
Debt Securities and the Indenture may be served;
(8) the period or periods within which, the price or prices at which and
the terms and conditions upon which the Debt Securities may be
redeemed, in whole or from time to time in part, at the option of the
Company, if the Company is to have such an option;
5
<PAGE> 12
(9) the obligation, if any, of the Company to redeem, repay or repurchase
the Debt Securities at the option of a Holder thereof, and the period
or periods within which, the price or prices as to which and the terms
and conditions upon which the Debt Securities will be redeemed, repaid
or repurchased, in whole or in part, pursuant to that obligation;
(10) if other than United States dollars, the currency or currencies in
which the Debt Securities are denominated and payable, which may be a
foreign currency or units of two or more foreign currencies or a
composite currency or currencies, and the terms and conditions
relating thereto;
(11) whether the amount of payments of principal of (and premium, if any)
or interest, if any, on the Debt Securities may be determined with
reference to an index, formula or other method (which index, formula
or other method may, but need not be, based on a currency, currencies,
currency unit or units or composite currency or currencies) and the
manner in which such amounts shall be determined;
(12) any additions to, modifications of or deletions from the terms of the
Debt Securities with respect to the Events of Default or covenants set
forth in the Indenture;
(13) whether the Debt Securities will be issued in certificated or
book-entry form;
(14) whether the Debt Securities will be in registered or bearer form and,
if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the
denominations thereof and the terms and conditions relating thereto;
(15) the applicability, if any, of the defeasance and covenant defeasance
provisions of Article Fourteen of the Indenture;
(16) whether and, if so, under what circumstances the Company will pay
Additional Amounts as contemplated in the Indenture in respect of any
tax, assessment or governmental charge and whether the Company will
have the option to redeem the Debt Securities in lieu of making such
payment; and
(17) any other terms of the Debt Securities not inconsistent with the
provisions of the Indenture (Section 301).
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Special United States federal income
tax, accounting and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Reference is made to the applicable Prospectus Supplement for information
with respect to any deletions from, modifications of or additions to the Events
of Default or covenants of the Company that are described below, including any
addition of a covenant or other provision providing event risk or similar
protection.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at the corporate trust office of the Trustee, initially located
at Two International Place, Financial Services, Corporate Trust Department,
Boston, Massachusetts 02110, or at the corporate trust window of the Trustee
initially maintained at 61 Broadway, Concourse Level, New York, New York 10006;
provided that, at the option of the Company, payment of interest may be made by
check mailed to the address of the Person entitled thereto as it appears in the
Security Register or by wire transfer of funds to such Person at an account
maintained within the United States (Sections 301, 305, 306, 307 and 1002).
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Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture
(Section 307).
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee referred to above.
In addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer or exchange thereof at the corporate
trust office of the Trustee. Every Debt Security surrendered for conversion,
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer. No service charge will be made for any
registration of transfer or exchange of any Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 305). If the applicable
Prospectus Supplement refers to any transfer agent (in addition to the Trustee)
initially designated by the Company with respect to any series of Debt
Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each Place of Payment for such series. The Company may at any
time designate additional transfer agents with respect to any series of Debt
Securities (Section 1002).
Neither the Company nor the Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed in
part; or (iii) issue, register the transfer of or exchange any Debt Security
which has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid (Section 305).
CERTAIN INDENTURE COVENANTS
LIMITATIONS ON INCURRENCE OF DEBT. The Company will not, and will not
permit a Subsidiary to, incur any Debt (as defined below), other than
intercompany Debt (representing Debt to which the only parties are the Trust,
the Company and any of their Subsidiaries, but only so long as such Debt is held
solely by any of the Trust, the Company and any Subsidiary and provided that, in
the case of Debt owed to Subsidiaries of the Company, such Debt is subordinate
in right of payment to the Debt Securities), if, immediately after giving effect
to the incurrence of such additional Debt, the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP is greater than 60% of the sum of (i) Total
Assets (as defined below) as of the end of the fiscal quarter covered in the
Company'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
required under the Exchange Act, with the Trustee) prior to the incurrence of
such additional Debt and (ii) the increase or decrease in Total Assets from the
end of such quarter including, without limitation, any increase in Total Assets
resulting from the incurrence of such additional Debt (such increase or decrease
together with the Company's Total Assets is referred to as the "Adjusted Total
Assets") (Section 1004(a)).
In addition to the foregoing limitations on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Secured Debt
(as defined below) of the Company or any Subsidiary if, immediately after giving
effect to the incurrence of such additional Secured Debt, the aggregate
principal amount of all outstanding Secured Debt of the Company and its
Subsidiaries on a consolidated basis is greater than 40% of Adjusted Total
Assets (Section 1004(b)).
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<PAGE> 14
In addition to the foregoing limitations on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt, other
than intercompany Debt (provided that, in the case of Debt owed to Subsidiaries
of the Company, such Debt is subordinate in right of payment to the Debt
Securities), if the ratio of Consolidated Income Available for Debt Service to
the Annual Debt Service Charge (in each case as defined below) for the period
consisting of the four consecutive fiscal quarters most recently ended prior to
the date on which such additional Debt is to be incurred shall have been less
than 1.5 to 1 on a pro forma basis after giving effect to the incurrence of such
Debt and to the application of the proceeds therefrom, and calculated on the
assumption that (i) such Debt and any other Debt incurred by the Company or its
Subsidiaries since the first day of such four-quarter period, which was
outstanding at the end of such period, had been incurred at the beginning of
such period and continued to be outstanding throughout such period, and the
application of the proceeds of such Debt, including to refinance other Debt, had
occurred at the beginning of such period, (ii) the repayment or retirement of
any other Debt by the Company or 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 determining the amount of Debt so repaid or retired, the amount
of Debt under any revolving credit facility shall be computed based upon the
average daily balance of such Debt during such period), (iii) in the case of
Acquired Indebtedness or Debt incurred in connection with any acquisition since
the first day of the four-quarter period, the related acquisition had occurred
as of the first day of the period with the appropriate adjustments with respect
to the acquisition being included in the pro forma calculation and (iv) in the
case of any increase or decrease in Total Assets, or any other acquisition or
disposition by the Company or any Subsidiary of any asset or group of assets,
since the first day of such four-quarter period, including, without limitation,
by merger, stock purchase or sale, or asset purchase or sale, such increase,
decrease or other acquisition or disposition or any related repayment of Debt
had occurred as of the first day of such period with the appropriate adjustments
to revenues, expenses and Debt levels with respect to such increase, decrease or
other acquisition or disposition being included in such pro forma calculation
(Section 1004(c)).
MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Company is required at all
times to maintain Total Unencumbered Assets of not less than 150% of the
aggregate outstanding principal amount of all outstanding Unsecured Debt of the
Company and its Subsidiaries on a consolidated basis (Section 1004(d)).
As used in the Indenture and the description thereof herein:
"Acquired Indebtedness" means Debt of a Person (i) existing at the
time the Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from the Person, in each case, other than Debt
incurred in connection with, or in contemplation of, the Person becoming a
Subsidiary or that 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 Debt Service Charge" as of any date means the amount which is
expensed in any 12-month period for Consolidated Interest Expense of the
Company and its Subsidiaries.
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income plus amounts which have been deducted in
determining Consolidated Net Income during such period for (i) Consolidated
Interest Expense, (ii) provision for taxes of the Company and its
Subsidiaries based on income, (iii) amortization (other than amortization
of debt discount) and depreciation, (iv) provisions for losses from sales
or joint ventures, (v) increases in deferred taxes and other noncash items,
(vi) charges resulting from a change in accounting principles, and (vii)
charges for early extinguishment of debt, and less amounts which have been
added in determining Consolidated Net Income during such period for (a)
provisions for gains from sales or joint ventures and (b) decreases in
deferred taxes and other noncash items.
"Consolidated Interest Expense" means, for any period, and without
duplication, all interest (including the interest component of rentals on
leases reflected in accordance with GAAP as capitalized leases on the
Company's consolidated balance sheet, letter of credit fees, commitment
fees and other like financial charges) and all amortization of debt
discount on all Debt (including, without limitation, payment-in-kind, zero
coupon and other securities) of the Company and its Subsidiaries, but
excluding
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<PAGE> 15
legal fees, title insurance charges and other out-of-pocket fees and
expenses incurred in connection with the issuance of Debt, all determined
in accordance with GAAP.
"Consolidated Net Income" for any period means the amount of net
income (or loss) of the Company and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.
"Debt" of the Company or any Subsidiary means, without duplication,
any indebtedness of the Company and its Subsidiaries, whether or not
contingent, in respect of (i) borrowed money evidenced by bonds, notes,
debentures or similar instruments, (ii) indebtedness secured by any
mortgage, pledge, lien, charge, encumbrance or any security interest
existing on property owned by the Company and its Subsidiaries, (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 except any such
balance that constitutes an accrued expense or trade payable or (iv) any
lease of property by the Company and its Subsidiaries as lessee which is
reflected in the Company's consolidated balance sheet as a capitalized
lease in accordance with GAAP, in the case of items of indebtedness under
(i) through (iii) above to the extent that any such items (other than
letters of credit) would appear as a liability on the Company's
consolidated balance sheet in accordance with GAAP, and also includes, to
the extent not otherwise included, any obligation by the Company 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 Company or any Subsidiary)
(it being understood that "Debt" shall be deemed to be incurred by the
Company and its Subsidiaries on a consolidated basis whenever the Company
and its Subsidiaries on a consolidated basis shall create, assume,
guarantee or otherwise become liable in respect thereof; Debt of a
Subsidiary of the Company existing prior to the time it became a Subsidiary
of the Company shall be deemed to be incurred upon such Subsidiary's
becoming a Subsidiary of the Company; and Debt of a person existing prior
to a merger or consolidation of such person with the Company or any
Subsidiary of the Company in which such person is the successor to the
Company or such Subsidiary shall be deemed to be incurred upon the
consummation of such merger or consolidation); provided, however, the term
Debt shall not include any such indebtedness that has been the subject of
an "in substance" defeasance in accordance with GAAP.
"Secured Debt" means, without duplication, Debt secured by any
mortgage, trust deed, deed of trust, deed to secure debt, security
agreement, pledge, conditional sale or other title retention agreement,
capitalized lease, or other like agreement granting or conveying security
title to or a security interest in real property or other tangible assets.
Secured Debt shall be deemed to be incurred (i) on the date the Company or
any Subsidiary creates, assumes, guarantees or otherwise becomes liable in
respect thereof if it is secured in the manner described in the preceding
sentence on such date or (ii) on the date the Company or any Subsidiary
first secures such Debt in the manner described in the preceding sentence
if such Debt was not so secured on the date it was incurred.
"Subsidiary" means (i) a corporation, partnership, limited liability
company, trust, real estate investment trust or other entity a majority of
the voting power of the voting equity securities of which are owned,
directly or indirectly, by the Company or by one or more Subsidiaries of
the Company, (ii) a partnership, limited liability company, trust, real
estate investment trust or other entity not treated as a corporation for
federal income tax purposes, the majority of the value of the equity
interests of which are owned, directly or indirectly, by the Company or by
one or more other Subsidiaries of the Company and (iii) one or more
corporations which, either individually or in the aggregate, would be
Significant Subsidiaries (as defined below, except that the investment,
asset and equity thresholds for purposes of this definition shall be 5%),
the majority of the value of the equity interests of which are owned,
directly or indirectly, by the Company or by one or more Subsidiaries.
"Total Assets" as of any date means the sum of (i) Undepreciated Real
Estate Assets and (ii) all other assets of the Company and its Subsidiaries
on a consolidated basis determined in accordance with GAAP (but excluding
intangibles and accounts receivable).
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<PAGE> 16
"Total Unencumbered Assets" as of any date means the sum of (i) those
Undepreciated Real Estate Assets not securing any portion of Secured Debt
and (ii) all other assets of the Company and its Subsidiaries on a
consolidated basis not securing any portion of Secured Debt determined in
accordance with GAAP (but excluding intangibles and accounts receivable).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the
Company and its Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt of the Company or any Subsidiary that is
not Secured Debt.
EXISTENCE. Except as permitted under "--Merger, Consolidation or Sale"
below, the Company is required to do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights and franchises;
provided, however, that the Company shall not be required to preserve any right
or franchise if the Board of Trustees of the Trust determines that the
preservation thereof is no longer desirable in the conduct of the Company's
business and that the loss thereof is not disadvantageous in any material
respect to the Holders (Section 1006).
MAINTENANCE OF PROPERTIES. The Company is required to cause all of its
material properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and to cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the reasonable judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that the Company and
its Subsidiaries shall not be prevented from discontinuing the operation and
maintenance of any of the properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business and not disadvantageous
in any material respect to the Holders (Section 1007).
INSURANCE. The Company is required to, and is required to cause each of
its Subsidiaries to, maintain insurance coverage by financially sound and
reputable insurance companies in such forms and amounts and against such risks
as are customary for companies of established reputation engaged in the same or
a similar business (Section 1008).
PAYMENT OF TAXES AND OTHER CLAIMS. The Company is required to pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent (i) all material taxes, assessments and governmental charges levied
or imposed upon it or any Subsidiary or upon its income, profits or property or
that of any Subsidiary and (ii) all material lawful claims for labor, materials
and supplies which, if unpaid, might by law become a lien upon the property of
the Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings so long as appropriate
reserves are established therefor in accordance with GAAP (Section 1009).
PROVISION OF FINANCIAL INFORMATION. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act and for so long as any Debt
Securities are outstanding, the Company will, to the extent permitted under the
Exchange Act, be required to file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to such Section 13 or 15(d) if the Company
were so subject (the "Financial Statements"), such documents to be filed with
the Commission on or prior to the respective dates by which the Company would
have been required to file such documents if the Company were so subject (the
"Required Filing Dates"). The Company will also in any event (x) within 15 days
of each Required Filing Date (i) transmit by mail to all Holders of Debt
Securities, as their names and addresses appear in the security register for the
Debt Securities, without cost to such Holders, copies of the annual reports and
quarterly reports which the Company would have been required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act if the Company
were subject to such Sections and (ii) file with the Trustee copies of the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act if the Company were subject to such
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<PAGE> 17
Sections and (y) if filing such documents by the Company with the Commission is
not made under the Exchange Act, promptly upon written request and payment of
the reasonable cost of duplication and delivery, supply copies of such documents
to any prospective Holder (Section 1010).
MERGER, CONSOLIDATION OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other
corporation, limited liability company, association, partnership, real estate
investment trust, company or business trust (collectively, a "Corporation"),
provided that (a) the Company shall be the continuing Corporation, or the
successor Corporation or its transferees or assignees of such assets (if other
than the Company) formed by or resulting from any such consolidation or merger
or which shall have received the transfer of such assets by lease (subject to
the continuing obligations of the Company set forth in the Indenture) or
otherwise, either directly or indirectly, shall expressly assume payment of the
principal of (and premium or Make-Whole Amount, if any) and interest on all the
Debt Securities issued by the Company under the Indenture and the due and
punctual performance and observance of all of the covenants and conditions
contained in the Indenture; (b) the successor Corporation formed by or resulting
from any such consolidation or merger or which shall have received the transfer
of assets shall be a United States Corporation; (c) immediately after giving
effect to such transaction and treating any indebtedness which becomes an
obligation of the Company or any Subsidiary of the Company as a result thereof
as having been incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default under the Indenture, and no event which, after
notice or the lapse of time, or both, would become such an Event of Default,
shall have occurred and be continuing; and (d) an officer's certificate and
legal opinion covering such conditions shall be delivered to the Trustee
(Sections 801 and 803).
EVENTS OF DEFAULT, NOTICE AND WAIVER
The following events are "Events of Default" with respect to the Debt
Securities of a series: (a) default for 30 days in the payment of any
installment of interest on any Debt Securities of such series: (b) default in
the payment of the principal of (or premium, or Make-Whole Amount, if any, on)
any Debt Securities at their maturity; (c) default in the performance of any
other covenant of the Company contained in the Indenture, such default having
continued for 60 days after written notice as provided pursuant to the
Indenture; (d) default in the payment of an aggregate principal amount exceeding
$5,000,000 of any evidence of recourse indebtedness of the Company or any
mortgage, indenture or other instrument under which such indebtedness is issued
or by which such indebtedness is secured, such default having occurred after the
expiration of any applicable grace period and having resulted in the
acceleration of the maturity of such indebtedness, but only if such indebtedness
is not discharged or such acceleration is not rescinded or annulled, such
default having continued for a period of 10 days after written notice as
provided pursuant to the Indenture; and (e) certain events of bankruptcy,
insolvency or reorganization, or court appointment of a receiver, liquidator or
trustee of the Company or any Significant Subsidiary or any of their respect
property. The term "Significant Subsidiary" means each significant subsidiary
(as defined in Regulation S-X promulgated under the Securities Act) of the
Company (Section 501).
If an Event of Default under the Indenture occurs and is continuing, then
in every such case the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Debt Securities of a series may declare the principal
amount of all of the Debt Securities of such series to be due and payable
immediately by written notice thereof to the Company (and to the Trustee if
given by the Holders). However, at any time after such a declaration of
acceleration with respect to such Debt Securities has been made, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of not less than a majority in principal amount of such
Outstanding Debt Securities may rescind and annul such declaration and its
consequences if (a) the Company shall have paid or deposited with the Trustee
all required payments of the principal of (and premium or Make-Whole Amount, if
any) and interest on such Debt Securities, plus certain fees, expenses,
disbursements and advances of the Trustee and (b) all Events of Default, other
than the nonpayment of accelerated principal of (or specified portion thereof)
or premium (if any) or interest on such Debt Securities have been cured or
waived as provided in the Indenture
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<PAGE> 18
(Section 502). The Indenture also provides that the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of a series may
waive any past default with respect to such series and its consequences, except
a default (x) in the payment of the principal of (or premium or Make-Whole
Amount, if any) or interest on any such Debt Securities or (y) in respect of a
covenant or provision contained in the Indenture that cannot be modified or
amended without the consent of the Holder of each Outstanding Debt Security
affected thereby (Section 513).
The Trustee will be required to give notice to the Holder of Debt
Securities within 90 days of a default under the Indenture unless such default
has been cured or waived; provided, however, that the Trustee may withhold
notice to the Holders of any default (except a default in the payment of the
principal of (or premium or Make-Whole Amount, if any) or interest on any Debt
Securities or in the payment of any sinking fund installment in respect of any
Debt Securities) if specified Responsible Officers of the Trustee consider such
withholding to be in the interest of such Holders (Section 601).
The Indenture provides that no Holder of Debt Securities may institute any
proceedings, judicial or otherwise, with respect to the Indenture or for any
remedy thereunder, except in the case of failure of the Trustee, for 60 days, to
act after it has received a written request to institute proceedings in respect
of an Event of Default from the Holders of not less than 25% in principal amount
of the Outstanding Debt Securities of a series, as well as an offer of indemnity
reasonably satisfactory to it (Section 507). This provision will not prevent,
however, any holder of Debt Securities from instituting suit for the enforcement
of payment of the principal of (and premium or Make-Whole Amount, if any) and
interest on such Debt Securities at the respective due dates thereof (Section
508).
Subject to the provisions in the Indenture relating to its duties in case
of default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
Debt Securities then Outstanding under the Indenture, unless such Holders shall
have offered to the Trustee thereunder reasonable security or indemnity (Section
602). The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of a series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee in respect of such Debt Securities, or of exercising any trust or power
conferred upon the Trustee in respect of such Debt Securities. However, the
Trustee may refuse to follow any direction which is in conflict with any law or
Indenture, which may involve the Trustee in personal liability or which may be
unduly prejudicial to the holders of Debt Securities of such series not joining
therein (Section 512).
Within 120 days after the close of each fiscal year, the Company must
deliver to the Trustee a certificate, signed by one of several specified
officers of the Company, stating whether or not such officer has knowledge of
any default under the Indenture and, if so, specifying each such default and the
nature and status thereof (Section 1011).
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities of each series which is affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holders of each such Debt Security
affected thereby, (a) change the Stated Maturity of the principal of, or premium
or Make-Whole Amount (if any) or any installment of interest on, any such Debt
Security; (b) reduce the principal amount of, or the rate or amount of interest
on, or any premium or Make-Whole Amount, payable on redemption of, any such Debt
Security; (c) change the place of payment, or the coin or currency, for payment
of principal of, or premium or Make-Whole Amount, if any, or interest on any
such Debt Security; (d) impair the right to institute suit for the enforcement
of any payment on or with respect to any such Debt Security; (e) reduce the
above stated percentage in principal amount of Outstanding Debt Securities of
any series necessary to modify or amend the Indenture, to waive compliance with
certain provisions thereof or certain defaults and consequences thereunder or to
reduce the quorum or voting requirements set forth in the Indenture; or (f)
modify any of the foregoing provisions or any of the provisions relating to the
waiver of certain past defaults or certain covenants, except to increase the
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<PAGE> 19
required percentage to effect such action or to provide that certain other
provisions may not be modified or waived without the consent of the Holders of
each such Debt Security affected thereby (Section 902). A Debt Security shall be
deemed outstanding ("Outstanding") if it has been authenticated and delivered
under the Indenture unless, among other things, such Debt Security has been
canceled or redeemed.
The Indenture provides that the Holders of not less than a majority in
principal amount of Outstanding Debt Securities of a series have the right to
waive compliance by the Company with certain covenants in the Indenture in
respect of such Debt Securities (Section 1013). Compliance with the covenants
described herein and such additional covenants with respect to the Debt
Securities of a series generally may not be waived by the Board of Trustees of
the Trust, as managing general partner of the Company, or by the Trustee.
Modifications and amendments of the Indenture will be permitted to be made
by the Company and the Trustee without the consent of any Holder for any of the
following purposes: (i) to evidence the succession or addition of another Person
to the Company as obligor under the Indenture; (ii) to add to the covenants of
the Company for the benefit of the Holders or to surrender any right or power
conferred upon the Company in the Indenture; (iii) to add Events of Default for
the benefit of the Holders; (iv) to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided, that such action shall not
adversely affect the interests of the Holders in any material respect; (v) to
secure the Debt Securities; (vi) to establish the form or terms of additional
Debt Securities of any series; (vii) to provide for the acceptance of
appointment by a successor Trustee or facilitate the administration of the
trusts under the Indenture by more than one Trustee; (viii) to cure any
ambiguity, defect or inconsistency in the Indenture, provided that such action
shall not adversely affect the interests of Holders in any material respect; or
(ix) to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of Debt
Securities under the Indenture provided that such action shall not adversely
affect the interests of the Holders in any material respect (Section 901).
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities (Section 1501). A meeting will be permitted to be called at any
time by the Trustee, and also, upon request, by the Company or the Holders of at
least 10% in principal amount of the Outstanding Debt Securities, in any such
case upon notice given as provided in the Indenture (Section 1502). Except for
any consent that must be given by the Holder of each Debt Security affected by
certain modifications and amendments of the Indenture, any resolution presented
at a meeting or adjourned meeting duly reconvened at which a quorum is present
will be permitted to be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided, however, that, except as referred to above, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of the
Outstanding Debt securities may be adopted at a meeting or adjourned meeting
duly reconvened at which a quorum is present by the affirmative vote of the
Holders of such specified percentage in principal amount of the Outstanding Debt
Securities. Any resolution passed or decision taken at any meeting of Holders of
Debt Securities duly held in accordance with the Indenture will be binding on
all Holders of Debt Securities of such series. The quorum at any meeting called
to adopt a resolution, and at any reconvened meeting, will be Persons holding or
representing a majority in principal amount of the Outstanding Debt Securities;
provided, however, that if any action is to be taken at such meeting with
respect to a consent or waiver which may be given by the Holders of not less
than a specified percentage in principal amount of the Outstanding Debt
Securities of a series, the Persons holding or representing such specified
percentage in principal amount of the Outstanding Debt Securities of such series
will constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the Outstanding Debt Securities that vote in favor
of such request, demand, authorization, direction, notice, consent, waiver or
other action shall be taken into account in
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determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under the
Indenture (Section 1504).
SATISFACTION AND DISCHARGE
The Company may discharge certain obligations to Holders of Debt Securities
that have not already been delivered to the Trustee for cancellation and that
either have become due and payable or will become due and payable within one
year (or scheduled for redemption within one year) by irrevocably depositing
with the Trustee, in trust, funds in such currency or currencies, currency unit
or units or composite currency or currencies in which such Debt Securities are
payable in an amount sufficient to pay the entire indebtedness on such Debt
Securities in respect of principal (and premium or Make-Whole Amount, if any)
and interest to the date of such deposit (if such Debt Securities have become
due and payable) or to the Stated Maturity or Redemption Date, as the case may
be (Section 401).
GLOBAL SECURITIES
If the applicable Prospectus Supplement so indicates, the Debt Securities
will be evidenced by one or more global certificates (the "Global Securities"),
which will be deposited with, or on behalf of, The Depository Trust Company, New
York, New York ("DTC"), and registered in the name of Cede & Co. ("Cede"), as
DTC's nominee.
Holders may hold their interests in any of the Global Securities directly
through DTC, or indirectly through organizations which are participants in DTC
("Participants"). Transfers between Participants will be effected in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds.
Holders who are not Participants may beneficially own interests in a Global
Security held by DTC only through Participants, including certain banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly, and have indirect access to the DTC system ("Indirect
Participants"). So long as Cede, as the nominee of DTC, is the registered owner
of any Global Security, Cede for all purposes will be considered the sole holder
of such Global Security. Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have certificates
registered in their names, will not receive or be entitled to receive physical
delivery of certificates in definitive form, and will not be considered the
holders thereof.
Neither the Company nor the Trustee (nor any registrar or paying agent)
will have any responsibility for the performance by DTC or their Participants or
Indirect Participants of their respective obligations under the rules and
procedures governing their operations. DTC has advised the Company that it will
take any action permitted to be taken by a holder of Debt Securities only at the
direction of one or more Participants whose accounts are credited with DTC
interests in a Global Security.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions, such as transfers and pledges, among Participants in
deposited securities through electronic book-entry changes to accounts of its
Participants, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. Certain of
such Participants (or their representatives), together with other entities, own
DTC. The rules applicable to DTC and its Participants are on file with the
Commission.
Purchases of Debt Securities under the DTC system must be made by or
through Participants, which will receive a credit for the Debt Securities on
DTC's records. The ownership interest of each actual purchaser of each Debt
Security (a "Beneficial Owner") is in turn to be recorded on the Participant's
and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but
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Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Participant or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Debt
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Debt Securities, except
in the event that use of the book-entry system for the Debt Securities is
discontinued.
The deposit of Debt Securities with DTC and their registration in the name
of Cede effect no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Debt Securities; DTC's records reflect only the
identity of the Participants whose accounts such Debt Securities are credited,
which may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the Global Security.
Redemption notices shall be sent to Cede. If less than all of the principal
amount of the Global Securities of the same series is being redeemed, DTC's
practice is to determine by lot the amount of the interest of each Participant
therein to be redeemed.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.
Principal, Make-Whole Amount and interest payments on the Debt Securities
will be made to DTC by wire transfer of immediately available funds. DTC's
practice is to credit Participants' accounts on the payable date in accordance
with their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payment on the payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC or the Company, subject to any
statutory or regulation requirements as may be in effect from time to time.
Payments of principal, Make-Whole Amount and interest to DTC is the
responsibility of the Company, disbursement of such payments to Participants
shall be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Participants and Indirect
Participants. Neither the Company nor the Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the Global Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DTC may discontinue providing its services as securities depository with
respect to the Debt Securities at any time by giving reasonable notice to the
Company. If DTC notifies the Company that it is unwilling or unable to continue
as depository for any Global Security or if at any time DTC ceases to be a
clearing agency registered as such under the Exchange Act when DTC is required
to be so registered to act as such depository and no successor depository shall
have been appointed within 90 days of such notification or of the Company
becoming aware of DTC's ceasing to be so registered, as the case may be,
certificates for the relevant Notes will be printed and delivered in exchange
for interests in such Global Security. Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for relevant Debt
Securities in authorized denominations registered in such names as DTC shall
direct. It is expected that such instruction will be based upon directions
received by DTC from its Participants with respect to ownership of beneficial
interests in such Global Security.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
certificates representing the Debt Securities will be printed and delivered.
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The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company does not take responsibility for the accuracy thereof.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities.
Warrants may be issued independently or together with any other Debt Securities
offered by any Prospectus Supplement and may be attached to or separate from
such Debt Securities. Each series of Warrants will be issued under a separate
warrant agreement (each, a "Warrant Agreement") to be entered into between the
Company and a warrant agent specified in the applicable Prospectus Supplement
(the "Warrant Agent"). The Warrant Agent will act solely as an agent of the
Company in connection with the Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants. The following sets forth certain general terms
and provisions of the Warrants offered hereby. Further terms of the Warrants and
the applicable Warrant Agreements will be set forth in the applicable Prospectus
Supplement.
The applicable Prospectus Supplement will describe the terms of the
Warrants in respect of which this Prospectus is being delivered, including,
where applicable, the following:
(1) The title of the Warrants;
(2) The aggregate number of the Warrants;
(3) The price or prices at which the Warrants will be issued;
(4) The title, aggregate principal amount and the terms of the Debt
Securities purchasable upon exercise of the Warrants;
(5) The title, aggregate principal amount and terms of the other Debt
Securities offered thereby with which the Warrants are issued and the
number of the Warrants issued with each such Debt Security offered
thereby;
(6) The date, if any, on and after which the Warrants and the related Debt
Securities will be separately transferable;
(7) The price (which may be expressed as a percentage of the principal
amount and may be payable in cash, securities or other property) at
which the related Debt Securities may be purchased upon exercise of
the Warrants;
(8) The date(s) on which or the period(s) during which the right to
exercise the Warrants will commence and the date on which the right
will expire, and any other restriction or limitation relating to the
exercise of the Warrants;
(9) The minimum or maximum number of Warrants which may be exercised at
any one time;
(10) Whether the Warrants represented by the Warrant certificates or Debt
Securities that may be issued upon exercise of the Warrants will be
issued in registered or bearer form;
(11) Information with respect to book-entry procedures, if any;
(12) A discussion of certain federal income tax considerations, if any; and
(13) Any other terms of the Warrants, including terms, procedures and
limitations relating to the exchange and exercise of the Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
the Securities will be named in the applicable Prospectus Supplement.
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The Company may offer and sell the Securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the
time of sale or at negotiated prices for cash or assets in transactions that do
not constitute a business combination within the meaning of Rule 145 promulgated
under the Securities Act. The Company also may offer and sell Debt Securities
upon the exercise of Warrants. The Company also may, from time to time,
authorize underwriters acting as the Company's agents to offer and sell the
Securities upon the terms and conditions as are set forth in the applicable
Prospectus Supplement. In connection with the sale of the Securities,
underwriters may be deemed to have received compensation from the Company in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of the Securities for whom they may act as agent. Underwriters
may sell Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers from whom they may act as
agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Securities may be deemed to
be underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions, under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements entered into with the
Company, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Securities from the Company at the public offering
price set forth in such Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for payment and delivery on the date or dates
stated in such Prospectus Supplement. Each Contract will be for an amount not
less than, and the aggregate principal amount of Securities sold pursuant to
Contracts shall be not less nor more than, the respective amounts stated in the
applicable Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but will in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions except
(i) the purchase by an institution of the Securities covered by its Contracts
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (ii)
if the Securities are being sold to underwriters, the Company shall have sold to
such underwriters the total principal amount of the Securities less the
principal amount thereof covered by Contracts.
Certain of the underwriters and their affiliates may engage in transactions
with and perform services for the Company and its subsidiaries in the ordinary
course of business.
EXPERTS
The consolidated financial statements of EOP Operating Limited Partnership
appearing in EOP Operating Limited Partnership's Annual Report (Form 10-K, as
amended by Form 10-K/A) for the year ended December 31, 1997, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Beacon Properties, L.P., appearing
in the Current Report on Form 8-K/A of EOP Operating Limited Partnership filed
with the Commission on February 18, 1998, have been audited by
PricewaterhouseCoopers LLP, independent auditors, as set forth in their reports
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
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LEGAL MATTERS
The legality of the Securities will be passed upon for the Company by Hogan
& Hartson L.L.P., Washington, D.C. Certain tax matters will be passed upon by
Hogan & Hartson L.L.P., Washington, D.C., special tax counsel to the Company.
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$600,000,000
EOP OPERATING LIMITED PARTNERSHIP
$300,000,000 % NOTES DUE JANUARY , 2004
$300,000,000 % NOTES DUE JANUARY , 2009
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PROSPECTUS SUPPLEMENT
------------------------------------------------
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
JANUARY , 1999
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