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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 1999
REGISTRATION NO. 333-76823
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMB PROPERTY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MARYLAND 94-3281941
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
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505 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 394-9000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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DAVID S. FRIES
CHIEF ADMINISTRATIVE OFFICER, MANAGING DIRECTOR AND
GENERAL COUNSEL
AMB PROPERTY CORPORATION
505 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111-2586
(415) 394-9000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
AGENT FOR SERVICE)
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COPIES TO:
JEFFEREY T. PERO, ESQ.
J. SCOTT HODGKINS, ESQ.
LATHAM & WATKINS
505 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111-2586
(415) 391-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time-to-time after the effective date of this registration statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement of the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(2) PRICE(2) REGISTRATION FEE
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Common Stock, $.01 par value per share.... 6,000,000(1) $20.9375 $131,250,000 $36,488(3)
$22.8125
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(1) Including an indeterminate number of shares which may be issued by AMB
Property Corporation with respect to such shares of common stock by way of a
stock dividend, stock split or in connection with a stock combination,
recapitalization, merger, consolidation or otherwise.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended. The
proposed maximum aggregate offering price is based upon (1) 3,000,000 shares
included in the initial filing of this registration statement at a proposed
maximum offering price per share of $20.9375 determined in accordance with
Rule 457(c) and (2) 3,000,000 additional shares registered by this amendment
no. 1 to the registration statement at a proposed maximum offering price per
share of $22.8125 determined in accordance with Rule 457(c).
(3) The registrant previously paid a registration fee of $17,462 with the
initial filing of this registration statement on April 22, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JULY 8, 1999
PROSPECTUS
AMB PROPERTY CORPORATION
DIVIDEND REINVESTMENT AND DIRECT PURCHASE PLAN
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COMMON STOCK
PAR VALUE $.01 PER SHARE
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We are offering the opportunity to participate in our Dividend Reinvestment
and Direct Purchase Plan. The plan is designed to provide our stockholders and
other investors with a convenient and economical method to purchase shares of
our common stock, par value $.01 per share, and to reinvest all or a portion of
their cash dividends in additional shares of common stock. You may begin
participating in the plan by completing a plan Enrollment Form and returning it
to BankBoston N.A., as agent, who will administer the plan. EquiServe Limited
Partnership, a registered transfer agent, will provide certain administrative
support to the agent.
The prospectus relates to the offer and sale of up to 6,000,000 shares of
common stock under the plan. You should retain this prospectus for future
reference. Our common stock is listed on the New York Stock Exchange under the
symbol "AMB."
Some of the significant features of the plan are as follows:
- You may purchase additional shares of common stock by automatically
reinvesting all or a portion of your cash dividends.
- You may purchase additional common stock by making optional cash
purchases of between $500 to $5,000 in any calendar month. Optional cash
purchases in excess of $5,000 in any calendar month may be made only with
our prior written consent.
- The plan will acquire shares of common stock purchased with reinvested
dividends and optional cash purchases in any calendar month either:
- directly from us in the form of newly issued shares of common stock;
- in the open market; or
- in privately negotiated transactions from third parties.
- We may offer a discount of up to 5%, determined by us from time to time
in accordance with the plan, on newly issued shares of common stock that
you purchase either through dividend reinvestment or pursuant to an
optional cash purchase in any calendar month.
- If you hold shares of common stock in broker or nominee names, you may
participate in the plan and the brokers or nominees will reinvest
dividends and make optional cash purchases on your behalf.
Your participation in the plan is entirely voluntary, and you may terminate
your participation at any time. If you are already a stockholder and do not
choose to participate in the plan, you will continue to receive cash dividends,
as declared, in the usual manner.
BEFORE YOU PARTICIPATE IN OUR PLAN YOU SHOULD CONSIDER THE RISKS DISCUSSED
IN "RISK FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is July , 1999.
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We have not authorized any person to give any information or to make any
representation not contained or incorporated by reference in this prospectus.
You must not rely upon any information or representation not contained or
incorporated by reference in this prospectus as if we had authorized it. This
prospectus is not an offer to sell or the solicitation of an offer to buy any
securities other than the registered securities to which it relates and this
prospectus is not an offer to sell or the solicitation of an offer to buy
securities in any jurisdiction where, or to any person to whom, it is unlawful
to make such offer or solicitation. You should not assume that the information
contained in this prospectus is correct on any date after the date of this
prospectus, even though this prospectus is delivered or shares are sold pursuant
to this prospectus on a later date.
TABLE OF CONTENTS
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PAGE
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Forward-Looking Statements May Prove Inaccurate............. i
Prospectus Summary.......................................... 1
Risk Factors................................................ 5
The Plan.................................................... 21
Description of Capital Stock................................ 34
Restrictions on Ownership and Transfer of Capital Stock..... 45
Transfer Agent, Registrar, Conversion Agent and Dividend
Disbursing Agent.......................................... 48
Material Federal Income Tax Consequences Associated with an
Investment in Common Stock................................ 48
Plan of Distribution........................................ 61
Experts..................................................... 62
Legal Matters............................................... 62
Incorporation of Certain Documents by Reference............. 62
Where You Can Find More Information......................... 63
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FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Some of the information included and incorporated by reference in this
prospectus contains forward-looking statements, such as those pertaining to our
(including certain of our subsidiaries') capital resources, portfolio
performance and results of operations. Likewise, the pro forma financial
statements and other pro forma information incorporated by reference in this
prospectus also contain forward-looking statements. In addition, all statements
regarding anticipated growth in our funds from operations and anticipated market
conditions, demographics and results of operations are forward-looking
statements. Forward-looking statements involve numerous risks and uncertainties
and you should not rely on them as predictions of future events. There is no
assurance that the events or circumstances reflected in forward-looking
statements will be achieved or will occur. You can identify forward-looking
statements by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "intends,"
"plans," "pro forma," "estimates" or "anticipates" or the negative of these
words and phrases or similar words or phrases. You can also identify
forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements are necessarily dependent on assumptions, data or
methods that may be incorrect or imprecise and we may not be able to realize
them. The following factors, among others, could cause actual results and future
events to differ materially from those set forth or contemplated in the
forward-looking statements: defaults on or non-renewal of leases by tenants,
increased interest rates and operating costs, our failure to obtain necessary
outside financing, difficulties in identifying properties to acquire and in
effecting acquisitions, our failure to successfully integrate acquired
properties and operations, our failure to dispose of properties we have
contracted to sell or to timely reinvest proceeds from any such dispositions,
risks and uncertainties affecting property development and construction
(including construction delays, cost overruns, our inability to obtain necessary
permits and public opposition to these activities), our failure to qualify and
maintain our status as a real estate investment trust under the Internal Revenue
Code, environmental uncertainties, risks related to natural disasters, financial
market fluctuations, changes in real estate and zoning laws and increases in
real property tax rates. Our success also depends upon economic trends
generally, including interest rates, income tax laws, governmental regulation,
legislation, population changes and certain other matters discussed below under
"Risk Factors." We caution you not to place undue reliance on forward-looking
statements, which reflect our analysis only and speak only as of the date of
this prospectus or the dates indicated in the statements.
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PROSPECTUS SUMMARY
THE COMPANY
We are one of the largest publicly-traded real estate companies in the
United States. As of March 31, 1999, we owned 615 industrial buildings located
in 26 markets throughout the United States, and 38 retail centers located in 16
markets throughout the United States. As of March 31, 1999, our industrial
buildings, principally warehouse distribution properties, encompassed
approximately 58.9 million rentable square feet and, as of the same date, were
95.4% leased to over 1,900 tenants. As of March 31, 1999, our retail centers,
principally grocer-anchored community shopping centers, encompassed
approximately 7.1 million rentable square feet and, as of the same date, were
95.0% leased to over 900 tenants. In the event that all of the BPP Retail, LLC
("BPP Retail") and Burnham Pacific Properties ("Burnham Pacific") transactions
are consummated (see discussion below under "-- Recent Developments -- BPP
Retail and Burnham Pacific Transactions"), we will have disposed of 28 of our
retail centers. We currently expect that the substantial majority of our
acquisition activities going forward will be in industrial properties. We own
substantially all of our assets, and conduct substantially all of our business,
through AMB Property L.P., the operating partnership, and its subsidiaries.
AMB was organized in November 1997 and commenced operations upon the
completion of its initial public offering on November 26, 1997. AMB operates as
a self-administered and self-managed real estate company and believes that it
has qualified and that it will continue to qualify as a real estate investment
trust for federal income tax purposes beginning with the year ended December 31,
1997. As a self-administered and self-managed real estate investment trust,
AMB's employees perform its administrative and management functions, rather than
our relying on an outside manager for these services.
DIVIDEND AND DISTRIBUTION POLICY
We intend to make distributions to our stockholders in amounts such that
all or substantially all of our taxable income in each year, subject to certain
adjustments, is distributed in order to maintain our qualification as a real
estate investment trust under the Internal Revenue Code. Taxable income, if any,
not distributed through regular dividends will be distributed annually in a
special dividend. All distributions will be made at the discretion of our board
of directors and will depend on our earnings and financial condition, the amount
of distributions necessary to maintain our status as a real estate investment
trust and other factors the board of directors deems relevant from time to time.
USE OF PROCEEDS
We do not know the number of stockholders and other investors that may
participate in the plan and therefore we cannot estimate the number of shares of
common stock that we may ultimately sell pursuant to the plan, or the prices at
which we will sell such shares. In addition, our decision whether to sell newly
issued shares of common stock to fulfill the requirements of the plan will
affect the amount of proceeds that we receive. We plan to use the proceeds from
shares of common stock purchased under the plan to continue our real estate
acquisition, development and investment activities and for general corporate
purposes. Pending these uses, we may temporarily invest the net proceeds in
short-term investments consistent with our investment policies and our
qualification as a real estate investment trust.
SUMMARY OF THE PLAN
The following summary contains basic information about the plan set forth
in a question and answer format and is qualified by reference to the full text
of the plan which is filed as an exhibit to the registration statement which
contains this prospectus and which was filed with the Securities and Exchange
Commission with respect to the shares of common stock to be sold under the plan.
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We encourage you to read and consider the information contained in the plan
and in documents identified in the sections entitled "Incorporation of Certain
Documents by Reference" and "Where You Can Find More Information."
- WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the plan is to provide our stockholders and other investors
with a convenient and economical method of purchasing shares of common stock and
investing all or a portion of their cash dividends in additional shares of
common stock. The plan also provides us with a means of raising additional
capital through the direct sale of common stock.
- HOW IS THE PURCHASE PRICE PER SHARE DETERMINED?
The purchase price per share of common stock acquired through the plan as a
result of the reinvestment of dividends will be equal to:
- in the case of newly issued shares of common stock, the average of the
high and low prices reported by the New York Stock Exchange on the
applicable dividend payment date, subject to applicable discounts, or
- in the case of shares purchased in the open market or in privately
negotiated transactions, the average of the purchase price of all shares
purchased by the agent for the plan with reinvested dividends for the
applicable dividend payment date.
The purchase price of shares acquired through optional cash purchases of
$5,000 or less during any calendar month under the Direct Share Purchase Plan
(which are also referred to in this prospectus as purchases under the "DSPP")
will be equal to:
- in the case of newly issued shares of common stock, the average of the
high and low prices reported by the New York Stock Exchange on the
applicable DSPP investment date, subject to any applicable discounts, or
- in the case of shares purchased in the open market or in privately
negotiated transactions, the average of the purchase price of all shares
purchased by the agent for the applicable DSPP investment date.
We may also advise the agent that it may purchase shares from time to time
at its discretion over a 15-day period following the applicable dividend payment
date or DSPP investment date, as the case may be.
During some months we may entertain optional cash purchases in excess of
$5,000 under that portion of the plan referred to as the Waiver Discount Plan or
"WDP." During those months, you may make optional cash purchases of shares of
common stock exceeding $5,000 but only with our prior written consent. Under the
WDP, you will acquire the maximum number of shares of common stock that may be
purchased on each day during the applicable twelve trading day investment period
with one-twelfth of your WDP payment. Under the WDP, we may issue new shares of
common stock or purchase shares in the open market or in privately negotiated
transactions. In the case of newly issued shares, we may offer a discount of up
to 5% from the market price of the common stock based on the average of the high
and low sales price per share reported on the New York Stock Exchange purchased
on each trading day during the twelve trading day WDP investment period. We may
also establish a threshold price for newly issued shares of common stock
purchased under the WDP, as described below.
If you desire to make purchases of common stock exceeding $5,000 in any
calendar month, you may telephone Investor Relations at our toll-free number,
(877) 285-3111, during the three business days prior to the first day of the
applicable calendar month to determine whether:
- we are considering offering shares pursuant to the WDP for that month;
and
- we are employing a threshold price that will exclude from the
determination of the average market price the trading days during the
investment period when the average per share price on the New York Stock
Exchange falls below the threshold price.
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Annex I to this prospectus lists the significant dates relating to optional
cash purchases.
- HOW MANY SHARES MAY I PURCHASE DURING ANY PERIOD?
There is no limit to the number of shares of common stock you may purchase
with reinvested dividends on any dividend payment date. However, under the DSPP,
regardless of whether you are already one of our stockholders, you must make an
investment in any calendar month of not less than $500 nor more than $5,000.
You may request a waiver of the $5,000 monthly maximum by sending a written
request to us. We will approve requests for waiver on a discretionary basis.
Optional cash purchases that do not exceed $5,000 in any calendar month
initially will not be sold at a discount to current market prices. However, we
reserve the right to grant a discount in the future for such investments.
We will return to you without interest amounts submitted for optional cash
purchases of less than $500 and any optional cash purchases that exceed $5,000
in any calendar month, unless a request for waiver under the WDP has been
approved.
- CAN I REQUEST A WAIVER OF THE PURCHASE LIMITATION?
We have not predetermined a maximum limit on the amount of the investment
or on the number of shares that you may purchase pursuant to a written request
for waiver under the WDP. With respect to optional cash purchases in excess of
$5,000 in any calendar month made pursuant to a request for waiver, we may, in
our sole discretion, establish each month a discount and a threshold price on
newly issued shares of common stock. We may establish a discount from market
prices of up to 5%, after a review of current market conditions, the level of
participation, and our current and projected capital needs. The discount may
vary from month to month. The threshold price will equal the minimum price,
determined without giving effect to the applicable discount, if any, applicable
to purchases of common stock under the WDP in a given month. For each trading
day during an investment period on which the threshold price is not satisfied,
we will return one-twelfth of your optional cash purchase for that month under
the WDP to you as soon as practicable after the applicable WDP investment
period, without interest. We will not offer a purchase discount or establish a
threshold price for shares of common stock purchased in the open market or in
privately negotiated transactions.
If you acquire shares of common stock through the plan and resell them
shortly before or after acquiring them, you may be considered to be an
underwriter within the meaning of the Securities Act of 1933. We expect that
certain persons will acquire shares of common stock pursuant to a request for
waiver and resell such shares in order to realize the financial benefit of any
discount then being offered under the plan. We have no arrangements or
understandings, formal or informal, with any person relating to a distribution
of shares to be received pursuant to the plan by such person.
- HOW MANY SHARES ARE BEING SOLD UNDER THE PLAN?
We are registering 6,000,000 shares of common stock for sale under the
plan. There is no limit on the number of these shares that we may direct the
agent to purchase in the open market or in privately negotiated transactions.
The agent will acquire shares of common stock with reinvested dividends under
the plan and with cash submitted under the DSPP or under the WDP by purchasing
either newly issued shares of common stock directly from us or shares in the
open market or in privately negotiated transactions.
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RECENT DEVELOPMENTS
Sale of Series D Preferred Units by AMB Property II, L.P. On May 5, 1999,
AMB Property II completed a private placement of 1,595,337 7.75% Series D
Cumulative Redeemable Preferred Units to an investor at a price of $50.00 per
unit. See "Description of Capital Stock -- Preferred Stock -- Series D Preferred
Stock." AMB Property II, L.P. used approximately $57.7 million of the net
proceeds to purchase an unconsolidated joint venture interest from the operating
partnership and used approximately $20 million of the net proceeds to make an
unsecured loan to the operating partnership. The operating partnership used the
funds to repay borrowings under its credit facility and for general corporate
purposes. The loan bears interest at a rate of 7.0% per annum and is payable
upon demand.
BPP Retail and Burnham Pacific Transactions. On March 9, 1999, the
operating partnership signed a series of definitive agreements with BPP Retail,
a co-investment entity between Burnham Pacific and the California Public
Employees' Retirement System, pursuant to which, if fully consummated, BPP
Retail will acquire up to 28 retail shopping centers, totaling approximately 5.1
million square feet, for an aggregate price of $663.4 million. The sale of five
of the properties is subject to the consent of our joint venture partners. One
of our joint venture partners who holds an interest in three of the properties
has indicated that it will not consent to the sale of these properties at this
time. As a result, the sale price with respect to the 25 remaining properties,
totaling approximately 4.3 million square feet, is approximately $560.4 million.
We intend to dispose of these three properties or our interests in the joint
ventures through which we hold the properties.
Pursuant to the agreements, BPP Retail will acquire the 25 centers in
separate transactions. Under the agreements, the operating partnership has the
right to extend the closing dates for a period of up to either 20 or 50 days.
The operating partnership has exercised this right with respect to the first
closing, which occurred on June 15, 1999. Pursuant to the first closing, BPP
Retail acquired nine retail shopping centers, totaling approximately 1.4 million
square feet, for an aggregate price of approximately $207.4 million. We intend
to use the proceeds from the first closing to pay approximately $2.7 million in
transaction expenses, to repay secured debt related to the properties of
approximately $30.1 million (including prepayment penalties of approximately
$3.3 million), to pay approximately $103.5 million in partial repayment of
amounts outstanding under our unsecured credit facility, for potential
acquisitions and for general corporate purposes. We currently expect the second
and third closings to occur on or about August 4, 1999 and December 1, 1999.
In addition, the operating partnership entered into a definitive agreement,
subject to a financing condition, with Burnham Pacific, pursuant to which, if
fully consummated, Burnham Pacific would acquire up to six additional retail
centers, totaling approximately 1.5 million square feet, for approximately
$284.4 million. On June 30, 1999, this agreement was terminated pursuant to its
terms as a result of Burnham Pacific's decision not to waive the financing
condition. We currently intend to dispose of the six retail properties, either
on an individual or portfolio basis.
We intend to use the proceeds of approximately $353.0 million from the
disposition of the remaining 16 retail centers to BPP Retail in the second and
third closings to pay approximately $4.8 million in transaction expenses, to
repay secured debt related to the properties divested of approximately $30.8
million (including prepayment penalties of approximately $2.0 million), to make
payments under our unsecured credit facility in the amount of approximately
$133.4 million, for potential acquisitions and for general corporate purposes.
In connection with these transactions, AMB has granted the California Public
Employees' Retirement System an option to purchase up to 2,000,000 shares of
AMB's common stock for an exercise price of $25.00 per share that the California
Public Employees' Retirement System may exercise on or before March 31, 2000.
AMB has registered the 2,000,000 shares of common stock issuable upon exercise
of the option. Although we believe that the BPP Retail transactions are
probable, they might not close as scheduled or close at all, and its is possible
that the transactions may close with respect to just a portion of the properties
currently subject to the agreements. See "Risk Factors -- Failure to Consummate
the Transactions with BPP Retail and Burnham Pacific."
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RISK FACTORS
Before you participate in the plan and invest in AMB's common stock, you
should be aware that purchasing or owning AMB's common stock involves various
risks, including those described below. You should consider carefully these risk
factors together with all of the other information included in this prospectus
before you decide to purchase shares of AMB's common stock through the plan.
GENERAL REAL ESTATE RISKS
THERE ARE FACTORS OUTSIDE OF OUR CONTROL THAT AFFECT THE PERFORMANCE AND
VALUE OF OUR PROPERTIES
Real property investments are subject to varying degrees of risk. The
yields available from equity investments in real estate depend on the amount of
income earned and capital appreciation generated by the related properties as
well as the expenses incurred in connection with the properties. If our
properties do not generate income sufficient to meet operating expenses,
including debt service and capital expenditures, AMB's ability to pay
distributions to holders of its common stock could be adversely affected. Income
from, and the value of, our properties may be adversely affected by the general
economic climate, local conditions such as oversupply of industrial or retail
space or a reduction in demand for industrial or retail space, the
attractiveness of our properties to potential tenants, competition from other
properties, our ability to provide adequate maintenance and insurance and an
increase in operating costs. In addition, revenues from properties and real
estate values are also affected by factors such as the cost of compliance with
regulations, the potential for liability under applicable laws (including
changes in tax laws), interest rate levels and the availability of financing.
Our income would be adversely affected if a significant number of tenants were
unable to pay rent or if we were unable to rent our industrial or retail space
on favorable terms. Certain significant expenditures associated with an
investment in real estate (such as mortgage payments, real estate taxes and
maintenance costs) generally do not decline when circumstances cause a reduction
in income from the property.
WE MAY BE UNABLE TO RENEW LEASES OR RELET SPACE AS LEASES EXPIRE
We are subject to the risks that leases may not be renewed, space may not
be relet, or the terms of renewal or reletting (including the cost of required
renovations) may be less favorable than current lease terms. Leases on a total
of approximately 28.4% of the leased square footage of our properties as of
March 31, 1999 will expire on or prior to December 31, 2000, with leases on
10.7% of the leased square footage of our properties as of March 31, 1999
expiring during the nine months ending December 31, 1999. In addition, numerous
properties compete with our properties in attracting tenants to lease space,
particularly with respect to retail centers. The number of competitive
commercial properties in a particular area could have a material adverse effect
on our ability to lease space in our properties and on the rents that we are
able to charge. Our financial condition, results of operations, cash flow and
AMB's ability to pay distributions on, and the market price of, its common stock
could be adversely affected if we are unable to promptly relet or renew the
leases for all or a substantial portion of expiring leases, if the rental rates
upon renewal or reletting is significantly lower than expected, or if our
reserves for these purposes prove inadequate.
REAL ESTATE INVESTMENTS ARE ILLIQUID
Because real estate investments are relatively illiquid, our ability to
vary our portfolio promptly in response to economic or other conditions is
limited. The limitations in the Internal Revenue Code and related regulations on
a real estate investment trust holding property for sale may affect our ability
to sell properties without adversely affecting distributions to AMB's
stockholders. The relative illiquidity of our holdings, Internal Revenue Code
prohibitions and related regulations could impede our ability to respond to
adverse changes in the performance of our investments and could adversely affect
our financial condition, results of operations and cash flow and AMB's ability
to pay distributions on, and the market price of, its common stock.
A SIGNIFICANT NUMBER OF OUR PROPERTIES ARE LOCATED IN CALIFORNIA
Our properties located in California as of March 31, 1999 represented
approximately 21.3% of the aggregate square footage of our properties as of
March 31, 1999 and approximately 28.5% of our annualized
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base rent. Annualized base rent means the monthly contractual amount under
existing leases at March 31, 1999, multiplied by 12. This amount excludes
expense reimbursements and rental abatements. Our revenue from, and the value
of, our properties located in California may be affected by a number of factors,
including local real estate conditions (such as oversupply of or reduced demand
for commercial properties) and the local economic climate. Business layoffs,
downsizing, industry slowdowns, changing demographics and other factors may
adversely impact the local economic climate. A downturn in either the California
economy or in California real estate conditions could adversely affect our
financial condition, results of operations and cash flow and AMB's ability to
pay distributions on, and the market price of, its common stock. Certain of our
properties are also subject to possible loss from seismic activity. On June 15,
1999, we sold five of our properties located in California to BPP Retail. In the
event that the remaining transactions with BPP Retail (as discussed above under
"Prospectus Summary -- Recent Developments -- BPP Retail and Burnham Pacific
Transactions") are fully consummated, we will dispose of all but three of our
retail centers located in California and, thereafter, 20.9% of our properties
based on aggregate square footage and 28.3% of our properties based on our
annualized base rent will be located in California.
OUR PROPERTIES ARE CURRENTLY CONCENTRATED IN THE INDUSTRIAL AND RETAIL
SECTORS
Our properties are currently concentrated predominantly in the industrial
and retail commercial real estate sectors. However, in the event that the
disposition of retail properties to BPP Retail (as discussed above under
"Prospectus Summary -- Recent Developments -- BPP Retail and Burnham Pacific
Transactions") are fully consummated, our properties will be concentrated
predominately in the industrial real estate sector. Our concentration in certain
property types may expose us to the risk of economic downturns in these sectors
to a greater extent than if our portfolio also included other property types. In
the event that the sale of the retail properties referred to above are
consummated, our exposure to the risk of economic downturns in the industrial
real estate sector will be greater. As a result of such concentration, economic
downturns in these sectors could have an adverse effect on our financial
condition, results of operations and cash flow and AMB's ability to pay
distributions on, and the market price of, its common stock.
SOME POTENTIAL LOSSES ARE NOT COVERED BY INSURANCE
We carry comprehensive liability, fire, extended coverage and rental loss
insurance covering all of our properties, with policy specifications and insured
limits which we believe are adequate and appropriate under the circumstances
given relative risk of loss, the cost of such coverage and industry practice.
There are, however, certain losses that are not generally insured because it is
not economically feasible to insure against them, including losses due to riots
or acts of war. Certain losses such as losses due to floods or seismic activity
may be insured subject to certain limitations including large deductibles or
co-payments and policy limits. If an uninsured loss or a loss in excess of
insured limits occurs with respect to one or more of our properties, we could
lose the capital we invested in the properties, as well as the anticipated
future revenue from the properties and, in the case of debt which is with
recourse to us, we would remain obligated for any mortgage debt or other
financial obligations related to the properties. Moreover, as the general
partner of the operating partnership, AMB will generally be liable for all of
the operating partnership's unsatisfied obligations other than non-recourse
obligations. Any such liability could adversely affect our financial condition,
results of operations and cash flow and AMB's ability to pay distributions on,
and the market price of, its common stock.
A number of our properties are located in areas that are known to be
subject to earthquake activity, including California where, as of March 31,
1999, 154 industrial buildings aggregating 12.2 million rentable square feet
(representing 18.4% of our properties based on aggregate square footage and
20.6% based on annualized base rent) and 11 retail centers aggregating 1.9
million rentable square feet (representing 2.9% of our properties based on
aggregate square footage and 7.8% based on annualized base rent) are located. In
the event that all of the transactions with BPP Retail (as discussed above under
"Prospectus Summary -- Recent Developments -- BPP Retail and Burnham Pacific
Transactions") are fully consummated, we will dispose of all but three of our
retail centers located in California. We carry replacement cost earthquake
insurance on all of our properties located in areas historically subject to
seismic activity, subject to coverage limitations and deductibles which we
believe are commercially reasonable. This insurance coverage also applies to the
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properties managed by AMB Investment Management, Inc., with a single aggregate
policy limit and deductible applicable to those properties and our properties.
The operating partnership owns 100% of the non-voting preferred stock of AMB
Investment Management, Inc. See "-- AMB Investment Management, Inc. and
Headlands Realty Corporation." Through an annual analysis prepared by outside
consultants, we evaluate our earthquake insurance coverage in light of current
industry practice and determine the appropriate amount of earthquake insurance
to carry. We may incur material losses in excess of insurance proceeds and we
may not be able to continue to obtain insurance at commercially reasonable
rates.
WE ARE SUBJECT TO RISKS AND LIABILITIES IN CONNECTION WITH PROPERTIES OWNED
THROUGH JOINT VENTURES, LIMITED LIABILITY COMPANIES AND PARTNERSHIPS
As of March 31, 1999, we had ownership interests in 18 joint ventures,
limited liability companies or partnerships with third parties, as well as an
interest in one unconsolidated entity. As of March 31, 1999, we owned 21 of our
properties through these entities. We may make additional investments through
these ventures in the future and presently plan to do so with clients of AMB
Investment Management, Inc. and certain Development Alliance Partners(TM), who
share certain approval rights over major decisions. Partnership, limited
liability company or joint venture investments may involve risks such as the
following:
- our partners, co-members or joint venturers might become bankrupt (in
which event we and any other remaining general partners, members or joint
venturers would generally remain liable for the liabilities of the
partnership, limited liability company or joint venture);
- our partners, co-members or joint venturers might at any time have
economic or other business interests or goals which are inconsistent with
our business interests or goals;
- our partners, co-members or joint venturers may be in a position to take
action contrary to our instructions, requests, policies or objectives,
including our policy with respect to maintaining AMB's qualification as a
real estate investment trust; and
- agreements governing joint ventures, limited liability companies and
partnerships often contain restrictions on the transfer of a joint
venturer's, member's or partner's interest or "buy-sell" or other
provisions which may result in a purchase or sale of the interest at a
disadvantageous time or on disadvantageous terms.
We will, however, generally seek to maintain sufficient control of our
partnerships, limited liability companies and joint ventures to permit us to
achieve our business objectives. Our organizational documents do not limit the
amount of available funds that we may invest in partnerships, limited liability
companies or joint ventures. The occurrence of one or more of the events
described above could have an adverse effect on our financial condition, results
of operations and cash flow and AMB's ability to pay distributions on, and the
market price of, its common stock.
WE MAY BE UNABLE TO CONSUMMATE ACQUISITIONS ON ADVANTAGEOUS TERMS
We intend to continue to acquire industrial and, to a lesser extent,
certain value-added retail properties. Acquisitions of industrial and retail
properties entail risks that investments will fail to perform in accordance with
expectations. Estimates of the costs of improvements necessary for us to bring
an acquired property up to market standards may prove inaccurate. In addition,
there are general investment risks associated with any new real estate
investment. Further, we anticipate significant competition for attractive
investment opportunities from other major real estate investors with significant
capital including both publicly traded real estate investment trusts and private
institutional investment funds. We expect that future acquisitions will be
financed through a combination of borrowings under our credit facility, proceeds
from equity or debt offerings by AMB or the operating partnership (including
issuances of limited partnership units), and proceeds from the transactions
pending with BPP Retail (as discussed above under "Prospectus Summary -- Recent
Developments -- BPP Retail and Burnham Pacific Transactions"), which could have
an adverse effect on our cash flow. We may not be able to acquire additional
properties. Our inability to finance any future acquisitions on favorable terms
or the failure of acquisitions to conform with our expectations or investment
criteria, or our
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failure to timely reinvest the proceeds from the transactions with BPP Retail
could adversely affect our financial condition, results of operations and cash
flow and AMB's ability to pay distributions on, and the market price of, its
common stock.
WE MAY BE UNABLE TO COMPLETE RENOVATION AND DEVELOPMENT ON ADVANTAGEOUS
TERMS
The real estate development business, including the renovation and
rehabilitation of existing properties, involves significant risks. These risks
include the following:
- we may not be able to obtain financing on favorable terms for development
projects and we may not complete construction on schedule or within
budget, resulting in increased debt service expense and construction
costs and delays in leasing such properties and generating cash flow;
- we may not be able to obtain, or we may experience delays in obtaining,
all necessary zoning, land-use, building, occupancy and other required
governmental permits and authorizations;
- new or renovated properties may perform below anticipated levels,
producing cash flow below budgeted amounts;
- substantial renovation as well as new development activities, regardless
of whether or not they are ultimately successful, typically require a
substantial portion of management's time and attention which could divert
management's time from our day-to-day operations; and
- activities that we finance through construction loans involve the risk
that, upon completion of construction, we may not be able to obtain
permanent financing or we may not be able to obtain permanent financing
on advantageous terms.
These risks could have an adverse effect on our financial condition,
results of operations and cash flow and AMB's ability to pay distributions on,
and the market price of, its common stock.
WE COULD INCUR MORE DEBT
We operate with a policy of incurring debt, either directly or through our
subsidiaries, only if upon such incurrence our debt-to-total market
capitalization ratio would be approximately 45% or less. The aggregate amount of
indebtedness that we may incur under our policy varies directly with the
valuation of AMB's capital stock and the number of shares of capital stock
outstanding. Accordingly, we would be able to incur additional indebtedness
under our policy as a result of increases in the market price per share of AMB's
common stock or other outstanding classes of capital stock, and future issuance
of shares of AMB's capital stock. In spite of this policy, our organizational
documents do not contain any limitation on the amount of indebtedness that we
may incur. Accordingly, AMB's board of directors could alter or eliminate this
policy and would do so, for example, if it were necessary for AMB to continue to
qualify as a real estate investment trust. If we change this policy, we could
become more highly leveraged, resulting in an increase in debt service that
could adversely affect our financial condition, results of operations and cash
flow and AMB's ability to pay distributions on, and the market price of, its
common stock.
DEBT FINANCING
SCHEDULED DEBT PAYMENTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION
We are subject to risks normally associated with debt financing, including
the risks that cash flow will be insufficient to make distributions to AMB's
stockholders, that we will be unable to refinance existing indebtedness on our
properties (which in all cases will not have been fully amortized at maturity)
and that the terms of refinancing will not be as favorable as the terms of
existing indebtedness.
As of May 31, 1999, we had total debt outstanding of approximately $1.6
billion including:
- approximately $753.0 million of secured indebtedness (not including
unamortized debt premiums) with an average maturity of seven years and a
weighted average interest rate of 7.9%;
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- approximately $353.0 million outstanding under our unsecured $500 million
credit facility with a maturity date of November 2000 and a weighted
average interest rate of 6.53%; and
- $400.0 million aggregate principal amount of unsecured senior debt
securities with maturities in June 2008, 2015 and 2018 and a weighted
average interest rate of 7.18%.
In the event that the transactions with BPP Retail with respect to 25 of
our retail properties (as discussed above under "Prospectus Summary -- Recent
Developments -- BPP Retail and Burnham Pacific Transactions") are fully
consummated, we currently anticipate that we will repay approximately $60.9
million of secured indebtedness relating to the properties divested (including
approximately $5.3 million of prepayment penalties) and make payments under our
unsecured credit facility in the amount of approximately $236.9 million.
AMB is a guarantor of the operating partnership's obligations with respect
to the senior debt securities referenced above. If we are unable to refinance or
extend principal payments due at maturity or pay them with proceeds of other
capital transactions, we expect that our cash flow will not be sufficient in all
years to pay distributions to AMB's stockholders and to repay all such maturing
debt. Furthermore, if prevailing interest rates or other factors at the time of
refinancing (such as the reluctance of lenders to make commercial real estate
loans) result in higher interest rates upon refinancing, the interest expense
relating to that refinanced indebtedness would increase. This increased interest
expense would adversely affect our financial condition, results of operations
and cash flow and AMB's ability to pay distributions on, and the market price
of, its common stock. In addition, if we mortgage one or more of our properties
to secure payment of indebtedness and we are unable to meet mortgage payments,
the property could be foreclosed upon or transferred to the mortgagee with a
consequent loss of income and asset value. A foreclosure on one or more of our
properties could adversely affect our financial condition, results of operations
and cash flow and AMB's ability to pay distributions on, and the market price
of, its common stock.
RISING INTEREST RATES COULD ADVERSELY AFFECT OUR CASH FLOW
As of May 31, 1999, we had $353.0 million outstanding under our credit
facility. In addition, we may incur other variable rate indebtedness in the
future. Increases in interest rates on this indebtedness could increase our
interest expense, which would adversely affect our financial condition, results
of operations and cash flow and AMB's ability to pay distributions on, and the
market price of, its common stock. Accordingly, we may in the future engage in
transactions to limit our exposure to rising interest rates.
WE ARE DEPENDENT ON EXTERNAL SOURCES OF CAPITAL
In order to qualify as a real estate investment trust under the Internal
Revenue Code, AMB is required each year to distribute to its stockholders at
least 95% of its real estate investment trust taxable income (determined without
regard to the dividends-paid deduction and by excluding any net capital gain).
See "Material Federal Income Tax Consequences Associated with an Investment in
Common Stock -- Taxation of the Company -- Annual Distribution Requirements."
Because of this distribution requirement, we may not be able to fund all future
capital needs, including capital needs in connection with acquisitions, from
cash retained from operations. As a result, to fund capital needs, we rely on
third-party sources of capital, which we may not be able to obtain on favorable
terms or at all. Our access to third-party sources of capital depends upon a
number of factors, including general market conditions and the market's
perception of our growth potential and our current and potential future earnings
and cash distributions and the market price of the shares of AMB's capital
stock. Additional debt financing may substantially increase our leverage.
WE COULD DEFAULT ON CROSS-COLLATERALIZED AND CROSS-DEFAULTED DEBT
As of March 31, 1999, we had 19 non-recourse secured loans which are
cross-collateralized by five pools consisting of 22 properties. As of March 31,
1999, we had $248.1 million (not including unamortized debt premium) outstanding
on these loans. In the event that all of the transactions with BPP Retail (as
discussed above under "Prospectus Summary -- Recent Developments -- BPP Retail
and Burnham Pacific Transactions") are fully consummated, we currently
anticipate the repayment of 6 loans aggregating approximately
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$55.5 million, which are secured by 7 properties. If we default on any of these
loans, we will be required to repay the aggregate of all indebtedness, together
with applicable prepayment charges, to avoid foreclosure on all the
cross-collateralized properties within the applicable pool. Foreclosure on our
properties, or our inability to refinance our loans on favorable terms, could
adversely impact our financial condition, results of operations and cash flow
and AMB's ability to pay distributions on, and the market price of, its common
stock. In addition, our credit facilities and the senior debt securities of the
operating partnership contain certain cross-default provisions which are
triggered in the event that our other material indebtedness is in default. These
cross-default provisions may require us to repay or restructure the credit
facilities and the senior debt securities in addition to any mortgage or other
debt which is in default, which could adversely affect our financial condition,
results of operations and cash flow and AMB's ability to pay distributions on,
and the market price of, its common stock.
CONTINGENT OR UNKNOWN LIABILITIES COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION
Our predecessors have been in existence for varying lengths of time up to
15 years. At the time of our formation we acquired the assets of these entities
subject to all of their potential existing liabilities. There may be current
liabilities or future liabilities arising from prior activities that we are not
aware of and therefore are not disclosed in this prospectus. We assumed these
liabilities as the surviving entity in the various merger and contribution
transactions that occurred at the time of our formation. Existing liabilities
for indebtedness generally were taken into account in connection with the
allocation of the operating partnership's limited partnership units and/or
shares of AMB's common stock in the formation transactions, but no other
liabilities were taken into account for these purposes. We do not have recourse
against our predecessors or any of their respective stockholders or partners or
against any individual account investors with respect to any unknown
liabilities. Unknown liabilities might include the following:
- liabilities for clean-up or remediation of undisclosed environmental
conditions;
- claims of tenants, vendors or other persons dealing with our predecessors
prior to the formation transactions that had not been asserted prior to
the formation transactions;
- accrued but unpaid liabilities incurred in the ordinary course of
business;
- tax liabilities; and
- claims for indemnification by the officers and directors of our
predecessors and others indemnified by these entities.
Certain tenants may claim that the formation transactions gave rise to a
right to purchase the premises that they occupy. We do not believe any such
claims would be material. See "-- Government Regulations -- We Could Encounter
Costly Environmental Problems" below regarding the possibility of undisclosed
environmental conditions potentially affecting the value of our properties.
Undisclosed material liabilities in connection with the acquisition of
properties, entities and interests in properties or entities could adversely
affect our financial condition, results of operations and cash flow and AMB's
ability to pay distributions on, and the market price of, its common stock.
FAILURE TO CONSUMMATE THE TRANSACTIONS WITH BPP RETAIL AND BURNHAM PACIFIC
On March 9, 1999, the operating partnership signed a series of definitive
agreements with BPP Retail, a co-investment entity between Burnham Pacific and
the California Public Employees' Retirement System, pursuant to which, if fully
consummated, BPP Retail will acquire up to 28 retail shopping centers, totaling
approximately 5.1 million square feet, for an aggregate price of $663.4 million.
The sale of five of the properties is subject to the consent of our joint
venture partners. One of our joint venture partners who holds an interest in
three of the properties has indicated that it will not consent to the sale of
these properties at this time. As a result, the sale price with respect to the
25 remaining properties, totaling approximately 4.3 million square feet, is
approximately $560.4 million. We intend to dispose of these three properties or
our interests in the joint ventures through which we hold the properties.
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Pursuant to the agreements, BPP Retail will acquire the 25 centers in
separate transactions. Under the agreements, the operating partnership has the
right to extend the closing dates for a period of up to either 20 or 50 days.
The operating partnership has exercised this right with respect to the first
closing, which occurred on June 15, 1999. Pursuant to the first closing, BPP
Retail acquired nine retail shopping centers, totaling approximately 1.4 million
square feet, for an aggregate price of approximately $207.4 million. We intend
to use the proceeds from the first closing to pay approximately $2.7 million in
transaction expenses, to repay secured debt related to the properties of
approximately $30.1 million (including prepayment penalties of approximately
$3.3 million), to pay approximately $103.5 million in partial repayment of
amounts outstanding under our unsecured credit facility, for potential
acquisitions and for general corporate purposes. We currently expect the second
and third closings to occur on or about August 4, 1999 and December 1, 1999.
In addition, the operating partnership entered into a definitive agreement,
subject to a financing condition, with Burnham Pacific, pursuant to which, if
fully consummated, Burnham Pacific would acquire up to six additional retail
centers, totaling approximately 1.5 million square feet, for approximately
$284.4 million. On June 30, 1999, this agreement was terminated pursuant to its
terms as a result of Burnham Pacific's decision not to waive the financing
condition. We currently intend to dispose of these six retail properties, either
on an individual or portfolio basis.
Although none of the transactions has a discretionary due diligence period,
all of the transactions are subject to certain customary closing conditions,
which are generally applied on a property-by-property basis. Burnham Pacific has
announced that it has received and is reviewing a merger proposal. We do not
believe that the contractual obligations of BPP Retail with respect to the
purchase of the retail centers will be affected by any resulting merger. BPP
Retail has posted certain initial deposits aggregating $25 million on the
transactions, approximately $3.9 million of which was refunded in connection
with the three joint venture properties for which our joint venture partner's
consent was not obtained. BPP Retail's liability in the event of its default
under a definitive agreement is limited to its deposit. We intend to use the
proceeds of approximately $353.0 million from the disposition of the remaining
16 retail centers to BPP Retail in the second and third closings to pay
approximately $4.8 million in transaction expenses, to repay secured debt
related to the properties divested of approximately $30.8 million (including
prepayment penalties of approximately $2.0 million), to make payments under our
unsecured credit facility in the amount of approximately $133.4 million, for
potential acquisitions and for general corporate purposes. Although we believe
that the transactions with BPP Retail are probable, they might not close as
scheduled or close at all, and it is possible that the transactions may close
with respect to just a portion of the properties currently subject to the
agreements. In the event that one or more of the transactions fail to close, or
a closing is significantly delayed, net proceeds from divestitures of properties
will not be available to the same extent to fund our acquisitions and
developments. Any failure or delay in any of the closings may also make us
unable to repay certain of our indebtedness with the net proceeds as we
currently intend and could require us to borrow additional funds or seek other
forms of financing.
CONFLICTS OF INTEREST
SOME OF OUR EXECUTIVE OFFICERS ARE INVOLVED IN OTHER REAL ESTATE ACTIVITIES
AND INVESTMENTS
Some of our executive officers own interests in real estate-related
businesses and investments. These interests include minority ownership of
Institutional Housing Partners, a residential housing finance company, and
ownership of AMB Development, Inc. and AMB Development, L.P., developers which
own property that we believe is not suitable for ownership by us. AMB
Development, Inc. and AMB Development, L.P. have agreed not to initiate any new
development projects following AMB's initial public offering in November 1997.
These entities have also agreed that they will not make any further investments
in industrial or retail properties other than those currently under development
at the time of AMB's initial public offering. AMB Institutional Housing
Partners, AMB Development, Inc. and AMB Development, L.P. continue to use the
name "AMB" pursuant to royalty-free license arrangements. The continued
involvement in other real estate-related activities by some of our executive
officers and directors could divert management's attention from our day-to-day
operations. Most of our executive officers have entered into non-competition
agreements with us pursuant to which they have agreed not to engage in any
activities, directly or indirectly, in respect of commercial real
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estate, and not to make any investment in respect of industrial or retail real
estate, other than through ownership of not more than 5% of the outstanding
shares of a public company engaged in such activities or through the existing
investments referred to in this prospectus. State law may limit our ability to
enforce these agreements.
We could also, in the future, subject to the unanimous approval of the
disinterested members of the board of directors with respect to such
transaction, acquire property from executive officers, enter into leases with
executive officers, and/or engage in other related activities in which the
interests pursued by the executive officers may not be in the best interests of
AMB's stockholders.
CERTAIN OF OUR EXECUTIVE OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF
INTEREST WITH US IN CONNECTION WITH OTHER PROPERTIES THAT THEY OWN OR
CONTROL
As of May 31, 1999, AMB Development, L.P. owns interests in 11 retail
development projects in the U.S., 10 of which consist of a single free-standing
Walgreens drugstore and one of which consists of a free-standing Walgreens
drugstore, a ground lease to McDonald's and a 14,000 square foot retail center.
In addition, Messrs. Abbey, Moghadam and Burke, each a founder and director, own
less than 1% interests in two partnerships which own office buildings in various
markets; these interests have negligible value. Luis A. Belmonte, an executive
officer, owns less than a 10% interest, representing an estimated value of
$75,000, in a limited partnership which owns an office building located in
Oakland, California.
In addition, several of our executive officers individually own:
- less than 1% interests in the stocks of certain publicly-traded real
estate investment trusts;
- certain interests in and rights to developed and undeveloped real
property located outside the United States;
- certain passive interests, that we do not believe are material, in real
estate businesses in which such persons were previously employed; and
- certain other de minimis holdings in equity securities of real estate
companies.
Thomas W. Tusher, a member of AMB's board of directors, is a limited
partner in a partnership in which Messrs. Abbey, Moghadam and Burke are general
partners and which owns a 75% interest in an office building. Mr. Tusher owns a
20% interest in the partnership, valued as of May 31, 1999 at approximately $1.2
million. Messrs. Abbey, Moghadam and Burke each have an approximately 26.7%
interest in the partnership, each valued as of May 31, 1999 at approximately
$1.6 million.
We believe that the properties and activities set forth above generally do
not directly compete with any of our properties. However, it is possible that a
property in which an executive officer or director, or an affiliate of an
executive officer or director, has an interest may compete with us in the future
if we were to invest in a property similar in type and in close proximity to
that property. In addition, the continued involvement by our executive officers
and directors in these properties could divert management's attention from our
day-to-day operations. Our policy prohibits us from acquiring any properties
from our executive officers or their affiliates without the approval of the
disinterested members of AMB's board of directors with respect to that
transaction.
AMB'S ROLE AS GENERAL PARTNER OF THE OPERATING PARTNERSHIP MAY CONFLICT WITH
THE INTERESTS OF STOCKHOLDERS
As the general partner of the operating partnership, AMB has fiduciary
obligations to the operating partnership's limited partners, the discharge of
which may conflict with the interests of AMB's stockholders. In addition, those
persons holding limited partnership units will have the right to vote as a class
on certain amendments to the partnership agreement of the operating partnership
and individually to approve certain amendments that would adversely affect their
rights. The limited partners may exercise these voting rights in a manner that
conflicts with the interests of AMB's stockholders. In addition, under the terms
of the operating partnership's partnership agreement, holders of limited
partnership units will have certain approval rights with
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respect to certain transactions that affect all stockholders but which they may
not exercise in a manner which reflects the interests of all stockholders.
AMB'S DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT STOCKHOLDERS COULD ACT
IN A MANNER THAT IS NOT IN THE BEST INTEREST OF ALL STOCKHOLDERS
As of June 21, 1999, AMB's three largest stockholders, Cohen & Steers
Capital Management, Inc. (with respect to various client accounts for which
Cohen & Steers Capital Management, Inc. serves as investment advisor), Southern
Company Services, Inc. and Ameritech Pension Trust beneficially owned
approximately 20.2% of AMB's outstanding common stock. In addition, our
executive officers and directors beneficially owned approximately 5.5% of AMB's
outstanding common stock as of the same date, and will have influence on our
management and operation and, as stockholders, will have influence on the
outcome of any matters submitted to a vote of AMB's stockholders. This influence
might be exercised in a manner that is inconsistent with the interests of other
stockholders. Although there is no understanding or arrangement for these
directors, officers and stockholders and their affiliates to act in concert,
these parties would be in a position to exercise significant influence over our
affairs if they choose to do so.
WE COULD SUFFER LOSSES IF WE FAIL TO ENFORCE THE TERMS OF CERTAIN AGREEMENTS
As holders of shares of AMB's common stock and, potentially, performance
units, certain of AMB's directors and officers could have a conflict of interest
with respect to their obligations as directors and officers to vigorously
enforce the terms of certain of the agreements relating to our formation
transactions. The potential failure to enforce the material terms of those
agreements could result in a monetary loss to us, which loss could have a
material adverse effect on our financial condition, results of operations and
cash flow and AMB's ability to pay distributions on, and the market price of,
its common stock.
OWNERSHIP OF COMMON STOCK
LIMITATIONS IN AMB'S CHARTER AND BYLAWS COULD PREVENT A CHANGE IN CONTROL
Certain provisions of AMB's charter and bylaws may delay, defer or prevent
a change in control or other transaction that could provide the holders of AMB's
common stock with the opportunity to realize a premium over the then-prevailing
market price for the common stock. To maintain AMB's qualification as a real
estate investment trust for federal income tax purposes, not more than 50% in
value of AMB's outstanding stock may be owned, actually or constructively, by
five or fewer individuals (as defined in the Internal Revenue Code to include
certain entities) during the last half of a taxable year after the first taxable
year for which a real estate investment trust election is made. See "Material
Federal Income Tax Consequences Associated with an Investment in Common
Stock -- Taxation of the Company -- Requirements for Qualification as a REIT."
Furthermore, after the first taxable year for which a real estate investment
trust election is made, AMB's common stock must be held by a minimum of 100
persons for at least 335 days of a 12-month taxable year (or a proportionate
part of a short tax year). In addition, if AMB, or an owner of 10% or more of
AMB's stock, actually or constructively owns 10% or more of one of AMB's tenants
(or a tenant of any partnership in which AMB is a partner), the rent received by
AMB (either directly or through any such partnership) from that tenant will not
be qualifying income for purposes of the real estate investment trust gross
income tests of the Internal Revenue Code. To facilitate maintenance of AMB's
qualification as a real estate investment trust for federal income tax purposes,
AMB will prohibit the ownership, actually or by virtue of the constructive
ownership provisions of the Internal Revenue Code, by any single person of more
than 9.8% (by value or number of shares, whichever is more restrictive) of the
issued and outstanding shares of AMB's common stock and more than 9.8% (by value
or number of shares, whichever is more restrictive) of the issued and
outstanding shares of AMB's Series A Preferred Stock, and AMB will also prohibit
the ownership, actually or constructively, of any shares of AMB's Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock by any
single person so that no such person, taking into account all of AMB's stock so
owned by such person, may own in excess of 9.8% of AMB's issued and outstanding
capital stock. We refer to this limitation as the "ownership limit." Shares
acquired or held in violation of the ownership limit will be transferred to a
trust for the benefit of a designated charitable beneficiary. Any person who
acquires shares in
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violation of the ownership limit will not be entitled to any distributions on
the shares or be entitled to vote the shares or receive any proceeds from the
subsequent sale of the shares in excess of the lesser of the price paid for the
shares or the amount realized from the sale. A transfer of shares in violation
of the above limits may be void under certain circumstances. See "Restrictions
on Ownership and Transfer of Capital Stock." The ownership limit may have the
effect of delaying, deferring or preventing a change in control and, therefore,
could adversely affect AMB's stockholders' ability to realize a premium over the
then-prevailing market price for the shares of AMB's common stock in connection
with such transaction. The board of directors has waived the ownership limit
applicable to AMB's common stock with respect to Ameritech Pension Trust,
allowing it to own up to 14.9% of AMB's common stock and, under some
circumstances, allowing it to own up to 19.6%. However, AMB conditioned this
waiver upon the receipt of undertakings and representations from Ameritech
Pension Trust which AMB believed were reasonably necessary in order to conclude
that the waiver would not cause AMB to fail to qualify as a real estate
investment trust.
AMB's charter authorizes AMB to issue additional shares of common stock and
Series A Preferred Stock and to issue Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and one or more other series or
classes of preferred stock and to establish the preferences, rights and other
terms of any series or class of preferred stock that AMB issues. See
"Description of Capital Stock." Although AMB's board of directors has no
intention to do so at the present time, it could establish a series or class of
preferred stock that could delay, defer or prevent a transaction or a change in
control that might involve a premium price for the common stock or otherwise be
in the best interests of AMB's stockholders.
AMB's charter and bylaws and Maryland law also contain other provisions
that may delay, defer or prevent a transaction, including a change in control,
that might involve payment of a premium price for the common stock or otherwise
be in the best interests of AMB's stockholders. Those provisions include the
following:
- the provision in the charter that directors may be removed only for cause
and only upon a two-thirds vote of stockholders, together with bylaw
provisions authorizing the board of directors to fill vacant
directorships;
- the provision in the charter requiring a two-thirds vote of stockholders
for any amendment of the charter;
- the requirement in the bylaws that the request of the holders of 50% or
more of AMB's common stock is necessary for stockholders to call a
special meeting;
- the requirement of Maryland law that stockholders may only take action by
written consent with the unanimous approval of all stockholders entitled
to vote on the matter in question; and
- the requirement in the bylaws of advance notice by stockholders for the
nomination of directors or proposal of business to be considered at a
meeting of stockholders.
These provisions may impede various actions by stockholders without
approval of AMB's board of directors, which in turn may delay, defer or prevent
a transaction involving a change of control.
WE COULD CHANGE OUR INVESTMENT AND FINANCING POLICIES WITHOUT A VOTE OF
STOCKHOLDERS
Subject to our fundamental investment policy to maintain AMB's
qualification as a real estate investment trust (unless a change is approved by
AMB's board of directors under certain circumstances), AMB's board of directors
will determine our investment and financing policies, our growth strategy and
our debt, capitalization, distribution and operating policies. Although the
board of directors has no present intention to revise or amend these strategies
and policies, the board of directors may do so at any time without a vote of
stockholders. Accordingly, stockholders will have no control over changes in our
strategies and policies (other than through the election of directors), and any
such changes may not serve the interests of all stockholders and could adversely
affect our financial condition or results of operations, including our ability
to distribute cash to stockholders.
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IF WE ISSUE ADDITIONAL SECURITIES, THE INVESTMENT OF EXISTING STOCKHOLDERS
WILL BE DILUTED
We have authority to issue shares of common stock or other equity or debt
securities in exchange for property or otherwise. Similarly, we may cause the
operating partnership to issue additional limited partnership units in exchange
for property or otherwise. Existing stockholders will have no preemptive right
to acquire any additional securities issued by us or the operating partnership
and any issuance of additional equity securities could result in dilution of an
existing stockholder's investment.
THE LARGE NUMBER OF SHARES AVAILABLE FOR FUTURE SALE COULD ADVERSELY AFFECT
THE MARKET PRICE OF AMB'S COMMON STOCK
We can not predict the effect, if any, that future sales of shares of AMB's
common stock, or the availability of shares of AMB's common stock for future
sale, will have on its market price. Sales of a substantial number of shares of
AMB's common stock in the public market (or upon exchange of limited partnership
units in the operating partnership) or the perception that such sales (or
exchanges) might occur could adversely affect the market price of AMB's common
stock.
All shares of common stock issuable upon the redemption of limited
partnership units in the operating partnership will be deemed to be "restricted
securities" within the meaning of Rule 144 under the Securities Act and may not
be transferred unless registered under the Securities Act or an exemption from
registration is available, including any exemption from registration provided
under Rule 144. In general, upon satisfaction of certain conditions, Rule 144
permits the holder to sell certain amounts of restricted securities one year
following the date of acquisition of the restricted securities from us and,
after two years, permits unlimited sales by persons unaffiliated with us. On
November 26, 1998, 74,710,153 shares of common stock issued in our formation
transactions became eligible for sale pursuant to Rule 144, subject to the
volume limitations and other conditions imposed by Rule 144. Commencing
generally on the first anniversary of the date of acquisition of common limited
partnership units (or such other date agreed to by the operating partnership and
the holders of the units), the operating partnership may redeem common limited
partnership units at the request of the holders for cash (based on the fair
market value of an equivalent number of shares of common stock at the time of
redemption) or, at AMB's option, exchange the common limited partnership units
for an equal number of shares of common stock of AMB, subject to certain
antidilution adjustments. The operating partnership has issued and outstanding
4,578,942 common limited partnership units to date. As of March 31, 1999, AMB
has reserved 8,792,530 shares of common stock for issuance under its Stock
Option and Incentive Plan (not including shares that AMB has already issued)
and, as of March 31, 1999, has granted to certain directors, officers and
employees options to purchase 4,368,320 shares of common stock (not including
forfeitures and 8,750 shares that AMB has issued pursuant to the exercise of
options). To date, AMB has granted 148,720 restricted shares of common stock,
932 of which have been forfeited. In addition, AMB may issue additional shares
of common stock and the operating partnership may issue additional limited
partnership units in connection with the acquisition of properties. In
connection with the issuance of common limited partnership units to other
transferors of properties, and in connection with the issuance of any
performance units, AMB has agreed to file registration statements covering the
issuance of shares of common stock upon the exchange of the common limited
partnership units. AMB has also filed a registration statement with respect to
the shares of common stock issuable under its Stock Option and Incentive Plan.
These registration statements and registration rights generally allow shares of
common stock covered thereby, including shares of common stock issuable upon
exchange of limited partnership units, including performance units, or the
exercise of options or restricted shares of common stock, to be transferred or
resold without restriction under the Securities Act. AMB may also agree to
provide registration rights to any other person who may become an owner of the
operating partnership's limited partnership units.
Future sales of the shares of common stock described above could adversely
affect the market price of AMB's common stock. The existence of the operating
partnership's limited partnership units, options and shares of common stock
reserved for issuance upon exchange of limited partnership units, and the
exercise of options and registration rights referred to above, also may
adversely affect the terms upon which we are able to obtain additional capital
through the sale of equity securities.
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VARIOUS MARKET CONDITIONS AFFECT THE PRICE OF AMB'S COMMON STOCK
As with other publicly-traded equity securities, the market price of AMB's
common stock will depend upon various market conditions, which may change from
time to time. Among the market conditions that may affect the market price of
AMB's common stock are the following:
- the extent of investor interest in us;
- the general reputation of real estate investment trusts and the
attractiveness of their equity securities in comparison to other equity
securities (including securities issued by other real estate-based
companies);
- our financial performance; and
- general stock and bond market conditions, including changes in interest
rates on fixed income securities which may lead prospective purchasers of
AMB's common stock to demand a higher annual yield from future
distributions. Such an increase in the required yield from distributions
may adversely affect the market price of AMB's common stock.
Other factors such as governmental regulatory action and changes in tax
laws could also have a significant impact on the future market price of AMB's
common stock.
EARNINGS AND CASH DISTRIBUTIONS, ASSET VALUE AND MARKET INTEREST RATES
AFFECT THE PRICE OF AMB'S COMMON STOCK
The market value of the equity securities of a real estate investment trust
generally is based primarily upon the market's perception of the real estate
investment trust's growth potential and its current and potential future
earnings and cash distributions, and is based secondarily upon the real estate
market value of the underlying assets. For that reason, shares of AMB's common
stock may trade at prices that are higher or lower than the net asset value per
share. To the extent AMB retains operating cash flow for investment purposes,
working capital reserves or other purposes, these retained funds, while
increasing the value of our underlying assets, may not correspondingly increase
the market price of AMB's common stock. AMB's failure to meet the market's
expectation with regard to future earnings and cash distributions likely would
adversely affect the market price of AMB's common stock. Another factor that may
influence the price of AMB's common stock will be the distribution yield on the
common stock (as a percentage of the price of the common stock) relative to
market interest rates. An increase in market interest rates might lead
prospective purchasers of AMB's common stock to expect a higher distribution
yield, which would adversely affect the market price of the common stock. If the
market price of AMB's common stock declines significantly, we might breach
certain covenants with respect to debt obligations, which might adversely affect
our liquidity and ability to make future acquisitions and AMB's ability to pay
distributions to its stockholders.
WE COULD INVEST IN REAL ESTATE MORTGAGES
We may invest in mortgages, and may do so as a strategy for ultimately
acquiring the underlying property. In general, investments in mortgages include
the risks that borrowers may not be able to make debt service payments or pay
principal when due, that the value of the mortgaged property may be less than
the principal amount of the mortgage note secured by the property and that
interest rates payable on the mortgages may be lower than our cost of funds to
acquire these mortgages. In any of these events, our funds from operations and
AMB's ability to make distributions on, and the market price of, its common
stock could be adversely affected. "Funds from operations" means income (loss)
from operations before disposal of real estate properties, minority interests
and extraordinary items plus depreciation and amortization, excluding
depreciation of furniture, fixtures and equipment less funds from operations
attributable to minority interests in consolidated joint ventures which are not
convertible into shares of common stock.
GOVERNMENT REGULATIONS
Many laws and governmental regulations are applicable to our properties and
changes in these laws and regulations, or their interpretation by agencies and
the courts, occur frequently.
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COSTS OF COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
Under the Americans with Disabilities Act, places of public accommodation
must meet certain federal requirements related to access and use by disabled
persons. Compliance with the Americans with Disabilities Act might require us to
remove structural barriers to handicapped access in certain public areas where
such removal is "readily achievable." If we fail to comply with the Americans
with Disabilities Act, we might be required to pay fines to the government or
damages to private litigants. The impact of application of the Americans with
Disabilities Act to our properties, including the extent and timing of required
renovations, is uncertain. If we are required to make unanticipated expenditures
to comply with the Americans with Disabilities Act, our cash flow and the
amounts available for distributions to AMB's stockholders may be adversely
affected.
WE COULD ENCOUNTER COSTLY ENVIRONMENTAL PROBLEMS
Federal, state and local laws and regulations relating to the protection of
the environment impose liability on a current or previous owner or operator of
real estate for contamination resulting from the presence or discharge of
hazardous or toxic substances or petroleum products at the property. A current
or previous owner may be required to investigate and clean up contamination at
or migrating from a site. These laws typically impose liability and clean-up
responsibility without regard to whether the owner or operator knew of or caused
the presence of the contaminants. Even if more than one person may have been
responsible for the contamination, each person covered by the environmental laws
may be held responsible for all of the clean-up costs incurred. In addition,
third parties may sue the owner or operator of a site for damages based on
personal injury, property damage and/or other costs, including investigation and
clean-up costs, resulting from environmental contamination present at or
emanating from that site.
Environmental laws also govern the presence, maintenance and removal of
asbestos. These laws require that owners or operators of buildings containing
asbestos properly manage and maintain the asbestos, that they adequately inform
or train those who may come into contact with asbestos and that they undertake
special precautions, including removal or other abatement in the event that
asbestos is disturbed during renovation or demolition of a building. These laws
may impose fines and penalties on building owners or operators for failure to
comply with these requirements and may allow third parties to seek recovery from
owners or operators for personal injury associated with exposure to asbestos
fibers. Some of our properties may contain asbestos-containing building
materials.
Some of our properties are leased or have been leased, in part, to owners
and operators of dry cleaners that operate on-site dry cleaning plants, to
owners and operators of gas stations or to owners or operators of other
businesses that use, store or otherwise handle petroleum products or other
hazardous or toxic substances. Some of these properties contain, or may have
contained, underground storage tanks for the storage of petroleum products and
other hazardous or toxic substances. These operations create a potential for the
release of petroleum products or other hazardous or toxic substances. Some of
our properties are adjacent to or near other properties that have contained or
currently contain underground storage tanks used to store petroleum products or
other hazardous or toxic substances. In addition, certain of our properties are
on, or are adjacent to or near other properties upon which others, including
former owners or tenants of the properties, have engaged or may in the future
engage in activities that may release petroleum products or other hazardous or
toxic substances. From time to time, we may acquire properties, or interests in
properties, with known adverse environmental conditions where we believe that
the environmental liabilities associated with these conditions are quantifiable
and the acquisition will yield a superior risk-adjusted return. In connection
with certain of the properties under contract for disposition to BPP Retail and
Burnham Pacific, we have agreed to remain responsible for, and to bear the cost
of, remediating or monitoring certain environmental conditions on the properties
following the applicable closing dates.
All of our properties were subject to a Phase I or similar environmental
assessments by independent environmental consultants at the time of acquisition
or shortly after acquisition. Phase I assessments are intended to discover and
evaluate information regarding the environmental condition of the surveyed
property and surrounding properties. Phase I assessments generally include an
historical review, a public records
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review, an investigation of the surveyed site and surrounding properties, and
preparation and issuance of a written report, but do not include soil sampling
or subsurface investigations and typically do not include an asbestos survey. We
may perform additional Phase II testing if recommended by the independent
environmental consultant. Phase II testing may include the collection and
laboratory analysis of soil and groundwater samples, completion of surveys for
asbestos-containing building materials, and any other testing that the
consultant considers prudent in order to test for the presence of hazardous
materials. Some of the environmental assessments of our properties do not
contain a comprehensive review of the past uses of the properties and/or the
surrounding properties.
None of the environmental assessments of our properties has revealed any
environmental liability that we believe would have a material adverse effect on
our financial condition or results of operations taken as a whole, and we are
not aware of any such material environmental liability. Nonetheless, it is
possible that the assessments do not reveal all environmental liabilities and
that there are material environmental liabilities of which we are unaware or
that known environmental conditions may give rise to liabilities that are
materially greater than anticipated. Moreover, future laws, ordinances or
regulations may impose material environmental liability and the current
environmental condition of our properties may be affected by tenants, by the
condition of land, by operations in the vicinity of the properties (such as
releases from underground storage tanks), or by third parties unrelated to us.
If the costs of compliance with environmental laws and regulations now existing
or adopted in the future exceed our budgets for these items, our financial
condition, results of operations and cash flow and AMB's ability to pay
distributions on, and the market price of, its common stock could be adversely
affected.
OUR FINANCIAL CONDITION COULD BE ADVERSELY AFFECTED IF WE FAIL TO COMPLY
WITH OTHER REGULATIONS
Our properties are also subject to various federal, state and local
regulatory requirements such as state and local fire and life safety
requirements. If we fail to comply with these requirements, we might incur fines
by governmental authorities or be required to pay awards of damages to private
litigants. We believe that our properties are currently in substantial
compliance with all such regulatory requirements. However, these requirements
may change or new requirements may be imposed which could require significant
unanticipated expenditures by us. Any such unanticipated expenditures could have
an adverse effect on our financial condition, results of operations and cash
flow and AMB's ability to pay distributions on, and the market price of, its
common stock.
FEDERAL INCOME TAX RISKS
AMB'S FAILURE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST WOULD HAVE
SERIOUS ADVERSE CONSEQUENCES TO STOCKHOLDERS
AMB intends to operate so as to qualify as a real estate investment trust
under the Internal Revenue Code. AMB believes that it has been organized and has
operated in a manner which would allow it to qualify as a real estate investment
trust under the Internal Revenue Code beginning with its taxable year ended
December 31, 1997. However, it is possible that AMB has been organized or has
operated in a manner which would not allow it to qualify as a real estate
investment trust, or that AMB's future operations could cause it to fail to
qualify. Qualification as a real estate investment trust requires AMB to satisfy
numerous requirements (some on an annual and quarterly basis) established under
highly technical and complex Internal Revenue Code provisions for which there
are only limited judicial and administrative interpretations, and involves the
determination of various factual matters and circumstances not entirely within
AMB's control. For example, in order to qualify as a real estate investment
trust, at least 95% of AMB's gross income in any year must be derived from
qualifying sources, AMB must pay dividends to stockholders aggregating annually
at least 95% of its real estate investment trust taxable income (determined
without regard to the dividends paid deduction and by excluding capital gains)
and AMB must satisfy specified asset tests on a quarterly basis. See "Material
Federal Income Tax Consequences Associated with an Investment in Common
Stock -- Taxation of the Company -- Asset Tests." These provisions and the
applicable treasury regulations are more complicated in our case because AMB
holds its assets in partnership form. Legislation, new regulations,
administrative
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interpretations or court decisions could significantly change the tax laws with
respect to qualification as a real estate investment trust or the federal income
tax consequences of such qualification. However, AMB is not aware of any pending
tax legislation that would adversely affect its ability to operate as a real
estate investment trust.
If AMB fails to qualify as a real estate investment trust in any taxable
year, it will be subject to federal income tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates.
Unless AMB is entitled to relief under certain statutory provisions, it would be
disqualified from treatment as a real estate investment trust for the four
taxable years following the year during which it lost qualification. If AMB
loses its real estate investment trust status, its net earnings available for
investment or distribution to stockholders would be significantly reduced for
each of the years involved. In addition, AMB would no longer be required to make
distributions to stockholders. See "Material Federal Income Tax Consequences
Associated with an Investment in Common Stock -- Failure to Qualify."
AMB PAYS SOME TAXES
Even if AMB qualifies as a real estate investment trust, it will be subject
to certain federal, state and local taxes on its income and property. In
addition, the net taxable income, if any, from the activities conducted through
AMB Investment Management, Inc. and Headlands Realty Corporation (which we
discuss below under "-- AMB Investment Management, Inc. and Headlands Realty
Corporation") will be subject to federal and state income tax. See "Material
Federal Income Tax Consequences Associated with an Investment in Common
Stock -- Other Tax Consequences."
CERTAIN PROPERTY TRANSFERS MAY GENERATE PROHIBITED TRANSACTION INCOME
From time to time, we may transfer or otherwise dispose of some of our
properties. Under the Internal Revenue Code, any gain resulting from transfers
of properties that are held as inventory or primarily for sale to customers in
the ordinary course of business is treated as income from a prohibited
transaction that is subject to a 100% penalty tax. Since we acquire properties
for investment purposes, we believe that any transfer or disposal of property by
us would not be deemed by the Internal Revenue Service to be a prohibited
transaction with any resulting gain allocable to AMB being subject to a 100%
penalty tax. However, whether property is held for investment purposes is a
question of fact that depends on all the facts and circumstances surrounding the
particular transaction and the Internal Revenue Service may contend that certain
transfers or disposals of properties by us (including possibly some or all of
the properties that are subject to the agreements with BPP Retail) are
prohibited transactions. While we believe that the Internal Revenue Service
would not prevail in any such dispute, any adverse finding by the Internal
Revenue Service that a transfer or disposition of property constituted a
prohibited transaction would subject AMB to a 100% penalty tax on any gain
allocable to AMB from the prohibited transaction. In addition, any income from a
prohibited transaction may adversely affect AMB's ability to satisfy the income
tests for qualifications as a real estate investment trust for federal income
tax purposes.
WE ARE DEPENDENT ON OUR KEY PERSONNEL
We depend on the efforts of AMB's executive officers. While we believe that
we could find suitable replacements for these key personnel, the loss of their
services or the limitation of their availability could adversely affect our
financial condition, results of operations and cash flow and AMB's ability to
pay distributions on, and the market price of, its common stock. We do not have
employment agreements with any of our executive officers.
WE MAY BE UNABLE TO MANAGE OUR GROWTH
Our business has grown rapidly and continues to grow through property
acquisitions. If we fail to effectively manage our growth, our financial
condition, results of operations and cash flow and AMB's ability to pay
distributions on, and the market price of, its common stock could be adversely
affected.
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AMB INVESTMENT MANAGEMENT, INC. AND HEADLANDS REALTY CORPORATION
WE DO NOT CONTROL THE ACTIVITIES OF AMB INVESTMENT MANAGEMENT, INC. AND
HEADLANDS REALTY CORPORATION
The operating partnership owns 100% of the non-voting preferred stock of
AMB Investment Management, Inc. and Headlands Realty Corporation (representing
approximately 95% of the economic interest in each entity). Certain of AMB's
current and former executive officers and an officer of AMB Investment
Management, Inc. own all of the outstanding voting common stock of AMB
Investment Management, Inc. (representing approximately 5% of the economic
interest in AMB Investment Management, Inc.). Certain of AMB's executive
officers and an officer of Headlands Realty Corporation own all of the
outstanding voting common stock of Headlands Realty Corporation (representing
approximately 5% of the economic interest in Headlands Realty Corporation). The
ownership structure of AMB Investment Management, Inc. and Headlands Realty
Corporation permits us to share in the income of those corporations while
allowing AMB to maintain its status as a real estate investment trust. We
receive substantially all of the economic benefit of the businesses carried on
by AMB Investment Management, Inc. and Headlands Realty Corporation through the
operating partnership's right to receive dividends. However, we are not able to
elect the directors or officers of AMB Investment Management, Inc. and Headlands
Realty Corporation and, as a result, we do not have the ability to influence
their operation or to require that their boards of directors declare and pay
cash dividends on the non-voting stock of AMB Investment Management, Inc. and
Headlands Realty Corporation held by the operating partnership. The boards of
directors and management of AMB Investment Management, Inc. and Headlands Realty
Corporation might implement business policies or decisions that would not have
been implemented by persons controlled by us and that may be adverse to the
interests of AMB's stockholders or that may adversely impact our financial
condition, results of operations and cash flow and AMB's ability to pay
distributions on, and the market price of, its common stock. In addition, AMB
Investment Management, Inc. and Headlands Realty Corporation are subject to tax
on their income, reducing their cash available for distribution to the operating
partnership.
AMB INVESTMENT MANAGEMENT, INC. MAY NOT BE ABLE TO GENERATE SUFFICIENT FEES
Fees earned by AMB Investment Management, Inc. depend on various factors
affecting the ability to attract and retain investment management clients and
the overall returns achieved on managed assets. These factors are beyond our
control. AMB Investment Management, Inc.'s failure to attract investment
management clients or achieve sufficient overall returns on managed assets could
reduce its ability to make distributions on the stock owned by the operating
partnership and could also limit co-investment opportunities to the operating
partnership. This would limit the operating partnership's ability to generate
rental revenues from such co-investments and use the co-investment program as a
source to finance property acquisitions and leverage acquisition opportunities.
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THE PLAN
The following questions and answers explain the plan, as in effect
beginning July 9, 1999, a copy of which is filed as an exhibit to the
registration statement which contains this prospectus and which was filed with
the SEC with respect to the shares of common stock to be sold under the plan. We
encourage you to read and consider the information contained in the plan and in
the documents identified in the sections entitled "Incorporation of Certain
Documents by Reference" and "Where You Can Find Additional Information."
PURPOSE.
1. What is the purpose of the plan?
The plan provides our stockholders and other investors with a convenient
and economical method to purchase shares of our common stock and to reinvest all
or a portion of their cash dividends in additional shares of our common stock.
In addition, the plan provides us with a means of raising additional capital to
continue our real estate, acquisition, development and investment activities and
for general corporate purposes.
OPTIONS UNDER THE PLAN.
2. What options are available under the plan?
You may participate in the plan even if you are not already one of our
stockholders. Under the plan you may automatically reinvest cash dividends on
all or a portion of your shares of common stock in additional shares of our
common stock. Even if you do not reinvest dividends, if you may make optional
cash purchases of common stock, subject to a minimum investment of $500 and a
maximum investment of $5,000 during any calendar month. You may be able to
purchase more than $5,000 during a calendar month only with our written consent
by submitting a request for waiver.
BENEFITS AND DISADVANTAGES OF THE PLAN.
3. What are the benefits and disadvantages of the plan to me?
BENEFITS OF THE PLAN.
- The plan provides you the opportunity to automatically reinvest cash
dividends on all or a portion of your common stock in additional shares
of common stock.
- In addition to reinvestment of dividends, you may purchase additional
shares of common stock pursuant to optional cash purchases of not less
than $500 and not more than $5,000 during any calendar month. Optional
cash purchases may not be made more frequently than at monthly intervals.
You may make optional cash purchases even if dividends on your shares are
not being reinvested under the plan.
- You will not be charged trading fees or brokerage commissions on
previously unissued shares of common stock. If we direct the agent to
purchase shares of common stock with reinvested dividends and to make
optional cash purchases under the DSPP or WDP in the open market or in
privately negotiated transactions instead of from previously unissued
shares, we will pass on to you and other participants the applicable
trading or brokerage fees or commissions on a pro rata basis based on the
number of purchased shares allocated to you and to each other
participant.
- You may fully invest dividends and any optional cash purchases because
the plan permits fractional shares to be credited to your account. We
will reinvest dividends on whole and on fractional shares in additional
shares which will be credited to your account.
- You may direct the agent to transfer, at any time and at no cost to you,
all or a portion of your shares in the plan to a plan account for another
person.
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- You will avoid the need for safekeeping of certificates for shares of
common stock credited to your plan account and may submit to the agent
for safekeeping certificates you hold that are registered in your name.
- You or other book entry holders that are registered holders may direct
the agent to sell or transfer all or a portion of your shares held in the
plan or in book entry.
- You will receive periodic statements reflecting all current activity in
your plan account, including purchases, sales and latest balances, which
will simplify your recordkeeping.
DISADVANTAGES OF THE PLAN.
- Cash dividends that you reinvest will be treated for federal income tax
purposes as a dividend received by you on the dividend payment date and
may create a liability for the payment of income tax without providing
you with immediate cash to pay such tax when it becomes due.
- We may, without giving you prior notice, change our determination as to
whether the agent will purchase shares of common stock directly from us
or in the open market or in privately negotiated transactions from third
parties.
- You will not know the actual number of shares purchased in any month on
your behalf under the plan until after the applicable investment date.
- The purchase price per share will equal an average price, in some cases
determined from purchases made as many as 15 days after the applicable
dividend payment date, or DSPP investment date, and in the case of
optional cash purchases under the WDP, on each trading day on which
shares are purchased during the applicable investment period.
Consequently, the actual purchase price of your shares may exceed the
price at which shares are trading on the dividend payment date, DSPP
investment date or any particular trading day on which shares are
purchased during the applicable WDP investment period, as applicable.
- You will have limited control regarding the specific timing of purchases
and sales under the plan. Because the agent will effect sales under the
plan only as soon as practicable after it receives instructions from you,
you may not be able to control the timing of purchases and sales as you
might for investments made outside the plan. The market price of the
shares of common stock may fluctuate between the time the agent receives
an investment instruction and the time at which the shares of common
stock are purchased or sold.
- You may not be able to depend on the availability of a market discount on
shares acquired under the plan. While a discount from market prices of up
to 5% may be established for a particular period, a discount for one
period will not insure the availability of a discount or the same
discount in future period. Each period we may, without giving you prior
notice, change or eliminate the discount.
- We will not pay you interest on dividends or funds for optional cash
purchases held pending reinvestment or investment or to be returned to
you. In addition, we may return funds submitted for optional cash
purchases under the WDP (in whole or proportionate part) without interest
if:
- a threshold price has been established with respect to shares to be
purchased from us, and
- the average per share market price fails to exceed the threshold price
for any trading day on the New York Stock Exchange during the twelve
trading day investment period for that month.
- Shares deposited in a plan account may not be pledged until the shares
are withdrawn from the plan.
Your investment in the shares of common stock held in your account is no
different than an investment in directly held shares of common stock. You bear
the risk of loss and the benefits of gain from market price changes for all of
your shares of common stock. NEITHER WE NOR THE AGENT CAN ASSURE YOU THAT SHARES
OF COMMON STOCK PURCHASED UNDER THE PLAN WILL, AT ANY
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PARTICULAR TIME, BE WORTH MORE OR LESS THAN THE AMOUNT YOU PAID FOR THEM.
ADMINISTRATION OF THE PLAN.
4. Who will administer the plan?
BankBoston N.A., as agent, or such successor administrator as we may
designate, will administer the plan. Under the plan the agent will act as your
agent, keep records of your account, send regular account statements to you, and
perform other duties relating to the plan.
EquiServe Limited Partnership, a registered transfer agent, will provide
certain administrative support to the agent.
BankBoston N.A.
c/o EquiServe Limited Partnership
150 Royall Street
Canton, Massachusetts 02021
Telephone Number: (800) 331-9474
PARTICIPATION IN THE PLAN.
5. Am I eligible to participate in the plan?
Any stockholder whose shares of common stock are registered on our stock
transfer books in his or her name (also referred to as a "registered holder") or
any stockholder whose shares of common stock are registered in a name other than
his or her name, for example, in the name of a broker, bank or other nominee
(also known as a "beneficial holder"), may participate in the plan. If you are a
registered holder, you may participate in the plan directly. If you are a
beneficial owner you must either become a registered holder by having such
shares transferred into your name or by making arrangements with your broker,
bank or other nominee to participate in the plan on your behalf. Even if you are
not already one of our stockholders, you may participate in the plan by making
an initial optional cash purchase of common stock of not less than $500 or more
than $5,000 during any calendar month unless we approve your request for waiver
under the WDP, in which case your initial investment may exceed $5,000.
You may not transfer the right to participate in the plan to another
person. We reserve the right to exclude any person from the plan if we believe
that person utilizes the plan to engage in short-term trading activities that
cause aberrations in the trading volume of our common stock.
If you reside in a state or other jurisdiction in which your participation
in the plan would be unlawful, you will not be eligible to participate in the
plan.
ENROLLMENT IN THE PLAN.
6. How do I enroll in the plan and become a participant in the plan?
If you are a registered holder, you may become a participant by completing
and signing an Enrollment Form and returning it to the agent at the address set
forth on the Enrollment Form. You may obtain an Enrollment Form at any time by
requesting one from the agent by calling (800) 331-9474. You may also obtain the
Enrollment Form on-line at www.equiserve.com. If your shares are registered in
more than one name (e.g., joint tenants, trustees), all registered holders of
such shares must sign the Enrollment Form exactly as their names appear on the
account registration.
If you are a beneficial owner, you must instruct your broker, bank or other
nominee in whose name your shares are held to participate in the plan on your
behalf. If a broker, bank or other nominee holds shares of beneficial owners
through a securities depository, the broker, bank or other nominee may also be
required to provide a Broker and Nominee Form to the agent in order to
participate in the optional cash purchases portion
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of the plan. You may obtain a Broker and Nominee Form at any time by requesting
one by telephone or in writing from the agent. You may also obtain a Broker and
Nominee Form on-line at www.equiserve.com.
If you are not presently one of our stockholders, but desire to participate
in the plan by making an initial investment in common stock, you may join the
plan by completing an Enrollment Form and forwarding it, together with such
initial investment, to the agent at the address indicated on the Enrollment
Form. You may obtain the Enrollment Form on-line at www.equiserve.com. If your
initial purchase is for more than $5,000, you must also complete a written
request for waiver and submit it to us for our written approval before you will
be enrolled in the plan.
7. What does the Enrollment Form provide?
The Enrollment Form directs the agent to apply to the purchase of
additional shares of common stock all of the cash dividends on the specified
number of shares of common stock that you own on the applicable dividend record
date and that you designate to be reinvested through the plan. The Enrollment
Form also directs the agent to purchase additional shares of common stock with
any optional cash purchases that you may elect to make.
While the Enrollment Form directs the agent to reinvest cash dividends on
shares enrolled in the plan by electing "Full Dividend Reinvestment," you may
alternatively elect "Partial Dividend Reinvestment" or "Optional Cash Purchases
Only." You may change the dividend reinvestment option at any time by submitting
a newly executed Enrollment Form to the agent or by writing to the agent. The
agent must receive any change in the number of shares with respect to which the
agent is authorized to reinvest dividends prior to the record date for a
dividend to permit the change to apply to that dividend. FOR EACH METHOD OF
DIVIDEND REINVESTMENT, WE WILL REINVEST YOUR CASH DIVIDENDS IN THE MANNER
SPECIFIED ON YOUR ENROLLMENT FORM ON ALL SHARES OTHER THAN THOSE THAT YOU
DESIGNATE FOR PAYMENT OF CASH DIVIDENDS UNTIL YOU SPECIFY OTHERWISE OR WITHDRAW
FROM THE PLAN ALTOGETHER, OR UNTIL THE PLAN IS TERMINATED.
8. When will my participation in the plan begin?
Your participation in the dividend reinvestment portion of the plan will
commence with the next dividend payment date after the agent receives your
Enrollment Form, provided the agent receives it at least five days before the
record date we establish for the payment of the dividend.
Your participation in the optional cash purchase portion of the plan for
purchases of $5,000 or less will commence with the next DSPP investment date
after the agent receives your Enrollment Form, provided the agent receives the
funds to be invested not later than two business days immediately preceding the
DSPP investment date. If the agent receives the funds to be invested after the
day indicated above and before the next succeeding DSPP investment date, the
agent will hold the funds for a period of up to 35 days, without interest, until
they can be invested during the next DSPP investment date.
Your participation in the optional cash purchase portion of the plan for
purchases in excess of $5,000 will commence with the next investment period
after the agent receives your Enrollment Form and your request for waiver,
approved by us, provided the agent receives the funds to be invested not later
than two business days immediately preceding the applicable investment period.
If the agent receives the funds to be invested after the day indicated above and
before the next succeeding investment period, the agent will hold the funds for
a period of up to 35 days, without interest, until they can be invested during
the next WDP investment period.
You may enroll in the plan at any time. Once enrolled, you will remain
enrolled until you discontinue participation or until we terminate the plan.
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PURCHASES.
9. When will my shares be acquired under the plan?
In the event that the agent purchases shares directly from us, the date of
issuance of shares to be purchased:
- with reinvested dividends will be the applicable dividend payment date,
- under the DSPP will be the DSPP investment date which shall be the 20th
day of the calendar month in which you may make an optional cash
purchase, unless such day is a Saturday, Sunday or holiday, in which case
the DSPP investment date will occur on the next succeeding business day
of the month, or
- under the WDP will be each day on which shares are purchased during the
applicable twelve-day investment period, and you will acquire, on each
day, all rights of ownership with respect to the maximum number of shares
of common stock that may be purchased on each day during the applicable
twelve trading day investment period with one-twelfth of your WDP
payment, including, without limitation the right to dispose of or vote
the shares.
In the event that the agent purchases shares either in open market or
privately negotiated transactions, the shares will be deemed acquired on the
date that they are purchased. For a schedule of expected threshold price and
discount dates, optional cash payment due dates, investment period commencement
dates and optional cash purchases investment dates in 1999 and 2000, see Annex I
to this prospectus.
If the agent acquires shares for the plan through open market purchases or
privately negotiated transactions, we will apply all dividends and all optional
cash purchases under the DSPP to the purchase of common stock pursuant to the
plan as soon as practicable on or after the applicable investment date. For
purchases under the WDP, we will purchase shares on each day during the twelve
trading day investment period that the purchase price exceeds the threshold
price, if any.
In the past, our common stock dividend payment dates occurred on or about
the 15th day of each January, April, July and October. While we expect to
continue to pay quarterly dividends, DIVIDENDS ARE PAID AS AND WHEN DECLARED BY
THE OUR BOARD OF DIRECTORS. WE CANNOT ASSURE YOU THAT OUR BOARD OF DIRECTORS
WILL DECLARE OR PAY DIVIDENDS ON THE COMMON STOCK, AND NOTHING CONTAINED IN THE
PLAN OBLIGATES OUR BOARD OF DIRECTORS TO DECLARE OR PAY DIVIDENDS ON COMMON
STOCK. THE PLAN DOES NOT GUARANTEE YOU THE RIGHT TO RECEIVE DIVIDENDS IN THE
FUTURE.
10. What is the source of shares to be purchased under the plan?
The agent will reinvest dividends and acquire common stock under the DSPP
or the WDP by purchasing either shares of common stock issued directly from us
or by purchasing shares in the open market or in privately negotiated
transactions, or a combination of both.
11. At what price will my shares be purchased?
The purchase price per share of common stock acquired through the plan as a
result of the reinvestment of dividends will be equal to:
- in the case of newly issued shares of common stock, the average of the
high and low sales price per share as reported on the New York Stock
Exchange on the applicable dividend payment date, subject to any
applicable discounts of up to 5% of the purchase price as determined at
our option, or
- in the case of shares purchased in the open market or in privately
negotiated transactions, the average of the purchase price of all shares
purchased by the agent for the plan with reinvested dividends for the
applicable dividend payment date.
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The price of shares acquired through optional cash purchases under the DSPP
of $5,000 or less during any calendar month will be equal to:
- in the case of newly issued shares of common stock, the average of the
high and low sales price per share as reported on the New York Stock
Exchange on the applicable DSPP investment date, subject to any
applicable discounts of up to 5% of the market price determined at our
option, or
- in the case of shares purchased in the open market or in privately
negotiated transactions, the average of the purchase price of all shares
purchased by the agent for the applicable DSPP investment date.
We may advise the agent to purchase shares from time to time in its
discretion over a period of up to 15 trading days following the applicable
dividend payment date or DSPP investment date, as the case may be.
The agent will acquire shares of common stock purchased under the WDP from
previously unissued shares of common stock, in the open market or in privately
negotiated transactions. In the case of previously unissued shares of common
stock, you may purchase more than $5,000 of common stock during any calendar
month at a discount of up to 5% from the market price, which will be the average
of the high and low sales price per share of the common stock as reported on the
New York Stock Exchange on each trading day on which shares are purchased during
the applicable investment period. Under the WDP, you will acquire the maximum
number of shares of common stock that may be purchased on each day during the
applicable twelve trading day investment period with one-twelfth of your WDP
payment. Shares purchased pursuant to the WDP may also be subject to a threshold
price provision. We will not offer a purchase discount on shares purchased in
the open market or in privately negotiated transactions.
You may obtain the discount applicable to the next investment period by
telephoning Investor Relations at (877) 285-3777 during the three business days
prior to the applicable dividend reinvestment date, DSPP investment date or WDP
investment period. Setting a discount for a particular period will not affect
the setting of a discount for any subsequent period.
Whether you are reinvesting dividends or making optional cash purchases,
the purchase price per share of common stock you acquire on any particular
investment date or trading day may not be less than 95% of the average high and
low sales price per share of the common stock on the New York Stock Exchange on
that particular day.
12. How may I make an optional cash purchase?
You are eligible to request optional cash purchases at any time. If you are
a registered holder, you may make an optional cash purchase by submitting an
Enrollment Form to the agent.
If you hold your shares registered in the name of another person, the
Broker and Nominee Form provides the sole means whereby a broker, bank or other
nominee holding shares on your behalf may request an optional cash purchase for
you. In such case, the broker, bank or other nominee must use a Broker and
Nominee Form for transmitting optional cash purchases on your behalf. A Broker
and Nominee Form must be delivered to the agent each time that such broker, bank
or other nominee transmits optional cash purchases on your behalf. Your broker
or nominee may request a Broker and Nominee Form from the agent in writing at
its address included in this prospectus or by telephone.
If you are not already one of our stockholders, you may make an initial
investment in common stock through an optional cash purchase by submitting an
Enrollment Form to the agent and in the case of a purchase under the WDP,
together with a request for waiver approved by us.
13. Where should I send my money to make an optional cash purchase?
You may make optional cash purchases under the DSPP by check payable to AMB
Investment Plan and mailed to the agent at the address referenced on the
Enrollment Form or your statement, as applicable. You may make optional cash
purchases under the WDP only with our prior written consent and only by wire
transfer to the account referenced on the Request for Waiver Form. You should
send all inquiries regarding other forms of payments and all other written
inquiries directly to the agent at its address referenced in this prospectus.
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The agent must receive funds for optional cash purchases of $5,000 or less
during any calendar month not later than two business days before the DSPP
investment date. The agent must receive funds for optional cash purchases
greater than $5,000 during any calendar month and made pursuant to our approval
of a request for waiver not later than two business days before the commencement
of the applicable investment period in order to purchase shares of common stock
during the following WDP investment period.
14. How do I get a refund if I change my mind?
You may obtain a refund of any DSPP payment or WDP payment not yet invested
by requesting, in writing, the agent to refund your payment. The agent must
receive your request not later than two business days prior to, in the case of a
DSPP payment, the next DSPP investment date, and, in the case of a WDP payment,
the commencement of the next investment period. If the agent receives your
request later than these specified times, your DSPP payment or WDP payment will
be applied to the purchase of shares of common stock.
15. Will I be paid interest on funds held for optional cash purchases prior
to investment?
You will not be paid interest on funds you send to the agent for optional
cash purchases. Consequently, we strongly suggest that you deliver funds to the
agent to be used for investment in optional cash purchases shortly prior to the
applicable investment date or investment period so that they are not held over
to the following investment date. If you have any questions regarding the
applicable investment dates or the dates as of which funds should be delivered
to the agent, you should write or telephone the agent at the address and
telephone number included above.
You should be aware that since investments under the plan are made as of
specified dates, you may lose any advantage that you otherwise might have from
being able to control the timing of an investment. NEITHER WE NOR THE AGENT CAN
ASSURE YOU A PROFIT OR PROTECT YOU AGAINST A LOSS ON SHARES OF COMMON STOCK
PURCHASED UNDER THE PLAN.
16. What limitations apply to optional cash purchases?
MINIMUM/MAXIMUM LIMITS.
You may make optional cash purchases under the DSPP with a minimum
investment of $500 up to a maximum investment of $5,000 during any calendar
month. If you request an optional cash purchase of less than the applicable
minimum amount, or if you request an optional cash purchase under the DSPP in
excess of $5,000, the agent will return your funds to you promptly, without
interest.
REQUEST FOR WAIVER.
You may make optional cash purchases in excess of $5,000 during any
calendar month under the WDP only pursuant to a request for waiver approved by
us. If you wish to make an optional cash purchase in excess of $5,000 for any
calendar month, you must obtain our prior written approval and a copy of such
written approval must be submitted to the agent. A request for waiver should be
sent to us by facsimile at (415) 394-9001, Attention: Investor Relations, by
2:00 p.m. San Francisco Time, on the day that is at least three business days
prior to the first day of the applicable investment period. You may obtain the
Request for Waiver Form from us at our address and telephone number referenced
in this prospectus. WE HAVE SOLE DISCRETION TO GRANT ANY WRITTEN APPROVAL FOR
OPTIONAL CASH PURCHASES IN EXCESS OF THE ALLOWABLE MAXIMUM AMOUNT.
In deciding whether to approve a request for waiver, we will consider
relevant factors including, but not limited to:
- our need for additional funds,
- the attractiveness of obtaining such additional funds through the sale of
common stock as compared to other sources of funds,
- the purchase price likely to apply to any sale of common stock, and
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- the aggregate amount of optional cash purchases in excess of $5,000 for
which requests for waiver have been submitted by all participants.
If requests for waiver are submitted for any WDP investment date for an
aggregate amount in excess of the amount we are then willing to accept, we may
honor such requests by any method that we determine to be appropriate. With
regard to optional cash purchases made pursuant to our written approval of a
request for waiver, the plan does not provide for a predetermined maximum limit
on the amount that you may invest or on the number of shares that you may
purchase. WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THE PLAN FOR ANY
REASON WHATSOEVER INCLUDING ELIMINATION OF PRACTICES THAT ARE NOT CONSISTENT
WITH THE PURPOSES OF THE PLAN.
THRESHOLD PRICE.
We may establish for any investment period a minimum threshold price
applicable to optional cash purchases made under the WDP. Not later than three
business days prior to the first day of the applicable investment period, we
will determine whether to establish a threshold price. We will determine the
threshold price in our sole discretion after a review of current market
conditions, the level of participation in the plan, and current and projected
capital needs. You may telephone Investor Relations at our toll-free number,
(877) 285-3111, during the three business days prior to the applicable
investment period to ascertain whether we have established a threshold price for
such investment period.
The threshold price, if any, is the per share price that the average of the
high and low sale prices of the common stock must equal or exceed on the New
York Stock Exchange for each trading day of the relevant investment period. If
the per share sale price does not equal or exceed the threshold price for any
particular trading day in the investment period, then we will exclude that
trading day from the investment period. A trading day will also be excluded if
no trades of common stock are made on the New York Stock Exchange for that day.
For example, if the threshold price is not satisfied for three of the twelve
trading days in an investment period, then we will determine the number of
shares to be purchased (including the applicable purchase price) based upon the
remaining nine trading days on which the threshold price was satisfied.
The agent will return to you, without interest, a portion of your optional
cash purchase for each trading day of an investment period on which the
threshold price is not satisfied or for each day on which no trades of common
stock are reported on the New York Stock Exchange. The returned portion will
equal one-twelfth of the total amount of such optional cash purchase for each
trading day on which the threshold price is not satisfied or on which no trades
of common stock are reported on the New York Stock Exchange. Thus, for example,
if the threshold price is not satisfied or no such sales are reported for three
of the twelve trading days in an investment period, we would return 3/12 (i.e.,
25%) of such optional cash purchase to you, without interest.
The possible return of a portion of the investment applies only to optional
cash purchases made under the WDP. Whether a threshold price is established for
any particular investment period will not affect whether a threshold price is
established for any subsequent investment period. For any particular month, we
may waive our right to set a threshold price. Neither we nor the agent will
notify you whether we establish a threshold price for any investment period. You
may, however, confirm whether we have established a threshold price for any
given investment period by telephoning Investor Relations at our toll-free
number, (877) 285-3111, during the three business days prior to the applicable
investment.
WAIVER DISCOUNTS.
Each month, not later than three business days prior to the first day of
the applicable investment period, we may establish a discount from the market
price applicable to optional cash purchases of newly issued common stock under
the WDP. The discount may be up to 5% of the purchase price and may vary each
month, but once established will apply uniformly to all optional cash purchases
made under the WDP for that month, provided that the purchase price for shares
purchased on any particular trading day during the applicable investment period
may not be less than the minimum purchase price of 95% of the average of the
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high and low sales price per share of the common stock as reported on the New
York Stock Exchange for that particular trading day.
We may establish a discount in our sole discretion after a review of
current market conditions, the level of participation in the plan, and current
and projected capital needs. You may obtain the discount applicable to the next
investment period by telephoning Investor Relations at our toll free number,
(877) 285-3111, during the three business days prior to the applicable
investment period. Setting a discount for a particular month will not affect the
setting of a discount for any subsequent month. The discount will apply to the
entire optional cash purchase and not just the portion of such investment that
exceeds $5,000.
17. What if I have more than one account?
We may aggregate all optional cash purchases for you if you have more than
one account using the same social security or taxpayer identification number. If
you are unable to supply a social security or taxpayer identification number, we
may limit your participation to only one plan account.
Also for the purpose of such limitations, we may aggregate all plan
accounts that we believe to be under common control or management or to have
common ultimate beneficial ownership. Unless we determine that reinvestment of
dividends and optional cash purchases for each account is consistent with the
purposes of the plan, we have the right to aggregate all such accounts and to
return, without interest, within 35 days of receipt, any amounts in excess of
the investment limitations applicable to a single account received in respect of
all such accounts.
CERTIFICATES.
18. Will certificates be issued for my share purchases?
All shares purchased pursuant to the plan will be credited to your
individual account in "book entry" form. This protects you against the loss,
theft or destruction of certificates evidencing shares. If you request, or if
you withdraw from the plan or if the plan terminates, the agent will issue and
deliver certificates for all full shares credited to your account. You may
request delivery of share certificates by telephoning or writing the agent. The
agent will only issue certificates in the same names as those enrolled in the
plan. In no event will we issue certificates for fractional shares. Any
fractional shares that you hold in the plan at the time you withdraw or at the
time the plan is terminated will be sold by the agent. The agent will distribute
to you the net proceeds of any of your fractional shares held in the plan sold
in connection with your withdrawal.
19. May I add shares of common stock to my account by transferring other
stock certificates representing AMB's common stock that I possess?
You may send to the agent for safekeeping all common stock certificates
which you hold. The safekeeping of shares offers the advantage of protection
against loss, theft or destruction of certificates as well as convenience, if
and when shares are sold through the plan. The agent will keep all shares
represented by such certificates for safekeeping in "book entry" form, combined
with any full and fractional shares then held by the plan in your name. To
deposit certificates for safekeeping under the plan, you must submit a letter of
instruction to the agent. You should send stock certificates by registered mail
and the letter of instruction as well as all written inquiries about the
safekeeping service to the agent at its address indicated in this prospectus.
You may withdraw shares deposited for safekeeping by telephoning or writing the
agent.
SALE OF SHARES.
20. How can I sell shares held under the plan?
You, or any other book entry holder, may instruct the agent to sell some or
all of your shares held in the plan or in book entry by notifying the agent by
telephone or in writing, or by using the form included with your statement of
account. You may also withdraw all or a portion of your shares from your account
and sell them through an outside broker or otherwise.
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The agent will sell shares through a registered broker dealer as soon as
practicable after receipt of a proper notice. Shares to be sold may be
commingled with those of other participants requesting sale of their shares, and
we will allocate the proceeds to you and to each other participant based on the
average price for all shares sold by the agent during the day of sale. You
should understand that the price of the common stock may go down as well as up
between the date you submit a request to sell and the date the sale is executed.
You may not specify either the dates or the prices at which shares are to be
sold through the agent. If the agent receives your request to sell shares on or
after the record date for a dividend, we will reinvest any cash dividend paid on
such shares, if applicable. You will only be charged for your pro rata share of
trading fees or brokerage commissions for selling shares through the agent.
These charges are normally lower than the cost of executing sales through a
brokerage account.
REPORTS.
21. What reports will I receive under the plan?
Unless you participate in the plan through a broker, bank or nominee, you
will receive from the agent a detailed statement of your account following each
dividend payment and when there is purchase or sale activity in your account.
These detailed statements will show total cash dividends received, total
optional cash purchases received, total shares purchased (including fractional
shares), price paid per share and total shares held in the plan. YOU SHOULD
RETAIN THESE STATEMENTS IN ORDER TO DETERMINE THE TAX COST BASIS FOR SHARES
PURCHASED PURSUANT TO THE PLAN.
If you participate in the plan through a broker, bank or nominee, you
should contact that person for such a statement.
WITHDRAWAL.
22. How may I withdraw from the plan?
You may terminate participation in the plan by writing to the agent. After
the agent receives the termination notice, we will send dividends to you in the
usual manner and you may not make any additional optional cash purchases unless
you re-enroll. The agent must receive your notice of termination at least two
business days before an investment date in order to be processed prior to that
investment date. Once termination has been effected, the agent will issue you a
certificate for all whole shares you hold under the plan. Alternatively, you may
specify in the termination notice that some or all of the shares be sold. Any
fractional shares that you hold in your account under the plan at any time you
withdraw or at the time the plan is terminated will be sold by the agent. The
agent will distribute to you the net proceeds of any of your shares held in the
plan sold in connection with your withdrawal, net of any trading fees or
brokerage commissions. If you transfer shares represented by certificates
registered in your name on our books but do not notify the agent, the agent will
continue to reinvest dividends on shares held in your account under the plan
until you direct otherwise. If the agent receives your termination request on or
after the record date for a dividend, the agent will reinvest any cash dividend
paid to you on your account. Your request will then be processed as soon as
practicable after the dividend is reinvested and the additional shares are
credited to your account. You will not be charged to terminate from the plan,
other than the applicable trading fees or brokerage commissions with respect to
any shares sold.
If your plan account balance falls below one full share, the agent reserves
the right to liquidate the fraction and remit the proceeds, less any applicable
trading fees or brokerage commissions, to you at your address of record and to
terminate your participation in the plan. We may also terminate the plan after
written notice in advance mailed to you at the address appearing on the agent's
records. If the plan or your participation is terminated, you will receive
certificates for whole shares held in your accounts and a check for the cash
value of any fractional shares held in any plan account that is terminated less
any applicable trading fees or brokerage commissions.
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TAXES.
23. What are the federal income tax consequences of participating in the
plan?
Dividends you receive on shares of our common stock that you hold in the
plan and which are reinvested in newly issued shares will be treated for federal
income tax purposes as a taxable stock distribution to you. Accordingly, you
will receive taxable dividend income in an amount equal to the fair market value
of the shares of our common stock that you receive on the dividend payment date
to the extent we have current or accumulated earnings and profits for federal
income tax purposes. We intend to take the position that the fair market value
of the newly issued shares purchased with reinvested dividends equals the
average of the high and low sale prices of shares of our common stock as
reported on the New York Stock Exchange on the related dividend payment date.
The treatment described above will apply to you whether or not the shares are
purchased at a discount. On the other hand, dividends you receive on shares of
our common stock that you hold in the plan which are reinvested in shares of our
common stock purchased by the agent in the open market or in privately
negotiated transactions will be treated for federal income tax purposes as a
taxable cash distribution to you in an amount equal to the purchase price of
such shares to the extent that we have current or accumulated earnings and
profits for federal income tax purposes. The portion of a distribution you
receive that is in excess of our current and accumulated earnings and profits
will not be taxable to you if this portion of the distribution does not exceed
the adjusted tax basis of your shares. If a portion of your distribution exceeds
the adjusted tax basis of your shares, that portion of your distribution will be
taxable as a capital gain. If we properly designate a portion of your
distribution as a capital gain dividend, then that portion will be reportable as
a capital gain. Capital gains will be taxed to you at a 20% or 25% income tax
rate, depending on the tax characteristics of the assets which produced such
gains, and on certain other designations, if any, that we may make. Your
statement of account will show the fair market value of the common stock
purchased with reinvested dividends on the applicable dividend payment date. You
also will receive a Form 1099-DIV after the end of the year which will show for
the year your total dividend income, your amount of any return of capital
distribution and your amount of any capital gain dividend. For a general
discussion of the federal income tax consequences of distributions to you with
respect to shares of our common stock, see "Material Federal Income Tax
Consequences Associated With an Investment in Common Stock -- Taxation of
Taxable U.S. Stockholders" below.
If you acquire shares of our common stock under the DSPP or the WDP at a
discount from the fair market value of such shares on the DSPP investment date
or the trading day on which the shares are purchased during the applicable WDP
investment period, as applicable, the tax treatment to you is unclear. We
presently intend to take the position that any discount on shares purchased
under the DSPP or the WDP does not constitute a distribution from us to you.
However, it is possible that you will be treated as having received a
distribution from us upon the purchase of our common stock under the DSPP or the
WDP in an amount equal to the excess, if any, of the total fair market value of
the shares you purchase on the DSPP investment date or each day on which shares
are purchased during the WDP investment period over the amount of your payment
for such shares. We may take this position in future reports to you or the
Internal Revenue Service. You should consult with your own tax advisor with
respect to the tax treatment of shares you purchase at a discount under the DSPP
or the WDP.
Under the plan, you will bear any trading fees or brokerage commissions
related to the acquisition and sale of shares of our common stock. However, in
the future we may agree to pay some or all of the trading fees or brokerage
commissions in connection with purchase transactions. The Internal Revenue
Service has ruled in private letter rulings that brokerage commissions paid by a
corporation with respect to open market purchases on behalf of participants in a
dividend reinvestment plan were to be treated as constructive distributions to
the participants. In these rulings the Internal Revenue Service determined that
distributions were subject to income tax in the same manner as distributions and
includable in the participant's cost basis of the shares purchased. Accordingly,
to the extent that we pay brokerage commissions with respect to any open market
or privately negotiated purchases made with reinvested dividends by the agent,
we intend to take the position that participants received their proportionate
amount of the commissions as distributions in addition to the amounts described
above. While the matter is not free from doubt, we intend to take the position
that any trading fees or brokerage commissions paid by us with respect to the
DSPP or the WDP will be treated in
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the same manner as the purchase price discount described above, and that
administrative expenses of the plan paid by us are not constructive
distributions to you.
If we invest your optional cash purchases under the DSPP or WDP in newly
issued shares of our common stock not sold to you at a discount, or reinvest
your dividends in newly issued shares of our common stock, then your tax basis
in the shares purchased for your account will equal the per share fair market
value of the common stock on the DSPP investment date, the day the shares are
purchased during the WDP investment period, or the relevant dividend payment
date, as applicable. Your tax basis in the shares of our common stock acquired
under the DSPP or the WDP at a discount will equal the amount you paid for the
shares, plus the amount of income, if any, you recognized upon the acquisition
as a result of the purchase price discount. If we reinvest your dividends or
your optional cash purchases under the DSPP in shares that the agent purchases
in the open market or in privately negotiated transactions, then your tax basis
in your shares purchased for your account will equal the amount you paid for the
shares, including any trading fees or brokerage commissions you paid, plus the
amount of income, if any, that you recognize because trading fees or brokerage
commissions were paid on your behalf. Your holding period for the shares of our
common stock acquired under the plan will begin on the day following the date
such shares were purchased for your account. Consequently, shares of our common
stock purchased in different months will have different holding periods.
You will not realize any gain or loss when you receive certificates for
whole shares of our common stock credited to your account, either upon your
request, when you withdraw from the plan or if the plan terminates. However, you
will recognize gain or loss when whole shares of our common stock or rights
applicable to our common stock acquired under the plan are sold or exchanged.
You will also recognize gain or loss when you receive a cash payment for a
fractional share of our common stock credited to your account when you withdraw
from the plan or if the plan terminates. The amount of your gain or loss will
equal the difference between the amount you receive for your shares or
fractional shares of our common stock or rights applicable to common stock, net
of any costs of sale paid by you, and your tax basis of such shares. For a
general discussion of the federal income tax consequences of disposing of shares
of our common stock, see "Material Federal Income Tax Consequences Associated
With an Investment in Common Stock -- Dispositions of Common Stock" below.
THE FOREGOING SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
REGARDING THE PLAN IS BASED ON CURRENT LAW, IS FOR YOUR GENERAL INFORMATION ONLY
AND IS NOT TAX ADVICE. THIS DISCUSSION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS
OF TAXATION THAT MAY BE RELEVANT TO YOU IN LIGHT OF YOUR PERSONAL INVESTMENT
CIRCUMSTANCES, OR IF YOU ARE A TYPE OF INVESTOR (INCLUDING INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS OR BROKER DEALERS, FOREIGN
CORPORATIONS AND PERSONS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES)
WHO IS SUBJECT TO SPECIAL TREATMENT UNDER THE FEDERAL INCOME TAX LAWS. IF YOU
WISH TO PARTICIPATE IN THE PLAN, YOU ARE STRONGLY URGED TO CONSULT WITH YOUR TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES (INCLUDING THE FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES) THAT MAY AFFECT YOU IF YOU PARTICIPATE IN
THE PLAN, AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS. SEE "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES ASSOCIATED WITH AN INVESTMENT IN COMMON STOCK" BELOW.
OTHER PROVISIONS.
24. What happens if I sell or transfer shares of stock or acquire
additional shares of stock?
If you elect to have dividends automatically reinvested in the plan and
subsequently sell or transfer all or any part of the shares registered in your
name, we will continue to reinvest your dividends as long as shares are
registered in your name or until you terminate your participation in the plan.
Similarly, if you elect the full or partial dividend reinvestment option under
the plan and subsequently acquire additional shares registered in your name, we
will continue to reinvest your dividends until you terminate your participation
in the plan. If, however, you elect the optional cash purchases only option and
subsequently acquire additional shares that are registered in your name, we will
not reinvest your dividends paid on such shares.
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25. How will my shares be voted?
For any meeting of stockholders, you will receive proxy materials in order
to vote all shares held by the plan for your account. The plan will vote all
shares as you direct or you may vote in person at the meeting of stockholders.
If you do not provide instructions or return an executed proxy, the plan will
not vote your shares. If you hold your shares through a broker, bank or nominee,
that person will receive the proxy materials and you will need to contact that
person in order to vote your shares.
26. Who pays the expenses of the plan?
We will pay all of the costs of administrating the plan other than trading
fees or brokerage commissions. We will pass on to you the trading fees and
brokerage commissions associated with the purchase and sale of shares of common
stock attributable to you under the plan.
27. What are the responsibilities of AMB or the agent under the plan?
Neither we nor the agent will be liable for any act done in good faith or
for any good faith omission to act, including, without limitation, any claims of
liability arising out of a failure to terminate your account upon your death or
adjudication of incompetence prior to the receipt of notice in writing of such
death or adjudication of incompetence, the prices at which shares are purchased
for your account, the times when purchases are made or fluctuations in the
market value of the common stock. Neither we nor the agent has any duties,
responsibilities or liabilities except as expressly set forth in the plan or as
imposed by applicable laws, including, without limitation, federal securities
laws. YOU SHOULD RECOGNIZE THAT WE CANNOT ASSURE YOU A PROFIT OR PROTECT YOU
AGAINST A LOSS ON THE SHARES YOU PURCHASE UNDER THE PLAN AND WE TAKE NO POSITION
ON WHETHER YOU OR OTHER STOCKHOLDERS OR INVESTORS SHOULD PARTICIPATE IN THE
PLAN.
28. What happens if the company issues a stock dividend, subscription
rights, declares a stock split or makes any other similar distribution in
respect of shares of common stock?
You will automatically receive credit to your plan account for any stock
dividend, stock split or other similar distribution in respect of shares of
common stock that we may declare. In the event that we make available to
stockholders subscription rights to purchase additional shares of common stock
or other securities, the agent will sell the rights accruing to all shares held
in your name when rights become separately tradable and will apply the net
proceeds from the sale of the rights to the purchase of common stock with the
next monthly optional cash purchase. If you do not want the agent to sell the
rights and invest the proceeds, you can notify the agent by submitting an
updated Enrollment Form and request that the distribution of subscription or
other purchase rights be made directly to you. This will permit you to
personally exercise, transfer or sell the rights on your shares.
29. May shares in my account be pledged?
You may not pledge shares credited to your account, and any purported
pledge will be void. If you wish to pledge shares, you must withdraw those
shares from the plan.
30. May I transfer all or a part of my shares held in the plan to another
person?
You may transfer ownership of all or part of your shares held in the plan
through gift, private sale or otherwise, by mailing to the agent at the address
listed above a properly executed stock assignment, along with a letter
requesting the transfer and a Substitute Form W-9 -- Certification of Taxpayer
Identification Number completed by the transferee. Requests for transfer of
shares held in the plan are subject to the same requirements as the transfer of
common stock certificates, including the requirement of a medallion signature
guarantee on the stock assignment. The agent will provide you with the
appropriate forms upon request. If any stock certificates bearing a restrictive
legend are contained in the your plan account, the agent will comply with the
provisions of such restrictive legend before effecting a sale or transfer of
such restricted shares. All transfers will be subject to the limitations on
ownership and transfer provided in our charter which are summarized below and
which are incorporated into the prospectus by reference.
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31. May the plan be changed or terminated?
We may amend, modify, suspend or terminate the plan at any time. The agent
will notify you in writing of any material modifications made to the plan. The
agent may appoint, by plan amendment, a successor agent to take its place under
the terms and conditions set forth in the plan. If the agent appoints a
successor agent, we are authorized to pay the successor agent for your account,
and all dividends and distributions payable on common stock you hold under the
plan for application by such successor.
DESCRIPTION OF CAPITAL STOCK
We have summarized certain terms and provisions of our capital stock in
this section. This summary is not complete. For more detail you should refer to
the Maryland General Corporation Law (the "MGCL"), our charter and our bylaws,
which we have filed as exhibits to the registration statement of which this
prospectus is a part. See "Where You Can Find More Information."
COMMON STOCK.
Our charter provides that we are authorized to issue 500,000,000 shares of
common stock, $.01 par value per share. As of June 21, 1999, we had 86,518,899
shares of common stock issued and outstanding. Each outstanding share of common
stock entitles the holder to one vote on all matters presented to stockholders
generally for a vote, including the election of directors. Except as otherwise
required by law and except as provided in any resolution adopted by the board of
directors establishing any other class or series of stock, the holders of common
stock possess the exclusive voting power, subject to the provisions of the
charter regarding the ownership of shares of common stock in excess of the
ownership limit or any other limit specified in the charter, or otherwise
permitted by the board of directors. Holders of shares of common stock do not
have any conversion, exchange, sinking fund, redemption or appraisal rights or
any preemptive rights to subscribe for any of our securities or cumulative
voting rights in the election of directors. All shares of common stock that are
issued and outstanding are duly authorized, fully paid and nonassessable.
Subject to the preferential rights of any other shares or series or classes of
stock, including the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and Series D Preferred Stock (see "-- Preferred
Stock"), and to the provisions of the charter regarding ownership of shares of
common stock in excess of the ownership limit, or such other limit specified in
the charter or as otherwise permitted by the board of directors, we may pay
distributions to the holders of shares of common stock if and when authorized
and declared by the board of directors out of funds legally available for
distribution. We intend to continue to make quarterly distributions on
outstanding shares of common stock. Under the MGCL, stockholders are generally
not liable for our debts or obligations. If we liquidate, subject to the right
of any holders of preferred stock, including the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and Series D Preferred
Stock (see "-- Preferred Stock") to receive preferential distributions, each
outstanding share of common stock will be entitled to participate pro rata in
the assets remaining after payment of, or adequate provision for, all of our
known debts and liabilities, including debts and liabilities arising out of our
status as general partner of the operating partnership.
Subject to the provisions of our charter regarding the ownership of shares
of common stock in excess of the ownership limit, or such other limit specified
in the charter, or as otherwise permitted by the board of directors as described
below, all shares of common stock have equal distribution, liquidation and
voting rights, and have no preference or exchange rights.
Under the MGCL, a Maryland corporation generally cannot dissolve, amend its
charter, merge, sell all or substantially all of its assets, engage in a share
exchange or engage in similar transactions outside the ordinary course of
business unless approved by the affirmative vote of at least two-thirds of the
votes entitled to be cast on the matter unless a lesser percentage (but not less
than a majority of all of the votes entitled to be cast on the matter) is set
forth in the corporation's charter. Under the MGCL, the term "substantially all
of the Company's assets" is not defined and is, therefore, subject to Maryland
common law and to judicial interpretation and review in the context of the
unique facts and circumstances of any particular transaction. Our charter does
not provide for a lesser percentage in any of the above situations.
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Our charter authorizes the board of directors to reclassify any unissued
shares of common stock into other classes or series of classes of stock and to
establish the number of shares in each class or series and to set the
preferences, conversion and other rights, voting powers, restrictions,
limitations and restrictions on ownership, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption for each
class or series.
PREFERRED STOCK.
Our charter provides that we are authorized to issue 100,000,000 shares of
preferred stock, $.01 par value per share, of which 4,600,000 shares are of a
separate class designated as Series A Preferred Stock, 1,300,000 shares are of a
separate class designated as Series B Preferred Stock, 2,200,000 shares are of a
separate class designated as Series C Preferred Stock and 1,595,337 shares are
of a separate class designated as Series D Preferred Stock. The Series B
Preferred Stock is issuable in exchange, on a one for one basis, subject to
adjustment, for the Series B Preferred Units. The Series C Preferred Stock is
issuable in exchange, on a one for one basis, subject to adjustment, for the AMB
Property II Series C Preferred Units. The Series D Preferred Stock is issuable
in exchange, on a one for one basis, subject to adjustment, for the Series D
Preferred Units. We have 4,000,000 shares of Series A Preferred Stock issued and
outstanding. We have 1,300,000 shares of Series B Preferred Stock, 2,200,000
shares of Series C Preferred Stock and 1,595,337 shares of Series D Preferred
Stock reserved for issuance, none of which is issued or outstanding. We may
issue additional shares of preferred stock from time to time, in one or more
classes, as authorized by the board of directors. Prior to the issuance of
shares of each class of preferred stock, the board of directors is required by
the MGCL and the charter to fix for each class the terms, preferences,
conversion or other rights, voting powers, restrictions, limitations as to
distributions, qualifications and terms or conditions of redemption, as
permitted by Maryland law. Because the board of directors has the power to
establish the preferences, powers and rights of each class of preferred stock,
it may afford the holders of any class of preferred stock preferences, powers
and rights, voting or otherwise, senior to the rights of holders of shares of
common stock. The issuance of preferred stock could have the effect of delaying
or preventing a change of control that might involve a premium price for holders
of shares of common stock or otherwise be in their best interest.
Series A Preferred Stock. The Series A Preferred Stock ranks, with respect
to dividends and in the event we voluntarily or involuntarily liquidate,
dissolve or wind up:
- senior to all classes or series of common stock and to all of our equity
securities that provide that they rank junior to the Series A Preferred
Stock;
- junior to all equity securities issued by us which rank senior to the
Series A Preferred Stock; and
- on a parity with all equity securities issued by us (including the Series
B Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock) other than those referred to in the bullet points above.
The term "equity securities" does not include convertible debt
securities.
Holders of the Series A Preferred Stock are entitled to receive, when and
as authorized by the board of directors out of funds legally available for
dividends, cumulative preferential cash dividends at the rate of 8 1/2% of the
liquidation preference per annum (equivalent to $2.125 per annum per share of
Series A Preferred Stock). Dividends on the Series A Preferred Stock accumulate
on a daily basis and are payable quarterly in arrears on the 15th day of each
January, April, July and October. Except as provided below, unless full
cumulative dividends on the Series A Preferred Stock have been or at the same
time are declared and paid or declared and a sum sufficient for payment set
apart for payment for all past dividend periods and the then current dividend
period, no dividends (other than in common stock or other equity securities
ranking junior to the Series A Preferred Stock) may be declared or paid or set
aside for payment or other dividend be declared or made upon the common stock or
any other equity securities ranking junior to or on a parity with the Series A
Preferred Stock (including the Series B Preferred Stock, the Series C Preferred
Stock and the Series D Preferred Stock), nor may any common stock or any other
equity securities ranking junior to or on a parity with the Series A Preferred
Stock (including the Series B Preferred Stock, the Series C Preferred Stock and
the Series D Preferred Stock) be redeemed, purchased or otherwise acquired for
any consideration (or any monies be paid to or made available for a sinking fund
for the redemption of any such securities) by us
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(except by conversion into or exchange for other equity securities ranking
junior to the Series A Preferred Stock and pursuant to the provisions of our
charter providing for limitations on ownership and transfer in order to ensure
that we remain qualified as a REIT). When dividends are not paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series A
Preferred Stock and any other equity securities ranking on a parity with the
Series A Preferred Stock (including the Series B Preferred Stock, the Series C
Preferred Stock and the Series D Preferred Stock), all dividends declared upon
the Series A Preferred Stock and any other equity securities ranking on a parity
with the Series A Preferred Stock (including the Series B Preferred Stock, the
Series C Preferred Stock and the Series D Preferred Stock) will be declared pro
rata so that the amount of dividends declared per share of Series A Preferred
Stock and each such other equity securities shall bear to each other the same
ratio that accumulated dividends per share of Series A Preferred Stock and such
other equity securities (which shall not include any accumulation in respect of
unpaid dividends for prior dividend periods if such other equity securities do
not have a cumulative dividend) bear to each other. Dividends on the Series A
Preferred Stock and accumulate whether or not we have funds legally available
for the payment of dividends and whether or not we declare dividends. If we
designate any portion of a dividend as a "capital gain dividend," a holder's
share of the capital gain dividend will be an amount that bears the same ratio
to the total amount of dividends (as determined for federal income tax purposes)
paid to the holder for the year as the aggregate amount designated as a capital
gain dividend bears to the aggregate amount of all dividends (as determined for
federal income tax purposes) paid on all classes of shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up, the holders of the Series A Preferred Stock are entitled to receive out
of our assets legally available for distribution to our stockholders remaining
after payment or provision for payment of all of our debts and liabilities, a
liquidation preference, in cash, of $25.00 per share, plus an amount equal to
any accumulated and unpaid dividends to the date of such payment, before any
distribution of assets is made to holders of common stock or any other equity
securities that rank junior to the Series A Preferred Stock. After payment of
the full amount of the liquidating distributions to which they are entitled, the
holders of the Series A Preferred Stock will have no right or claim to any of
our remaining assets. Our consolidation or merger with or into any other entity,
a merger of another entity with or into us, a statutory share exchange or the
sale, lease, transfer or conveyance of all or substantially all of our property
or business do not constitute a liquidation, dissolution or winding up for
purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up and our
assets are insufficient to make full payment to holders of the Series A
Preferred Stock and the corresponding amounts payable on all shares of other
classes or series of equity securities ranking on a parity with the Series A
Preferred Stock, then the holders of the Series A Preferred Stock and all other
such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
The Series A Preferred Stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. We cannot redeem the Series A
Preferred Stock prior to July 27, 2003. On and after July 27, 2003, we can
redeem the Series A Preferred Stock for cash at our option, in whole or from
time to time in part, at a redemption price of $25.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a REIT for federal income tax purposes, we may redeem shares of Series A
Preferred Stock. See "Restrictions on Ownership and Transfer of Capital Stock."
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Holders of Series A Preferred Stock have no voting rights, except as
described below. If we do not pay dividends on the Series A Preferred Stock for
six or more quarterly periods (whether or not consecutive), holders of the
Series A Preferred Stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the Series A Preferred Stock. So long as any
shares of Series A Preferred Stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of outstanding shares of Series A Preferred Stock (the
Series A Preferred Stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount of, any
class or series of stock ranking senior to the Series A Preferred Stock;
- reclassify any of our authorized stock into any class or series of stock
ranking senior to the Series A Preferred Stock;
- create, authorize or issue any obligation or security convertible into,
exchangeable or exercisable for, or evidencing the right to purchase, any
class or series of stock ranking senior to the Series A Preferred Stock;
or
- amend, alter or repeal the provisions of our charter, whether by merger
or consolidation or otherwise, so as to materially and adversely affect
any right, preference, privilege or voting power of the Series A
Preferred Stock.
With respect to the occurrence of any of the events set forth in the fourth
bullet point above, so long as shares of Series A Preferred Stock (or shares
issued by a surviving entity in substitution for shares of the Series A
Preferred Stock) remain outstanding with the terms materially unchanged, taking
into account that upon the occurrence of such an event, we may not be the
surviving entity, the occurrence of any such event will not be considered to
materially and adversely affect rights, preferences, privileges or voting powers
of holders of Series A Preferred Stock. Any increase in the amount of the
authorized preferred stock, the creation or issuance of any other class or
series of preferred stock or any increase in the amount of authorized Series A
Preferred Stock or any other class or series of preferred stock, in each case
ranking on a parity with or junior to the Series A Preferred Stock will not be
considered to materially and adversely affect such rights, preferences,
privileges or voting powers.
In accordance with the terms of the Partnership Agreement, we contributed
the net proceeds of the sale of the Series A Preferred Shares to the operating
partnership and the operating partnership issued to us Series A Preferred Units
that mirror the rights, preferences and other terms of the Series A Preferred
Stock. The operating partnership is required to make all required distributions
on the Series A Preferred Units prior to any distribution of cash or assets to
the holders of any other Units or any other equity interests in the operating
partnership, except for any other series of preferred Units ranking on a parity
with the Series A Preferred Units as to dividends or voluntary or involuntary
liquidation, dissolution or winding up of the operating partnership. The
operating partnership has no preferred Units, other than the Series A Preferred
Units and the Series B Preferred Units, outstanding or any other equity
interests ranking prior to any other Units or any other equity interests in the
operating partnership.
Series B Preferred Stock. We currently have no shares of Series B Preferred
Stock issued or outstanding. The Series B Preferred Stock is issuable upon
exchange of the Series B Preferred Units, as described under The Series B
Preferred Stock ranks, with respect to dividends and in the event we voluntarily
or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our equity
securities that provide that they rank junior to the Series B Preferred
Stock;
- junior to all equity securities issued by us which rank senior to the
Series B Preferred Stock; and
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- on a parity with all equity securities issued by us (including the Series
A Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock) other than those referred to in the bullet points above.
The term "equity securities" does not include convertible debt
securities.
If ever issued, the Series B Preferred Stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
8 5/8% of the liquidation preference per annum (equivalent to $4.3125 per annum
per share of Series B Preferred Stock). Dividends on the Series B Preferred
Stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the Series B Preferred Stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no distributions (other than in common stock or other equity
securities ranking junior to the Series B Preferred Stock) may be declared or
paid or set aside for payment or other dividend be declared or made upon the
common stock or any other equity securities ranking junior to or on a parity
with the Series B Preferred Stock (including the Series A Preferred Stock, the
Series C Preferred Stock and the Series D Preferred Stock), nor may any common
stock or any other equity securities ranking junior to or on a parity with the
Series B Preferred Stock (including the Series A Preferred Stock, the Series C
Preferred Stock and the Series D Preferred Stock) be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such securities) by us
(except by conversion into or exchange for other equity securities ranking
junior to the Series B Preferred Stock and pursuant to the provisions of our
charter providing for limitations on ownership and transfer in order to ensure
that we remain qualified as a REIT). When dividends are not paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series B
Preferred Stock and any other equity securities ranking on a parity with the
Series B Preferred Stock (including the Series A Preferred Stock, the Series C
Preferred Stock and the Series D Preferred Stock), all dividends declared upon
the Series B Preferred Stock and any other equity securities ranking on a parity
with the Series B Preferred Stock (including the Series A Preferred Stock, the
Series C Preferred Stock and the Series D Preferred Stock) will be declared pro
rata so that the amount of dividends declared per share of Series B Preferred
Stock and each such other equity securities shall bear to each other the same
ratio that accumulated dividends per share of Series B Preferred Stock and such
other equity securities (which shall not include any accumulation in respect of
unpaid dividends for prior dividend periods if such other equity securities do
not have a cumulative dividend) bear to each other. Dividends on the Series B
Preferred Stock will accumulate whether or not we have funds legally available
for the payment of dividends and whether or not we declare dividends. If we
designate any portion of a dividend as a "capital gain dividend," a holder's
share of the capital gain dividend will be an amount that bears the same ratio
to the total amount of dividends (as determined for federal income tax purposes)
paid to the holder for the year as the aggregate amount designated as a capital
gain dividend bears to the aggregate amount of all dividends (as determined for
federal income tax purposes) paid on all classes of shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of the Series B Preferred Stock, the holders of
the Series B Preferred Stock will be entitled to receive out of our assets
legally available for distribution to our stockholders remaining after payment
or provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated and unpaid dividends to the date of such payment, before any
distribution of assets is made to holders of common stock or any other equity
securities that rank junior to the Series B Preferred Stock. After payment of
the full amount of the liquidating distributions to which they are entitled, the
holders of the Series B Preferred Stock will have no right or claim to any of
our remaining assets. Our consolidation or merger with or into any other entity,
a merger of another entity with or into us, a statutory share exchange or the
sale, lease, transfer or conveyance of all or substantially all of our property
or business do not constitute a liquidation, dissolution or winding up for
purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up following
the issuance of Series B Preferred Stock and our assets are insufficient to make
full payment to the holders of the Series B Preferred Stock and the
corresponding amounts payable on all shares of other classes or series of equity
securities
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<PAGE> 42
ranking on a parity with the Series B Preferred Stock as to liquidation rights
(including the Series A Preferred Stock, the Series C Preferred Stock and the
Series D Preferred Stock) then the holders of the Series B Preferred Stock and
all other such classes or series of equity securities will share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be entitled.
The Series B Preferred Stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the Series
B Preferred Stock prior to November 12, 2003. On and after November 12, 2003, we
can redeem the Series B Preferred Stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a REIT for federal income tax purposes, we may redeem shares of Series B
Preferred Stock. See "Restrictions on Ownership and Transfer of Capital Stock."
Holders of Series B Preferred Stock will have no voting rights, except as
described below. If we do not pay dividends on the Series B Preferred Stock for
six or more quarterly periods (whether or not consecutive), holders of the
Series B Preferred Stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the Series B Preferred Stock. So long as any
shares of Series B Preferred Stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of Series B Preferred Stock (the
Series B Preferred Stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount of, any
class or series of stock ranking senior to the Series B Preferred Stock;
- reclassify any of our authorized stock into any class or series of stock
ranking senior to the Series B Preferred Stock;
- designate or create, or increase the authorized or issued amount of, or
reclassify, any authorized shares into, any preferred stock ranking on a
parity with the Series B Preferred Stock or create, authorize or issue
any obligations or securities convertible into any such shares, but only
to the extent such stock is issued to one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or lease our
assets substantially as an entirety, to any corporation or other entity,
or amend, alter or repeal the provisions of our charter, whether by
merger or consolidation or otherwise, in each case so as to materially
and adversely affect the powers, special rights, preferences, privileges
or voting power of the Series B Preferred Stock.
With respect to the occurrence of any of the events set forth in the fourth
bullet point above, so long as we are either the surviving entity and shares of
Series B Preferred Stock remain outstanding with the terms materially unchanged
or the resulting, surviving or transferee entity is a corporation organized
under the laws of any state and substitutes for the Series B Preferred Stock
other preferred stock having substantially the same terms and rights as the
Series B Preferred Stock, the occurrence of any such event will not be
considered to materially and adversely affect rights, preferences, privileges or
voting powers of holders of Series B Preferred Stock. Any increase in the amount
of authorized preferred stock, the creation or issuance of any other class or
series of preferred stock or any increase in an amount of authorized shares of
each class or series, in each case ranking on a parity with or junior to the
Series B Preferred Stock will not be considered to materially and adversely
affect such rights, preferences, privileges or voting powers.
We have granted certain registration rights with respect to any shares of
Series B Preferred Stock that we may issue upon exchange of the Series B
Preferred Units.
39
<PAGE> 43
Series C Preferred Stock. We currently have no shares of Series C Preferred
Stock issued or outstanding. The Series C Preferred Stock is issuable upon
exchange of the AMB Property II Series C Preferred Units. The AMB Property II
Series C Preferred Units are exchangeable in whole at any time on or after
November 24, 2008, at the option of 51% of the holders of all outstanding AMB
Property II Series C Preferred Units, on a one for one basis, subject to
adjustment, for shares of our Series C Preferred Stock. In addition, the AMB
Property II Series C Preferred Units are exchangeable in whole at any time at
the option of 51% of the holders of all outstanding AMB Property II Series C
Preferred Units if:
- any AMB Property II Series C Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution periods
(whether or not consecutive); or
- AMB Property Holding Corporation, the general partner of AMB Property II,
or one of its subsidiaries takes the position, and a holder or holders of
AMB Property II Series C Preferred Units receive an opinion of
independent counsel that AMB Property II is, or upon the happening of a
certain event likely will be, a "publicly traded partnership" within the
meaning of the Internal Revenue Code.
AMB Property II Series C Preferred Units are exchangeable in whole for
shares of Series C Preferred Stock at any time after November 24, 2001 and prior
to November 24, 2008 at the option of 51% of the holders of all outstanding AMB
Property II Series C Preferred Units if those holders deliver to AMB Property
Holding Corporation a private letter ruling or an opinion of independent counsel
to the effect that an exchange of the AMB Property II Series C Preferred Units
at that time would not cause the AMB Property II Series C Preferred Units to be
considered "stock and securities" within the meaning of the Internal Revenue
Code for purposes of determining whether the holder of AMB Property II Series C
Preferred Units is an "investment company" under the Internal Revenue Code.
The AMB Property II Series C Preferred Units are also exchangeable in whole
at any time for shares of Series C Preferred Stock, if initial purchasers of the
AMB Property II Series C Preferred Units holding 51% of all outstanding AMB
Property II Series C Preferred Units determine (regardless of whether held by
the initial purchasers), if:
- AMB Property II reasonably determines that the assets and income of AMB
Property II for a taxable year after 1998 would not satisfy the income
and assets tests of the Internal Revenue Code for such taxable year if
AMB Property II were a REIT; or
- any holder of AMB Property II Series C Preferred Units delivers to AMB
Property II and AMB Property Holding Corporation an opinion of
independent counsel to the effect that (based on the assets and income of
AMB Property II for a taxable year after 1998) AMB Property II would not
satisfy the income and assets tests of the Internal Revenue Code for such
taxable year if AMB Property II were a REIT and that such failure would
create a meaningful risk that a holder of AMB Property II Series C
Preferred Units would fail to maintain qualification as a REIT.
In lieu of an exchange for Series C Preferred Stock, AMB Property II may
redeem AMB Property II Series C Preferred Units for cash in an amount equal to
the original capital account balance of the holder of AMB Property II Series C
Preferred Units. A holder of AMB Property II Series C Preferred Units will not
be entitled to exchange the units for Series C Preferred Stock if the exchange
would result in a violation of the ownership limit. See "Restrictions on
Ownership and Transfer of Capital Stock."
The Series C Preferred Stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our equity
securities that provide that they rank junior to the Series C Preferred
Stock;
- junior to all equity securities issued by us which rank senior to the
Series C Preferred Stock; and
- on a parity with all equity securities issued by us (including the Series
A Preferred Stock, the Series B Preferred Stock and the Series D
Preferred Stock) other than those referred to in the bullet points
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<PAGE> 44
above. The term "equity securities" does not include convertible debt
securities until converted into equity securities.
If ever issued, the Series C Preferred Stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
8.75% of the liquidation preference per annum (equivalent to $4.375 per annum
per share of Series C Preferred Stock). Dividends on the Series C Preferred
Stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the Series C Preferred Stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no distributions (other than in common stock or other equity
securities ranking junior to the Series C Preferred Stock) may be declared or
paid or set aside for payment or other dividend be declared or made upon the
common stock or any other equity securities ranking junior to or on a parity
with the Series C Preferred Stock (including the Series A Preferred Stock, the
Series B Preferred Stock and the Series D Preferred Stock), nor may any common
stock or any other equity securities ranking junior to or on a parity with the
Series C Preferred Stock (including the Series A Preferred Stock, the Series B
Preferred Stock and the Series D Preferred Stock) be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such securities) by us
(except by conversion into or exchange for other equity securities ranking
junior to the Series C Preferred Stock and pursuant to the provisions of our
charter providing for limitations on ownership and transfer in order to ensure
that we remain qualified as a REIT). When dividends are not paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series C
Preferred Stock and any other equity securities ranking on a parity with the
Series C Preferred Stock (including the Series A Preferred Stock, the Series B
Preferred Stock and the Series D Preferred Stock), all dividends declared upon
the Series C Preferred Stock and any other equity securities ranking on a parity
with the Series C Preferred Stock (including the Series A Preferred Stock, the
Series B Preferred Stock and the Series D Preferred Stock) will be declared pro
rata so that the amount of dividends declared per share of Series C Preferred
Stock and each such other equity securities shall bear to each other the same
ratio that accumulated dividends per share of Series C Preferred Stock and such
other equity securities (which shall not include any accumulation in respect of
unpaid dividends for prior dividend periods if such other equity securities do
not have a cumulative dividend) bear to each other. Dividends on the Series C
Preferred Stock will accumulate whether or not we have funds legally available
for the payment of dividends and whether or not we declare dividends. If we
designate any portion of a dividend as a "capital gain dividend," a holder's
share of the capital gain dividend will be an amount that bears the same ratio
to the total amount of dividends (as determined for federal income tax purposes)
paid to the holder for the year as the aggregate amount designated as a capital
gain dividend bears to the aggregate amount of all dividends (as determined for
federal income tax purposes) paid on all classes of shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of Series C Preferred Stock, the holders of the
Series C Preferred Stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the Series C Preferred Stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the Series C Preferred Stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up following
the issuance of Series C Preferred Stock and our assets are insufficient to make
full payment to holders of the Series C Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of equity securities
ranking on a parity with the Series C Preferred Stock as to liquidation rights
(including the Series A Preferred Stock, the
41
<PAGE> 45
Series B Preferred Stock and the Series D Preferred Stock) then the holders of
the Series C Preferred Stock and all other such classes or series of equity
securities will share ratably in any such distribution of assets in proportion
to the full liquidating distributions to which they would otherwise be entitled.
The Series C Preferred Stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the Series
C Preferred Stock prior to November 24, 2003. On and after November 24, 2003, we
can redeem the Series C Preferred Stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a REIT for federal income tax purposes, we may redeem shares of Series C
Preferred Stock. See "Restrictions on Ownership and Transfer of Capital Stock."
Holders of Series C Preferred Stock will have no voting rights, except as
described below. If we do not pay dividends on the Series C Preferred Stock for
six or more quarterly periods (whether or not consecutive), holders of the
Series C Preferred Stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the Series C Preferred Stock. So long as any
shares of Series C Preferred Stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of Series C Preferred Stock (the
Series C Preferred Stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount of, any
class or series of stock ranking senior to the Series C Preferred Stock;
- reclassify any of our authorized stock into any class or series of stock
ranking senior to the Series C Preferred Stock;
- designate or create, or increase the authorized or issued amount of, or
reclassify, any authorized shares into, any preferred stock ranking on a
parity with the Series C Preferred Stock or create, authorize or issue
any obligations or securities convertible into any such shares, but only
to the extent such stock is issued to one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or lease our
assets substantially, as an entirety, to any corporation or other entity,
or amend, alter or repeal the provisions of our charter, whether by
merger or consolidation or otherwise, in each case so as to materially
and adversely affect the powers, special rights, preferences, privileges
or voting power of the Series C Preferred Stock.
With respect to the occurrence of any of the events set forth in the fourth
bullet point above, so long as we are either the surviving entity and shares of
Series C Preferred Stock remain outstanding with the terms materially unchanged
or the resulting, surviving or transferee entity is a corporation, business
trust or like entity organized under the laws of any state and substitutes for
the Series C Preferred Stock other preferred stock or preferred shares having
substantially the same terms and rights as the Series C Preferred Stock, the
occurrence of any such event will not be considered to materially and adversely
affect rights, preferences, privileges or voting powers of holders of Series C
Preferred Stock. Any increase in the amount of authorized preferred stock, the
creation or issuance of any other class or series of preferred stock or any
increase in an amount of authorized shares of each class or series, in each case
ranking on a parity with or junior to the Series C Preferred Stock will not be
considered to materially and adversely affect such rights, preferences,
privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of Series C Preferred Stock issuable to the holders of AMB Property
II Series C Preferred Units as soon as practicable but not later than 60 days
after the date the AMB Property II Series C Preferred Units are exchanged for
shares of Series C Preferred Stock. We have also agreed to use our best efforts
to cause the registration statement to be declared effective within 120 days
after the date of the exchange.
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<PAGE> 46
Series D Preferred Stock. We currently have no shares of Series D Preferred
Stock issued or outstanding. The Series D Preferred Stock is issuable upon
exchange of the AMB Property II Series D Preferred Units. The AMB Property II
Series D Preferred Units are exchangeable in whole at any time on or after May
5, 2009, at the option of 51% of the holders of all outstanding AMB Property II
Series D Preferred Units, on a one for one basis, subject to adjustment, for
shares of our Series D Preferred Stock. In addition, the AMB Property II Series
D Preferred Units are exchangeable in whole at any time at the option of 51% of
the holders of all outstanding AMB Property II Series D Preferred Units if:
- any AMB Property II Series D Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution periods
(whether or not consecutive); or
- AMB Property Holding Corporation, the general partner of AMB Property II,
or one of its subsidiaries takes the position, and a holder or holders of
AMB Property II Series D Preferred Units receive an opinion of
independent counsel that AMB Property II is, or upon the happening of a
certain event likely will be, a "publicly traded partnership" within the
meaning of the Internal Revenue Code.
AMB Property II Series D Preferred Units are exchangeable in whole for
shares of Series D Preferred Stock at any time after May 5, 2002 and prior to
May 5, 2009 at the option of 51% of the holders of all outstanding AMB Property
II Series D Preferred Units if those holders deliver to AMB Property Holding
Corporation a private letter ruling or an opinion of independent counsel to the
effect that an exchange of the AMB Property II Series D Preferred Units at that
time would not cause the AMB Property II Series D Preferred Units to be
considered "stock and securities" within the meaning of the Internal Revenue
Code for purposes of determining whether the holder of AMB Property II Series D
Preferred Units is an "investment company" under the Internal Revenue Code.
In lieu of an exchange for Series D Preferred Stock, AMB Property II may
redeem AMB Property II Series D Preferred Units for cash in an amount equal to
the original capital account balance of the holder of AMB Property II Series D
Preferred Units. A holder of AMB Property II Series D Preferred Units will not
be entitled to exchange the units for Series D Preferred Stock if the exchange
would result in a violation of the ownership limit. See "Restrictions on
Ownership and Transfer of Capital Stock."
The Series D Preferred Stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our equity
securities that provide that they rank junior to the Series D Preferred
Stock;
- junior to all equity securities issued by us which rank senior to the
Series D Preferred Stock; and
- on a parity with all equity securities issued by us (including the Series
A Preferred Stock, the Series B Preferred Stock and the Series C
Preferred Stock) other than those referred to in the bullet points above.
The term "equity securities" does not include convertible debt securities
until converted into equity securities.
If ever issued, the Series D Preferred Stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
7.75% of the liquidation preference per annum (equivalent to $3.875 per annum
per share of Series D Preferred Stock). Dividends on the Series D Preferred
Stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the Series D Preferred Stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no distributions (other than in common stock or other equity
securities ranking junior to the Series D Preferred Stock) may be declared or
paid or set aside for payment or other dividend be declared or made upon the
common stock or any other equity securities ranking junior to or on a parity
with the Series D Preferred Stock (including the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock), nor may any common
stock or any other equity securities ranking junior to or on a parity with the
Series C Preferred Stock (including the Series A Preferred Stock, the Series B
Preferred Stock
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<PAGE> 47
and the Series C Preferred Stock) be redeemed, purchased or otherwise acquired
for any consideration (or any monies be paid to or made available for a sinking
fund for the redemption of any such securities) by us (except by conversion into
or exchange for other equity securities ranking junior to the Series D Preferred
Stock and pursuant to the provisions of our charter providing for limitations on
ownership and transfer in order to ensure that we remain qualified as a REIT).
When dividends are not paid in full (or a sum sufficient for such full payment
is not so set apart) upon the Series D Preferred Stock and any other equity
securities ranking on a parity with the Series D Preferred Stock (including the
Series A Preferred Stock, the Series B Preferred Stock and the Series C
Preferred Stock), all dividends declared upon the Series D Preferred Stock and
any other equity securities ranking on a parity with the Series D Preferred
Stock (including the Series A Preferred Stock, the Series B Preferred Stock and
the Series C Preferred Stock) will be declared pro rata so that the amount of
dividends declared per share of Series D Preferred Stock and each such other
equity securities shall bear to each other the same ratio that accumulated
dividends per share of Series D Preferred Stock and such other equity securities
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such other equity securities do not have a cumulative
dividend) bear to each other. Dividends on the Series D Preferred Stock will
accumulate whether or not we have funds legally available for the payment of
dividends and whether or not we declare dividends. If we designate any portion
of a dividend as a "capital gain dividend," a holder's share of the capital gain
dividend will be an amount that bears the same ratio to the total amount of
dividends (as determined for federal income tax purposes) paid to the holder for
the year as the aggregate amount designated as a capital gain dividend bears to
the aggregate amount of all dividends (as determined for federal income tax
purposes) paid on all classes of shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of Series D Preferred Stock, the holders of the
Series D Preferred Stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the Series D Preferred Stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the Series D Preferred Stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up following
the issuance of Series D Preferred Stock and our assets are insufficient to make
full payment to holders of the Series D Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of equity securities
ranking on a parity with the Series D Preferred Stock as to liquidation rights
(including the Series A Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock) then the holders of the Series D Preferred Stock and
all other such classes or series of equity securities will share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be entitled.
The Series D Preferred Stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the Series
D Preferred Stock prior to May 5, 2004. On and after May 5, 2004, we can redeem
the Series D Preferred Stock for cash at our option, in whole or from time to
time in part, at a redemption price of $50.00 per share, plus accumulated and
unpaid dividends, if any, to the redemption date. We must pay the redemption
price (other than the portion of the redemption price consisting of accumulated
and unpaid dividends) solely out of the sale proceeds of other equity
securities, which may include other classes or series of preferred stock. In
certain circumstances related to our maintenance of our ability to qualify as a
REIT for federal income tax purposes, we may redeem shares of Series D Preferred
Stock. See "Restrictions on Ownership and Transfer of Capital Stock."
Holders of Series D Preferred Stock will have no voting rights, except as
described below. If we do not pay dividends on the Series D Preferred Stock for
six or more quarterly periods (whether or not consecutive), holders of the
Series D Preferred Stock (voting separately as a class with all other classes or
series of equity
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<PAGE> 48
securities upon which like voting rights have been conferred and are
exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the Series D Preferred Stock. So long as any
shares of Series D Preferred Stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of Series D Preferred Stock (the
Series D Preferred Stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount of, any
class or series of stock ranking senior to the Series D Preferred Stock;
- reclassify any of our authorized stock into any class or series of stock
ranking senior to the Series D Preferred Stock;
- designate or create, or increase the authorized or issued amount of, or
reclassify, any authorized shares into, any preferred stock ranking on a
parity with the Series D Preferred Stock or create, authorize or issue
any obligations or securities convertible into any such shares, but only
to the extent such stock is issued to one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or lease our
assets substantially, as an entirety, to any corporation or other entity,
or amend, alter or repeal the provisions of our charter, whether by
merger or consolidation or otherwise, in each case so as to materially
and adversely affect the powers, special rights, preferences, privileges
or voting power of the Series D Preferred Stock.
With respect to the occurrence of any of the events set forth in the fourth
bullet point above, so long as we are either the surviving entity and shares of
Series D Preferred Stock remain outstanding with the terms materially unchanged
or the resulting, surviving or transferee entity is a corporation, business
trust or like entity organized under the laws of any state and substitutes for
the Series D Preferred Stock other preferred stock or preferred shares having
substantially the same terms and rights as the Series D Preferred Stock, the
occurrence of any such event will not be considered to materially and adversely
affect rights, preferences, privileges or voting powers of holders of Series D
Preferred Stock. Any increase in the amount of authorized preferred stock, the
creation or issuance of any other class or series of preferred stock or any
increase in an amount of authorized shares of each class or series, in each case
ranking on a parity with or junior to the Series D Preferred Stock will not be
considered to materially and adversely affect such rights, preferences,
privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of Series D Preferred Stock issuable to the holders of AMB Property
II Series D Preferred Units as soon as practicable but not later than 60 days
after the date the AMB Property II Series D Preferred Units are exchanged for
shares of Series D Preferred Stock. We have also agreed to use our best efforts
to cause the registration statement to be declared effective within 120 days
after the date of the exchange.
RESTRICTIONS ON OWNERSHIP AND TRANSFER OF CAPITAL STOCK
In order for us to qualify as a REIT under the Internal Revenue Code, no
more than 50% in value of all classes of our outstanding shares of capital stock
may be owned, actually or constructively, by five or fewer individuals (as
defined in the Internal Revenue Code to include certain entities) during the
last half of a taxable year (other than the first year for which we have made an
election to be treated as a REIT). In addition, if we, or an owner of 10% or
more of our capital stock, actually or constructively own 10% or more of one of
our tenants (or a tenant of any partnership or limited liability company in
which we are a partner or member), the rent received by us (either directly or
through the partnership or limited liability company) from the tenant will not
be qualifying income for purposes of the gross income tests for REITs contained
in the Internal Revenue Code. A REIT's stock also must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year (other than the first year
for which an election to be treated as a REIT has been made).
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Because our board of directors believes it is desirable for us to qualify
as a REIT, our charter, subject to certain exceptions as discussed below,
provides that no person may own, or be deemed to own by virtue of the
attribution provisions of the Internal Revenue Code, more than 9.8% (by value or
number of shares, whichever is more restrictive) of either our issued and
outstanding common stock or our issued and outstanding Series A Preferred Stock.
Our charter also prohibits the ownership, actually or constructively, of any
shares of our Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock by any single person so that no such
person, taking into account all of our stock so owned by such person, may own in
excess of 9.8% of our issued and outstanding capital stock. The constructive
ownership rules under the Internal Revenue Code are complex and may cause stock
owned actually or constructively by a group of related individuals and/or
entities to be owned constructively by one individual or entity. As a result,
the acquisition of less than 9.8% of our common stock, Series A Preferred Stock
or capital stock (or the acquisition of an interest in an entity that owns,
actually or constructively, common stock, Series A Preferred Stock or capital
stock) by an individual or entity, could, nevertheless cause that individual or
entity, or another individual or entity, to own constructively in excess of 9.8%
of our outstanding common stock, Series A Preferred Stock or capital stock, as
the case may be, and thereby subject the common stock, Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
to the applicable ownership limit. Shares held in your account are attributed to
you for purposes of determining percentage ownership. The board of directors
may, but in no event will be required to, waive the applicable ownership limit
with respect to a particular stockholder if it determines that such ownership
will not jeopardize our status as a REIT and the board of directors otherwise
decides such action would be in our best interest. As a condition of such
waiver, the board of directors may require an opinion of counsel satisfactory to
it and/or undertakings or representations from the applicant with respect to
preserving our REIT status. The board of directors has waived the ownership
limit applicable to our common stock with respect to Ameritech Pension Trust,
allowing it to own up to 14.9% of our common stock and, under some
circumstances, allowing it to own up to 19.6%. However, we conditioned this
waiver upon the receipt of undertakings and representations from Ameritech
Pension Trust which we believed were reasonably necessary in order for us to
conclude that the waiver would not cause us to fail to qualify as a REIT.
Our charter also provides that:
- no person may actually or constructively own common stock, Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock that would result in us being "closely held"
under Section 856(h) of the Internal Revenue Code or otherwise cause us
to fail to qualify as a REIT;
- no person may transfer common stock, Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock if
a transfer would result in shares of our capital stock being owned by
fewer than 100 persons; and
- any person who acquires or attempts or intends to acquire actual or
constructive ownership of common stock, Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
that will or may violate any of the foregoing restrictions on
transferability and ownership is required to notify us immediately and
provide us with such other information as we may request in order to
determine the effect of the transfer on our status as a REIT. The
foregoing restrictions on transferability and ownership will not apply if
our board of directors determines that it is no longer in our best
interest to attempt to qualify, or to continue to qualify, as a REIT.
Except as otherwise described above, any change in the applicable
ownership limit would require an amendment to our charter, which requires
the affirmative vote of holders owning at least two-thirds of the shares
of our outstanding capital stock entitled to vote on the amendment.
Under our charter, if any attempted transfer of shares of stock or any
other event would otherwise result in any person violating an ownership limit,
any other limit imposed by our board of directors or the other restrictions in
the charter, then any such attempted transfer will be void and of no force or
effect with respect to the purported transferee (the "Prohibited Transferee") as
to that number of shares that exceeds the applicable ownership limit or such
other limit (referred to as "Excess Shares"). Under those circumstances,
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the Prohibited Transferee will acquire no right or interest (or, in the case of
any event other than an attempted transfer, the person or entity holding record
title to any shares in excess of the applicable ownership limit (the "Prohibited
Owner") will cease to own any right or interest) in the Excess Shares. Any
Excess Shares described above will be transferred automatically, by operation of
law, to a trust, the beneficiary of which will be a qualified charitable
organization selected by us (the "Beneficiary"). This automatic transfer will be
considered to be effective as of the close of business on the business day prior
to the date of the violating transfer or event. Within 20 days of receiving
notice from us of the transfer of shares to the trust, the trustee of the trust
will be required to sell the Excess Shares to a person or entity who could own
the shares without violating the applicable ownership limit, or any other limit
imposed by our board of directors, and distribute to the Prohibited Transferee
an amount equal to the lesser of the price paid by the Prohibited Transferee for
the Excess Shares or the sales proceeds received by the trust for the Excess
Shares. In the case of any Excess Shares resulting from any event other than a
transfer, or from a transfer for no consideration (such as a gift), the trustee
will be required to sell Excess Shares to a qualified person or entity and
distribute to the Prohibited Owner an amount equal to the lesser of the
applicable market price of the Excess Shares as of the date of the event or the
sales proceeds received by the trust for the Excess Shares. In either case, any
proceeds in excess of the amount distributable to the Prohibited Transferee or
Prohibited Owner will be distributed to the Beneficiary. Prior to a sale of any
Excess Shares by the trust, the trustee will be entitled to receive, in trust
for the Beneficiary, all dividends and other distributions paid by us with
respect to the Excess Shares, and also will be entitled to exercise all voting
rights with respect to the Excess Shares. Subject to Maryland law, effective as
of the date that the shares have been transferred to the trust, the trustee will
have the authority (at the trustee's sole discretion) to rescind as void any
vote cast by a Prohibited Transferee or Prohibited Owner prior to the time that
we discover that the shares have been automatically transferred to the trust and
to recast the vote in accordance with the desires of the trustee acting for the
benefit of the Beneficiary. However, if we have already taken irreversible
corporate action, then the trustee will not have the authority to rescind and
recast the vote. If we pay the Prohibited Transferee or Prohibited Owner any
dividend or other distribution before we discover that the shares were
transferred to the trust, the Purported Transferee or Prohibited Owner will be
required to repay the dividend to the trustee upon demand for distribution to
the Beneficiary. If the transfer to the trust is not automatically effective
(for any reason), to prevent violation of the applicable ownership limit or any
other limit provided in our charter or imposed by the board of directors, then
our charter provides that the transfer of the Excess Shares will be void ab
initio.
In addition, shares of stock held in the trust will be considered to have
been offered for sale to us, or our designee, at a price per share equal to the
lesser of (1) the price per share in the transaction that resulted in the
transfer to the trust (or, in the case of a devise or gift, the market price at
the time of such devise or gift) and (2) the applicable market price on the date
that we, or our designee, accept the offer. We have the right to accept the
offer until the trustee has sold the shares held in the trust. Upon that sale to
us, the interest of the Beneficiary in the shares sold will terminate and the
trustee will distribute the net proceeds of the sale to the Prohibited
Transferee or Prohibited Owner.
If any attempted transfer of shares would cause us to be beneficially owned
by fewer than 100 persons, our charter provides that the transfer will be null
and void in its entirety and the intended transferee will acquire no rights to
the stock.
All certificates representing shares will bear a legend referring to the
restrictions described above. The ownership limitations described above could
delay, defer or prevent a transaction or a change in control that might involve
a premium price for the shares or otherwise be in the best interest of
stockholders.
Under our charter, owners of outstanding shares must, upon our demand,
provide us with a completed questionnaire containing information regarding
ownership of the shares, as set forth in the treasury regulations. In addition,
each stockholder must upon demand disclose to us in writing such information
that we may request in order to determine the effect, if any, of the
stockholder's actual and constructive ownership of shares of common stock,
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and/or Series D Preferred Stock on our status as a REIT and to ensure compliance
with each ownership limit, or any other limit specified in the charter or
required by the board of directors.
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TRANSFER AGENT, REGISTRAR, CONVERSION AGENT AND
DIVIDEND DISBURSING AGENT
The transfer agent, registrar and dividend disbursing agent for our common
stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock is BankBoston, N.A., an affiliate of First
National Bank of Boston.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
ASSOCIATED WITH AN INVESTMENT IN COMMON STOCK
The following summary of material federal income tax considerations
regarding AMB and the common stock AMB is registering is based on current law,
is for general information only and is not tax advice. The information set forth
below, to the extent that it constitutes matters of law, summaries of legal
matters or legal conclusions, is the opinion of Latham & Watkins. Your tax
treatment will vary depending on your particular situation, and this discussion
does not purport to deal with all aspects of taxation that may be relevant to a
holder of common stock in light of his or her personal investments or tax
circumstances, or to stockholders who receive special treatment under the
federal income tax laws except to the extent discussed under the headings
"-- Taxation of Tax-Exempt Stockholders" and "-- Taxation of Non-U.S.
Stockholders." Stockholders receiving special treatment include, without
limitation, insurance companies, financial institutions or broker-dealers,
tax-exempt organizations, stockholders holding securities as part of a
conversion transaction, or a hedge or hedging transaction or as a position in a
straddle for tax purposes, foreign corporations or partnerships and persons who
are not citizens or residents of the United States. In addition, the summary
below does not consider the effect of any foreign, state, local or other tax
laws that may be applicable to you as a holder of AMB's common stock.
The information in this section is based on the Internal Revenue Code,
current, temporary and proposed treasury regulations promulgated under the
Internal Revenue Code, the legislative history of the Internal Revenue Code,
current administrative interpretations and practices of the Internal Revenue
Service, including its practices and policies as expressed in certain private
letter rulings which are not binding on the Internal Revenue Service except with
respect to the particular taxpayers who requested and received such rulings, and
court decisions, all as of the date of this prospectus. Future legislation,
treasury regulations, administrative interpretations and practices and/or court
decisions may adversely affect the tax considerations described in this
prospectus. Any such change could apply retroactively to transactions preceding
the date of the change. We have not requested, and do not plan to request, any
rulings from the Internal Revenue Service concerning our tax treatment and the
statements in this prospectus are not binding on the Internal Revenue Service or
a court. Thus, we can provide no assurance that the tax considerations contained
in this summary will not be challenged by the Internal Revenue Service or
sustained by a court if challenged by the Internal Revenue Service.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF (1) THE ACQUISITION, OWNERSHIP AND SALE OR OTHER
DISPOSITION OF AMB'S COMMON STOCK, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX CONSEQUENCES OF SUCH ACQUISITION, OWNERSHIP AND SALE OR OTHER
DISPOSITION, (2) AMB'S ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST
FOR FEDERAL INCOME TAX PURPOSES AND (3) OF POTENTIAL CHANGES IN APPLICABLE TAX
LAWS.
TAXATION OF THE COMPANY
General. AMB elected to be taxed as a real estate investment trust under
Sections 856 through 860 of the Internal Revenue Code, commencing with its
taxable year ended December 31, 1997. AMB believes it has been organized and has
operated in a manner which allows it to qualify for taxation as a real estate
investment trust under the Internal Revenue Code commencing with its taxable
year ended December 31, 1997. AMB intends to continue to operate in this manner.
However, the qualification and taxation as a real estate investment trust
depends upon AMB's ability to meet, through actual annual operating results,
asset
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diversification, distribution levels and diversity of stock ownership, the
various qualification tests imposed under the Internal Revenue Code.
Accordingly, no assurance can be given that AMB has operated or will continue to
operate in a manner so as to qualify or remain qualified as a real estate
investment trust. See "-- Failure to Qualify."
The sections of the Internal Revenue Code that relate to the qualification
and operation as a real estate investment trust are highly technical and
complex. The following sets forth the material aspects of the sections of the
Internal Revenue Code that govern the federal income tax treatment of a real
estate investment trust and its stockholders. This summary is qualified in its
entirety by the applicable Internal Revenue Code provisions, relevant rules and
regulations promulgated under the Internal Revenue Code, and administrative and
judicial interpretations of the Internal Revenue Code and these rules and
regulations.
If AMB qualifies for taxation as a real estate investment trust, it
generally will not be subject to federal corporate income taxes on its net
income that is currently distributed to stockholders. This treatment
substantially eliminates the "double taxation" that generally results from
investment in a corporation. Double taxation refers to taxation that occurs once
at the corporate level when income is earned and once again at the stockholder
level when such income is distributed. AMB will be subject to federal income
tax, however, as follows:
First, AMB will be taxed at regular corporate rates on any undistributed
real estate investment trust taxable income, including undistributed net capital
gains.
Second, AMB may be required to pay the "alternative minimum tax" on its
items of tax preference.
Third, if AMB has (1) net income from the sale or other disposition of
"foreclosure property" which is held primarily for sale to customers in the
ordinary course of business or (2) other nonqualifying income from foreclosure
property, AMB will be subject to tax at the highest corporate rate on this
income. Foreclosure property is generally defined as property we acquired
through foreclosure or after a default on a loan secured by the property or a
lease of the property.
Fourth, AMB will be subject to a 100% tax on any net income from prohibited
transactions. Prohibited transactions are, in general, sales or other taxable
dispositions of property, other than foreclosure property, held primarily for
sale to customers in the ordinary course of business.
Fifth, if AMB fails to satisfy the 75% or 95% gross income test, as
described below, but has otherwise maintained its qualification as a real estate
investment trust, AMB will be required to pay a 100% tax on an amount equal to
(1) the gross income attributable to the greater of the amount by which AMB
fails the 75% or 95% gross income test multiplied by (2) a fraction intended to
reflect AMB's profitability.
Sixth, AMB will be required to pay a 4% excise tax on the excess of the
required distribution over the amounts actually distributed if it fails to
distribute during each calendar year at least the sum of (1) 85% of its real
estate investment trust ordinary income for the year, (2) 95% of its real estate
investment trust capital gain net income for the year, and (3) any undistributed
taxable income from prior periods.
Seventh, if AMB acquires any asset from a corporation which is or has been
a C corporation, generally a corporation required to pay full corporate-level
tax, in a transaction in which the basis of the asset in AMB's hands is
determined by reference to the basis of the asset in the hands of the C
corporation, and AMB subsequently recognizes gain on the disposition of the
asset during the ten-year period beginning on the date on which AMB acquired the
asset, then under treasury regulations not yet promulgated, AMB will be required
to pay tax at the highest regular corporate tax rate on this gain to the extent
of the excess of (1) the fair market value of the asset over (2) AMB's adjusted
basis in the asset, in each case determined as of the date on which AMB acquired
the asset. The results described in this paragraph with respect to the
recognition of such gain assume that AMB will make an election pursuant to
Internal Revenue Service Notice 88-19 and that the availability or nature of
such election is not modified as proposed in President Clinton's Year 2000
Federal Budget Proposal.
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Requirements for Qualification as a REIT. The Internal Revenue Code defines
a real estate investment trust as a corporation, trust or association:
(1) that is managed by one or more trustees or directors;
(2) that issues transferable shares or transferable certificates to
evidence its beneficial ownership;
(3) that would be taxable as a domestic corporation, but for Sections
856 through 860 of the Internal Revenue Code;
(4) that is not a financial institution or an insurance company within
the meaning of the Internal Revenue Code;
(5) that is beneficially owned by 100 or more persons;
(6) not more than 50% in value of the outstanding stock of which is
owned, actually or constructively, by five or fewer individuals, as defined
in the Internal Revenue Code to include certain entities, during the last
half of each taxable year; and
(7) that meets other tests, described below, regarding the nature of
its income and assets and the amount of its distributions.
The Internal Revenue Code provides that conditions (1) to (4), inclusive,
must be met during the entire taxable year and that condition (5) must be met
during at least 335 days of a taxable year of twelve months, or during a
proportionate part of a taxable year of less than twelve months. Conditions (5)
and (6) do not apply until after the first taxable year for which an election is
made to be taxed as a real estate investment trust. For purposes of condition
(6), pension funds and certain other tax-exempt entities generally are treated
as individuals, subject to a "look-through" exception with respect to pension
funds.
AMB believes that it has satisfied conditions (1) through (7) inclusive. In
addition, AMB's charter provides for restrictions regarding ownership and
transfer of shares. These restrictions are intended to assist us in continuing
to satisfy the share ownership requirements described in (5) and (6) above.
These stock ownership and transfer restrictions are described in "Description of
Capital Stock -- Restrictions on Ownership and Transfer of Capital Stock." These
restrictions, however, may not ensure that AMB will, in all cases, be able to
satisfy the share ownership requirements described in (5) and (6) above. If AMB
fails to satisfy these share ownership requirements, except as provided in the
next sentence, its status as a real estate investment trust will terminate.
However, if AMB complies with the rules contained in applicable treasury
regulations that require AMB to ascertain the actual ownership of its shares and
AMB does not know, or would not have known through the exercise of reasonable
diligence, that it failed to meet the requirement described in condition (6)
above, AMB will be treated as having met this requirement. See the section below
entitled "-- Failure to Qualify."
In addition, AMB may not maintain its status as a real estate investment
trust unless its taxable year is the calendar year. AMB has and will continue to
have a calendar taxable year.
Termination of S Status. Prior to its merger into AMB in connection with
our formation transactions, AMB Institutional Realty Advisors, Inc. believed
that it validly elected to be taxed as an S corporation and that such election
had not been revoked or otherwise terminated (except as provided below). In
order to allow AMB to become a real estate investment trust, AMB Institutional
Realty Advisors, Inc. revoked its S election shortly before its merger into AMB.
If AMB Institutional Realty Advisors, Inc. was not an S corporation in 1997 (the
calendar year in which our formation transactions occurred), AMB likely would
not qualify as a real estate investment trust for its taxable year ended
December 31, 1997 and perhaps subsequent years. See "-- Failure to Qualify." In
connection with AMB's initial public offering, Latham & Watkins rendered an
opinion regarding AMB Institutional Realty Advisors, Inc.'s federal income tax
status as an S corporation, which opinion was based upon certain representations
made by AMB Institutional Realty Advisors, Inc. as to factual matters and upon
the opinion of counsel for certain shareholders of AMB Institutional Realty
Advisors, Inc., with respect to matters relating to the tax status of such
shareholders.
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Ownership of Interests in Partnerships and Qualified REIT Subsidiaries. In
the case of a real estate investment trust which is a partner in a partnership,
Internal Revenue Service treasury regulations provide that the real estate
investment trust will be deemed to own its proportionate share of the assets of
the partnership. Also, the real estate investment trust will be deemed to be
entitled to its proportionate share of the income of the partnership. The
character of the assets and gross income of the partnership retains the same
character in the hands of the real estate investment trust for purposes of
Section 856 of the Internal Revenue Code, including satisfying the gross income
tests and the asset tests. In addition, for these purposes, the operating
partnership's assets and items of income include its share of the assets and
items of income of any partnership or limited liability company in which it owns
an interest. We have included a brief summary of the rules governing the federal
income taxation of partnerships and their partners below in "-- Tax Aspects of
the Operating Partnerships and the Joint Ventures." AMB has direct control of
the operating partnership and will continue to operate it consistent with the
requirements for qualification as a real estate investment trust. However, we
are a limited partner or non-managing member in certain of our joint ventures.
If a joint venture takes or expects to take actions which could jeopardize AMB's
status as a real estate investment trust or subject AMB to tax, we may be forced
to dispose of our interest in such joint venture. In addition, it is possible
that a joint venture could take an action which could cause AMB to fail a real
estate investment trust income or asset test, and that AMB would not become
aware of such action in a time frame which would allow us to dispose of our
interest in the joint venture or take other corrective action on a timely basis.
In such a case, AMB could fail to qualify as a real estate investment trust.
AMB owns 100% of the stock of corporate subsidiaries that are qualified
REIT subsidiaries and may acquire stock of one or more new corporate
subsidiaries. A corporation will qualify as a qualified REIT subsidiary if 100%
of its stock is held by AMB. A qualified REIT subsidiary will not be treated as
a separate corporation, and all assets, liabilities and items of income,
deduction and credit of a qualified REIT subsidiary will be treated as assets,
liabilities and such items, as the case may be, of AMB for all purposes of the
Internal Revenue Code, including the real estate investment trust qualification
tests. For this reason, references under "Certain Federal Income Tax
Considerations" to our income and assets shall include the income and assets of
any qualified REIT subsidiary. A qualified REIT subsidiary will not be subject
to federal income tax, and our ownership of the voting stock of a qualified REIT
subsidiary will not violate the restrictions against ownership of securities of
any one issuer which constitute more than 10% of such issuer's voting securities
or more than 5% of the value of our total assets, as described below under
"-- Asset Tests."
Income Tests. AMB must satisfy two gross income requirements annually to
maintain its qualification as a real estate investment trust. First, in each
taxable year AMB must derive directly or indirectly at least 75% of its gross
income, excluding gross income from prohibited transactions, from investments
relating to real property or mortgages on real property, including "rents from
real property" and, in certain circumstances, interest, or from certain types of
temporary investments. Second, each taxable year AMB must derive at least 95% of
its gross income, excluding gross income from prohibited transactions, from
these real property investments, dividends, interest and gain from the sale or
disposition of stock or securities, or from any combination of the foregoing.
For these purposes, the term "interest" generally does not include any amount
received or accrued, directly or indirectly, if the determination of the amount
depends in whole or in part on the income or profits of any person. However, an
amount received or accrued generally will not be excluded from the term
"interest" solely by reason of being based on a fixed percentage or percentages
of receipts or sales.
Rents we receive will qualify as "rents from real property" in satisfying
the gross income requirements for a real estate investment trust described above
only if the following conditions are met:
- the amount of rent must not be based in whole or in part on the income or
profits of any person. However, an amount received or accrued generally
will not be excluded from the term "rents from real property" solely by
reason of being based on a fixed percentage or percentages of receipts or
sales;
- the Internal Revenue Code provides that rents received from a tenant will
not qualify as "rents from real property" in satisfying the gross income
tests if the real estate investment trust, or an actual or
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constructive owner of 10% or more of the real estate investment trust,
actually or constructively owns 10% or more of the interests in such
tenant (a "related party tenant");
- if rent attributable to personal property, leased in connection with a
lease of real property, is greater than 15% of the total rent received
under the lease, then the portion of rent attributable to personal
property will not qualify as "rents from real property"; and
- for rents received to qualify as "rents from real property," the real
estate investment trust generally must not operate or manage the property
or furnish or render services to the tenants of the property (subject to
a 1% de minimis exception), other than through an independent contractor
from whom the real estate investment trust derives no revenue. The real
estate investment trust may, however, directly perform certain services
that are "usually or customarily rendered" in connection with the rental
of space for occupancy only and are not otherwise considered "rendered to
the occupant" of the property. Examples of such services include the
provision of light, heat, or other utilities, trash removal and general
maintenance of common areas.
AMB generally does not intend to receive rent which fails to qualify as
"rents from real property." However, we may have failed to satisfy, and may
continue to fail to satisfy, some of the conditions described above to the
extent these actions will not, based on the advice of our tax counsel,
jeopardize AMB's status as a real estate investment trust.
AMB Investment Management, Inc. is the sole general partner of, and
conducts its operations through, AMB Investment Management Limited Partnership.
AMB Investment Management Limited Partnership conducts the asset management
business and receives fees, including incentive fees, in exchange for the
provision of certain services to asset management clients. In addition,
Headlands Realty Corporation may provide certain services in exchange for a fee
or derive other income which would not qualify under the real estate investment
trust gross income tests. Such fees and other income do not accrue to AMB, but
AMB derives its allocable share of dividend income from AMB Investment
Management, Inc. and Headlands Realty through its interest in the operating
partnership. Such dividend income qualifies under the 95%, but not the 75%, real
estate investment trust gross income test. The operating partnership may provide
certain management or administrative services to AMB Investment Management
Limited Partnership and Headlands Realty Corporation. The fees derived by the
operating partnership as a result of the provision of such services will be
nonqualifying income to us under both the 95% and 75% real estate investment
trust income tests. The amount of such dividend and fee income will depend on a
number of factors which cannot be determined with certainty, including the level
of services provided by AMB Investment Management Limited Partnership, Headlands
Realty Corporation and the operating partnership. We will monitor the amount of
the dividend income from AMB Investment Management, Inc. and Headlands Realty
Corporation and the fee income described above, and will take actions intended
to keep this income, and any other nonqualifying income, within the limitations
of the real estate investment trust income tests. However, we cannot guarantee
that such actions will in all cases prevent us from violating a real estate
investment trust income test.
If AMB fails to satisfy one or both of the 75% or 95% gross income tests
for any taxable year, AMB may nevertheless qualify as a real estate investment
trust for the year if it is entitled to relief under certain provisions of the
Internal Revenue Code. Generally, AMB may avail itself of the relief provisions
if:
- its failure to meet these tests was due to reasonable cause and not due
to willful neglect;
- it attaches a schedule of the sources of its income to its federal income
tax return; and
- any incorrect information on the schedule was not due to fraud with
intent to evade tax.
It is not possible, however, to state whether in all circumstances we would
be entitled to the benefit of these relief provisions. For example, if AMB fails
to satisfy the gross income tests because nonqualifying income that it
intentionally accrues or receives exceeds the limits on nonqualifying income,
the Internal Revenue Service could conclude that AMB's failure to satisfy the
tests was not due to reasonable cause. If these relief provisions do not apply
to a particular set of circumstances, AMB will not qualify as a real estate
investment trust. As discussed above in "-- Taxation of the Company -- General,"
even if these relief
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provisions apply, and AMB retains its status as a real estate investment trust,
a tax would be imposed with respect to AMB's non-qualifying income. AMB may not
always be able to maintain compliance with the gross income tests for real
estate investment trust qualification despite periodic monitoring of its income.
Asset Tests. At the close of each quarter of our taxable year, AMB also
must satisfy three tests relating to the nature and diversification of its
assets. First, at least 75% of the value of AMB's total assets must be
represented by real estate assets, cash, cash items and government securities.
For purposes of this test, real estate assets include stock or debt instruments
that are purchased with the proceeds of a stock offering or a long-term (at
least five years) public debt offering, but only for the one year period
beginning on the date AMB receives such proceeds. Second, not more than 25% of
AMB's total assets may be represented by securities, other than those securities
includable in the 75% asset test. Third, of the investments included in the 25%
asset class, the value of any one issuer's securities may not exceed 5% of the
value of AMB's total assets and AMB may not own more than 10% of any one
issuer's outstanding voting securities.
The operating partnership owns 100% of the non-voting preferred stock of
AMB Investment Management, Inc. and Headlands Realty Corporation, and by virtue
of its ownership of interests in the operating partnership, AMB is considered to
own its pro rata share of that stock. The stock of AMB Investment Management,
Inc. and Headlands Realty Corporation held by us is not a qualifying real estate
asset. The operating partnership does not and will not own any of the voting
securities of AMB Investment Management, Inc. or Headlands Realty Corporation,
and therefore we will not be considered to own more than 10% of the voting
securities of either corporation. In addition, we believe that the value of our
pro rata share of the securities of AMB Investment Management, Inc. and
Headlands Realty Corporation held by the operating partnership does not, in
either case, exceed 5% of the total value of our assets, and will not exceed
such amount in the future. No independent appraisals have been obtained to
support this conclusion. We cannot assure you that the Internal Revenue Service
will not contend that the value of the securities of one or both of AMB
Investment Management, Inc. and Headlands Realty Corporation held by us exceeds
the 5% value limitation. The 5% value test must be satisfied not only on the
date that we, directly or through the operating partnership, acquire securities
in AMB Investment Management, Inc. or Headlands Realty Corporation, as
applicable, but also each time we increase our ownership of securities of AMB
Investment Management, Inc. and Headlands Realty Corporation, including as a
result of increasing our interest in the operating partnership. For example, our
indirect ownership of securities of AMB Investment Management, Inc. and
Headlands Realty Corporation will increase as a result of our capital
contributions to the operating partnership or as limited partners exercise their
redemption/exchange rights. Although we believe that we presently satisfy the 5%
value test and plan to take steps to ensure that we satisfy such test for any
quarter with respect to which retesting is to occur, we cannot assure you that
such steps will always be successful, or will not require a reduction in the
operating partnership's overall interest in either or both of AMB Investment
Management, Inc. and Headlands Realty Corporation.
President Clinton's Year 2000 Federal Budget Proposal, announced February
1, 1999, includes a proposal that would limit a real estate investment trust's
ability to own more than 10%, by vote or value, of the stock of another
corporation. As discussed above, a real estate investment trust cannot currently
own more than 10% of the outstanding voting securities of any one issuer. The
budget proposal would allow a real estate investment trust to own all or a
portion of the voting stock and value of a "taxable REIT subsidiary," provided
all of a real estate investment trust's taxable subsidiaries do not represent
more than 15% of the total assets of the real estate investment trust. In
addition, under the budget proposal, a "taxable REIT subsidiary" would not be
entitled to deduct any interest on debt funded directly or indirectly by the
REIT. The budget proposal, if enacted in its current form, may require that we
restructure our interests in AMB Investment Management, Inc. and Headlands
Realty Corporation, because we currently own more than 10% of the value of both
corporations and because we have loaned funds to one of the corporations. The
budget proposal, if enacted in its current form, would be effective after the
date of its enactment and would provide transition rules to allow corporations,
like AMB Investment Management, Inc. and Headlands Realty Corporation, to
convert into "taxable REIT subsidiaries" tax-free. It is presently uncertain
whether any proposal regarding REIT subsidiaries, including the budget proposal,
will be enacted, or if enacted, what the terms of such proposal, including its
effective date, will be.
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After initially meeting the asset tests at the close of any quarter, AMB
will not lose its status as a real estate investment trust for failure to
satisfy the asset tests at the end of a later quarter solely by reason of
changes in asset values. If we fail to satisfy the asset tests because we
acquire securities or other property during a quarter, including an increase in
AMB's interests in the operating partnership, we can cure this failure by
disposing of sufficient nonqualifying assets within 30 days after the close of
that quarter. We believe we have maintained and intend to continue to maintain
adequate records of the value of our assets to ensure compliance with the asset
tests and to take such other actions within the 30 days after the close of any
quarter as may be required to cure any noncompliance. If we fail to cure
noncompliance with the asset tests within this time period, AMB would cease to
qualify as a real estate investment trust.
In connection with recent property acquisitions, we acquired partnership
interests and may have inadvertently acquired the voting securities of shell
corporations in violation of the 10% asset test at March 31, 1999. However,
while no assurance can be given, based on the advice of counsel in the relevant
jurisdiction and other factors, we do not believe that we have in fact violated
this test or that we would lose our status as a real estate investment trust as
a result of this matter.
Annual Distribution Requirements. To maintain its qualification as a real
estate investment trust, AMB is required to distribute dividends, other than
capital gain dividends, to its stockholders in an amount at least equal to the
sum of (1) 95% of its "real estate investment trust taxable income" and (2) 95%
of AMB's after tax net income, if any, from foreclosure property, (3) minus the
excess of the sum of certain items of noncash income over 5% of the "real estate
investment trust taxable income." AMB's "real estate investment trust taxable
income" is computed without regard to the dividends paid deduction and AMB's net
capital gain. In addition, for purposes of this test, non-cash income means
income attributable to leveled stepped rents, original issue discount on
purchase money debt, or a like-kind exchange that is later determined to be
taxable.
These distributions must be paid in the taxable year to which they relate,
or in the following taxable year if they are declared before we timely file our
tax return for such year and if paid on or before the first regular dividend
payment after such declaration. Except as provided in "-- Taxation of Taxable
U.S. Stockholders" below, these distributions are taxable to stockholders (other
than tax-exempt entities, as discussed below) in the year in which paid. This is
so even though these distributions relate to the prior year for purposes of our
95% distribution requirement. The amount distributed must not be
preferential -- e.g., every stockholder of the class of stock to which a
distribution is made must be treated the same as every other stockholder of that
class, and no class of stock may be treated otherwise than in accordance with
its dividend rights as a class. To the extent that AMB does not distribute all
of its net capital gain or distribute at least 95%, but less than 100%, of its
"real estate investment trust taxable income," as adjusted, AMB will be subject
to tax thereon at regular ordinary and capital gain corporate tax rates. AMB
believes it has made and intends to continue to make timely distributions
sufficient to satisfy these annual distribution requirements. In this regard,
the partnership agreement authorizes AMB, as general partner of the operating
partnership, to take such steps as may be necessary to cause the operating
partnership to distribute to its partners an amount sufficient to permit AMB to
meet these distribution requirements.
AMB expects that its real estate investment trust taxable income will be
less than its cash flow due to the allowance of depreciation and other non-cash
charges in computing real estate investment trust taxable income. Accordingly,
AMB anticipates that it will generally have sufficient cash or liquid assets to
enable it to satisfy the distribution requirements described above. However,
from time to time, AMB may not have sufficient cash or other liquid assets to
meet these distribution requirements due to timing differences between the
actual receipt of income and actual payment of deductible expenses, and the
inclusion of income and deduction of expenses in arriving at its taxable income.
If these timing differences occur, in order to meet the distribution
requirements, AMB may need to arrange for short-term, or possibly long-term,
borrowings or need to pay dividends in the form of taxable stock dividends.
Under certain circumstances, AMB may be able to rectify a failure to meet
the distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year, which may be included in AMB's deduction for
dividends paid for the earlier year. Thus, AMB may be able to avoid being taxed
on amounts
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distributed as deficiency dividends. However, AMB will be required to pay
interest based upon the amount of any deduction claimed for deficiency
dividends.
Furthermore, AMB would be subject to a 4% excise tax on the excess of the
required distribution over the amounts actually distributed if it should fail to
distribute during each calendar year (or in the case of distributions with
declaration and record dates falling in the last three months of the calendar
year, by the end of January immediately following such year) at least the sum of
85% of AMB's REIT ordinary income for such year, 95% of its real estate
investment trust capital gain income for the year and any undistributed taxable
income from prior periods. Any real estate investment trust taxable income and
net capital gain on which this excise tax is imposed for any year is treated as
an amount distributed during that year for purposes of calculating such tax.
Earnings and Profits Distribution Requirement. In order to qualify as a
real estate investment trust, AMB cannot have at the end of any taxable year any
undistributed "earnings and profits" that are attributable to a "C corporation"
taxable year. A C corporation's taxable year is a year in which a corporation is
neither a real estate investment trust nor an S corporation. In connection with
our formation transactions, we succeeded to various tax attributes of AMB
Institutional Realty Advisors, Inc., AMB Current Income Fund, Inc. and AMB Value
Added Fund, Inc., if the mergers of AMB Current Income Fund, Inc. and VAF into
AMB Institutional Realty Advisors, Inc. were treated as tax-free reorganizations
under the Internal Revenue Code, including any undistributed C corporation
earnings and profits of such corporations. If AMB Institutional Realty Advisors,
Inc. qualified as an S corporation for each year in which its activities would
have created earnings and profits, and each of AMB Current Income Fund, Inc. and
AMB Value Added Fund, Inc. qualified as a real estate investment trust during
its existence and its merger into us was treated as a tax-free reorganization
under the Internal Revenue Code, then those corporations would not have any
undistributed C corporation earnings and profits. If, however, either AMB
Current Income Fund, Inc. or AMB Value Added Fund, Inc. failed to qualify as a
real estate investment trust throughout the duration of its existence, or AMB
Institutional Realty Advisors, Inc. failed to qualify as an S corporation for
any year in which its activities would have created earnings and profits, then
AMB would have acquired undistributed C corporation earnings and profits that,
if not distributed by AMB prior to the end of its first taxable year, would
prevent AMB from qualifying as a real estate investment trust.
We believe that each of AMB Current Income Fund, Inc. and AMB Value Added
Fund, Inc. qualified as a real estate investment trust throughout the duration
of its existence and that, in any event, neither AMB Current Income Fund, Inc.
nor AMB Value Added Fund, Inc. had any undistributed C corporation earnings and
profits at the time of the applicable merger. We believe that AMB Institutional
Realty Advisors, Inc. qualified as an S corporation since its 1989 taxable year
and that its activities prior to such year did not create any earnings and
profits. In addition, in connection with AMB's initial public offering, counsel
to AMB Current Income Fund, Inc. and AMB Value Added Fund, Inc. rendered
opinions with respect to the qualification of those corporations as real estate
investment trusts for federal income tax purposes, and Latham & Watkins rendered
an opinion with respect to AMB Institutional Realty Advisors, Inc.'s status as
an S corporation for federal income tax purposes. Those opinions were based on
certain representations and assumptions. However, the Internal Revenue Service
may contend otherwise on a subsequent audit of AMB Institutional Realty
Advisors, Inc., AMB Current Income Fund, Inc. or AMB Value Added Fund, Inc.
Property Transfers. If the transfers by the operating partnership and its
subsidiaries of the retail properties to BPP Retail and Burnham Pacific are
consummated, the proceeds from many of the properties transferred would exceed
their tax bases, resulting in gains that would be allocable to the partners of
the operating partnership, including AMB, in accordance with the terms of the
partnership agreement. The operating partnership currently expects to defer
recognition of a substantial portion of these gains by acquiring replacement
properties pursuant to the like-kind-exchange provisions of Section 1031 of the
Internal Revenue Code. However, these transactions might not close as scheduled
or close at all, and it is possible that the transactions may close with respect
to just a portion of the properties currently under agreement.
Any gain realized by us on the sale of any property held as inventory or
other property held primarily for sale to customers in the ordinary course of
business (including our share of any such gain realized by the
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operating partnership, either directly or through its subsidiary partnerships)
will be treated as income from a prohibited transaction that is subject to a
100% penalty tax. This prohibited transaction income may also adversely affect
AMB's ability to satisfy the income tests for qualification as a real estate
investment trust. Under existing law, whether property is held as inventory or
primarily for sale to customers in the ordinary course of a trade or business is
a question of fact that depends on all the facts and circumstances surrounding
the particular transaction. The operating partnership intends to hold its
properties for investment with a view to long-term appreciation, to engage in
the business of acquiring, developing and owning its properties and to make
occasional sales of the properties as are consistent with the operating
partnership's investment objectives. However, the Internal Revenue Service may
successfully contend that some or all of the sales made by the operating
partnership or its subsidiary partnerships (including some or all of the sales
to BPP Retail and Burnham Pacific), are prohibited transactions. AMB would be
subject to the 100% penalty tax on its allocable share of the gains resulting
from any such sales.
FAILURE TO QUALIFY
If AMB fails to qualify for taxation as a real estate investment trust in
any taxable year, and the relief provisions of the Internal Revenue Code
applicable to real estate investment trusts do not apply, AMB will be subject to
tax, including any applicable alternative minimum tax, on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which AMB
fails to qualify will not be deductible by AMB and AMB will not be required to
distribute any amounts to its stockholders. As a result, we anticipate that
AMB's failure to qualify as a real estate investment trust would reduce the cash
available for distribution by AMB to its stockholders. In addition, if AMB fails
to qualify as a real estate investment trust, all distributions to stockholders
will be taxable as ordinary income to the extent of AMB's current and
accumulated earnings and profits, and subject to certain limitations of the
Internal Revenue Code, corporate distributees may be eligible for the dividends
received deduction. Unless entitled to relief under specific statutory
provisions, AMB will also be disqualified from taxation as a real estate
investment trust for the four taxable years following the year during which it
lost its qualification. It is not possible to state whether in all circumstances
AMB would be entitled to this statutory relief. In addition, President Clinton's
Year 2000 Federal Budget Proposal contains a provision which, if enacted in its
present form, would result in the immediate taxation of all gain inherent in a C
corporation's assets upon an election by the corporation to become a real estate
investment trust in taxable years beginning after January 1, 2000. If enacted,
this provision could impose a substantial tax upon AMB's re-election to be taxed
as a real estate investment trust following any loss of its status as a real
estate investment trust.
TAX ASPECTS OF THE OPERATING PARTNERSHIP AND THE JOINT VENTURES
General. Substantially all of our investments will be held indirectly
through the operating partnership. In addition, the operating partnership holds
certain of its investments indirectly through joint ventures. In general,
partnerships are "pass-through" entities which are not subject to federal income
tax. Rather, partners are allocated their proportionate shares of the items of
income, gain, loss, deduction and credit of a partnership, and are potentially
subject to tax thereon, without regard to whether the partners receive a
distribution from the partnership. AMB will include in its income its
proportionate share of the foregoing partnership items for purposes of the
various real estate investment trust income tests and in the computation of our
real estate investment trust taxable income. Moreover, for purposes of the real
estate investment trust asset tests, AMB will include its proportionate share of
assets held by the operating partnership and joint ventures. See "-- Taxation of
the Company."
Entity Classification. AMB's interests in the operating partnership and the
joint ventures involve special tax considerations, including the possibility
that the Internal Revenue Service might challenge the status of the operating
partnership or a partnership as a partnership, as opposed to an association
taxable as a corporation for federal income tax purposes. If the operating
partnership or a partnership were treated as an association, it would be taxable
as a corporation and therefore be subject to an entity-level tax on its income.
In such a situation, the character of our assets and items of gross income would
change and preclude AMB from satisfying the asset tests and possibly the income
tests (see "-- Taxation of the Company -- Asset
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Tests" and "-- Income Tests"). This, in turn, would prevent AMB from qualifying
as a real estate investment trust. See "-- Failure to Qualify" for a discussion
of the effect of our failure to meet these tests for a taxable year. In
addition, a change in the operating partnership's or a partnership's status for
tax purposes might be treated as a taxable event. If so, we might incur a tax
liability without any related cash distributions.
Treasury regulations that apply for tax periods beginning on or after
January 1, 1997 provide that a domestic business entity not otherwise organized
as a corporation and which has at least two members is eligible to be treated as
a partnership for federal income tax purposes. Unless it elects otherwise, an
eligible entity in existence prior to January 1, 1997 will have the same
classification for federal income tax purposes that it claimed under the entity
classification treasury regulations in effect prior to this date. In addition,
an eligible entity which did not exist, or did not claim a classification, prior
to January 1, 1997, will be classified as a partnership for federal income tax
purposes unless it elects otherwise. The operating partnership and each of our
joint ventures intend to claim classification as a partnership under the Final
Regulations, and, as a result, we believe such partnerships will be classified
as partnerships for federal income tax purposes.
Allocations of Operating Partnership Income, Gain, Loss and Deduction. The
partnership agreement provides for preferred distributions of cash and preferred
allocations of income to AMB with respect to its Series A Preferred Units and to
the holders of Series B Preferred Units. In addition, to the extent AMB issues
Series C Preferred Stock in exchange for Series C Preferred Units of AMB
Property II or Series D Preferred Stock in exchange for Series D Preferred Units
of AMB Property II, the operating partnership will issue Series C Preferred
Units or Series D Preferred Units to AMB, and the partnership agreement will be
amended to provide for similar preferred distributions of cash and preferred
allocations of income to AMB with respect to the operating partnership's Series
C Preferred Units or its Series D Preferred Units. As a consequence, AMB will
receive distributions from the operating partnership and attributable to its
other assets that AMB would use to pay dividends on shares of Series A Preferred
Stock and any shares of Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock issued by AMB before any other partner in the operating
partnership (other than a holder of Series B Preferred Units, if the units are
not then held by AMB) receives a distribution. In addition, if necessary, income
will be specially allocated to AMB, and losses will be allocated to the other
partners of the operating partnership, in amounts necessary to ensure that the
balance in the capital account of AMB will at all times be equal to or in excess
of the amount payable by AMB on the Series A Preferred Stock and any Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock then
issued by AMB upon liquidation or redemption. As long as AMB does not hold the
Series B Preferred Units, similar preferred distributions and allocations will
be made for the benefit of the holders of such units. All remaining items of
operating income and loss will be allocated to the holders of common units in
proportion to the number of units or performance units held by each such
unitholder. All remaining items of gain or loss relating to the disposition of
the operating partnership's assets upon liquidation will be allocated first to
the partners in the amounts necessary, in general, to equalize AMB's and the
limited partners' per unit capital accounts, with any special allocation of gain
to the holders of performance units being offset by a reduction in the gain
allocation to AMB and unitholders which were performance investors. Certain
limited partners have agreed to guarantee debt of the operating partnership,
either directly or indirectly through an agreement to make capital contributions
to the operating partnership under limited circumstances. As a result of these
guarantees or contribution agreements, and notwithstanding the foregoing
discussion of allocations of income and loss of the operating partnership to
holders of common units, such limited partners could under limited circumstances
be allocated a disproportionate amount of net loss upon a liquidation of the
operating partnership, which net loss would have otherwise been allocable to
AMB.
If an allocation is not recognized for federal income tax purposes, the
item subject to the allocation will be reallocated in accordance with the
partners' interests in the partnership. This reallocation will be determined by
taking into account all of the facts and circumstances relating to the economic
arrangement of the partners with respect to such item. The operating
partnership's allocations of taxable income and loss are intended to comply with
the requirements of Section 704(b) of the Internal Revenue Code and the treasury
regulations promulgated under this section of the Internal Revenue Code.
Tax Allocations with Respect to the Properties. Under Section 704(c) of the
Internal Revenue Code, income, gain, loss and deduction attributable to
appreciated or depreciated property that is contributed to a
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partnership in exchange for an interest in the partnership, must be allocated in
a manner so that the contributing partner is charged with the unrealized gain or
benefits from the unrealized loss associated with the property at the time of
the contribution. The amount of the unrealized gain or unrealized loss is
generally equal to the difference between the fair market value of contributed
property at the time of contribution and the adjusted tax basis of the property
at the time of contribution (a "book-tax difference"). These allocations are
solely for federal income tax purposes and do not affect the book capital
accounts or other economic or legal arrangements among the partners. The
operating partnership was formed by way of contributions of appreciated
property. Moreover, subsequent to the formation of the operating partnership,
additional appreciated property has been contributed to the operating
partnership in exchange for interests in the operating partnership. The
partnership agreement requires that these allocations be made in a manner
consistent with Section 704(c) of the Internal Revenue Code.
In general, the partners of the operating partnership, including AMB, which
contributed assets having an adjusted tax basis less than their fair market
value at the time of contribution will be allocated depreciation deductions for
tax purposes which are lower than such deductions would have been if determined
on a pro rata basis. In addition, in the event of the disposition of any of the
contributed assets which have such a book-tax difference, all income
attributable to such book-tax difference generally will be allocated to the
contributing partners. These allocations will tend to eliminate the book-tax
difference over the life of the operating partnership. However, the special
allocation rules of Section 704(c) do not always entirely eliminate the book-
tax difference on an annual basis or with respect to a specific taxable
transaction such as a sale. Thus, the carryover basis of the contributed assets
in the hands of the operating partnership may cause AMB or other partners to be
allocated lower depreciation and other deductions, and possibly an amount of
taxable income in the event of a sale of such contributed assets in excess of
the economic or book income allocated to AMB or other partners as a result of
the sale. Such an allocation might cause AMB or other partners to recognize
taxable income in excess of cash proceeds, which might adversely affect AMB's
ability to comply with the real estate investment trust distribution
requirements. See "-- Taxation of the Company -- Requirements for Qualification"
and "-- Annual Distribution Requirements."
Treasury regulations issued under Section 704(c) of the Internal Revenue
Code provide partnerships with a choice of several methods of accounting for
book-tax differences, including retention of the "traditional method" or the
election of certain methods which would permit any distortions caused by a
book-tax difference to be entirely rectified on an annual basis or with respect
to a specific taxable transaction such as a sale. AMB and the operating
partnership have determined to use the "traditional method" for accounting for
book-tax differences for the properties initially contributed to the operating
partnership and for certain assets contributed subsequently. AMB and the
operating partnership have not yet decided what method will be used to account
for book-tax differences for properties acquired by the operating partnership in
the future.
Any property acquired by the operating partnership in a taxable transaction
will initially have a tax basis equal to its fair market value, and Section
704(c) of the Internal Revenue Code will not apply.
TAXATION OF TAXABLE U.S. STOCKHOLDERS
When we use the term "U.S. stockholder," we mean a holder of shares of
common stock who (for United States federal income tax purposes):
- is a citizen or resident of the United States;
- is a corporation, partnership, or other entity created or organized in or
under the laws of the United States or of any state thereof or in the
District of Columbia, unless, in the case of a partnership, treasury
regulations provide otherwise;
- is an estate the income of which is subject to United States federal
income taxation regardless of its source; or
- is a trust whose administration is subject to the primary supervision of
a United States court and which has one or more United States persons who
have the authority to control all substantial decisions of the trust.
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Notwithstanding the preceding sentence, to the extent provided in the
treasury regulations, certain trusts in existence on August 20, 1996, and
treated as United States persons prior to this date that elect to continue to be
treated as United States persons, shall also be considered U.S. stockholders.
Distributions Generally. As long as AMB qualifies as a real estate
investment trust, distributions out of its current or accumulated earnings and
profits, other than capital gain dividends discussed below, will constitute
dividends taxable to AMB's taxable U.S. stockholders as ordinary income. As long
as AMB qualifies as a real estate investment trust, these distributions will not
be eligible for the dividends-received deduction in the case of U.S.
stockholders that are corporations. For purposes of determining whether
distributions to holders of common stock are out of current or accumulated
earnings and profits, AMB's earnings and profits will be allocated first to the
outstanding preferred stock, if any, and then to the common stock.
To the extent that AMB makes distributions, other than capital gain
dividends discussed below, in excess of its current and accumulated earnings and
profits, these distributions will be treated first as a tax-free return of
capital to each U.S. stockholder. This treatment will reduce the adjusted tax
basis which each U.S. stockholder has in his shares of stock for tax purposes by
the amount of the distribution, but not below zero. Distributions in excess of a
U.S. stockholder's adjusted tax basis in his shares will be taxable as capital
gains, provided that the shares have been held as a capital asset, and will be
taxable as long-term capital gain if the shares have been held for more than one
year. Dividends AMB declares in October, November, or December of any year and
payable to a stockholder of record on a specified date in any of these months
shall be treated as both paid by AMB and received by the stockholder on December
31 of that year, provided AMB actually pays the dividend on or before January 31
of the following calendar year. Stockholders may not include in their own income
tax returns any of AMB's net operating losses or capital losses.
Capital Gain Distributions. Distributions that AMB properly designates as
capital gain dividends will be taxable to taxable U.S. stockholders as gains
from the sale or disposition of a capital asset, to the extent that such gains
do not exceed its actual net capital gain for the taxable year. Depending on the
characteristics of the assets which produced these gains, and on certain
designations, if any, which AMB may make, these gains may be taxable to
non-corporate U.S. stockholders at a 20% or 25% rate. U.S. stockholders that are
corporations may, however, be required to treat up to 20% of certain capital
gain dividends as ordinary income. For a discussion of the manner in which that
portion of any dividends designated as capital gain dividends will be allocated
among the holders of our preferred stock, if any, and common stock, see
"Description of Capital Stock."
Passive Activity Losses and Investment Interest Limitations. Distributions
AMB makes and gain arising from the sale or exchange by a U.S. stockholder of
AMB's shares will not be treated as passive activity income. As a result, U.S.
stockholders generally will not be able to apply any "passive losses" against
this income or gain. Distributions AMB makes, to the extent they do not
constitute a return of capital, generally will be treated as investment income
for purposes of computing the investment interest limitation. Gain arising from
the sale or other disposition of AMB's shares, however, will not be treated as
investment income under certain circumstances.
Retention of Net Long-Term Capital Gains. AMB may elect to retain, rather
than distribute as a capital gain dividend, its net long-term capital gains. If
AMB makes this election, it would pay tax on its retained net long-term capital
gains. In addition, to the extent AMB designates, a U.S. stockholder generally
would:
- include its proportionate share of AMB's undistributed long-term capital
gains in computing its long-term capital gains in its return for its
taxable year in which the last day of AMB's taxable year falls, subject
to certain limitations as to the amount that is includable;
- be deemed to have paid the capital gains tax imposed on AMB on the
designated amounts included in the U.S. stockholder's long-term capital
gains;
- receive a credit or refund for the amount of tax deemed paid by it;
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- increase the adjusted basis of its common stock by the difference between
the amount of includable gains and the tax deemed to have been paid by
it; and
- in the case of a U.S. stockholder that is a corporation, appropriately
adjust its earnings and profits for the retained capital gains in
accordance with treasury regulations to be prescribed by the Internal
Revenue Service.
Dispositions of Common Stock. If you are a U.S. stockholder and you sell or
dispose of your shares of common stock, you will recognize gain or loss for
federal income tax purposes in an amount equal to the difference between the
amount of cash and the fair market value of any property you receive on the sale
or other disposition and your adjusted basis in the shares for tax purposes.
This gain or loss will be capital if you have held the common stock as a capital
asset and will be long-term capital gain or loss if you have held the common
stock for more than one year. In general, if you are a U.S. stockholder and you
recognize loss upon the sale or other disposition of common stock that you have
held for six months or less, after applying certain holding period rules, the
loss you recognize will be treated as a long-term capital loss, to the extent
you received distributions from us which were required to be treated as
long-term capital gains.
BACKUP WITHHOLDING
AMB reports to its U.S. stockholders and the Internal Revenue Service the
amount of dividends paid during each calendar year, and the amount of any tax
withheld. Under the backup withholding rules, a stockholder may be subject to
backup withholding at the rate of 31% with respect to dividends paid unless the
holder is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with applicable requirements of the backup withholding rules.
A U.S. stockholder that does not provide AMB with his correct taxpayer
identification number may also be subject to penalties imposed by the Internal
Revenue Service. Backup withholding is not an additional tax. Any amount paid as
backup withholding will be creditable against the stockholder's income tax
liability. In addition, AMB may be required to withhold a portion of capital
gain distributions to any stockholders who fail to certify their non-foreign
status. See "-- Taxation of Non-U.S. stockholders."
TAXATION OF TAX-EXEMPT STOCKHOLDERS
The Internal Revenue Service has ruled that amounts distributed as
dividends by a qualified real estate investment trust do not constitute
unrelated business taxable income when received by a tax-exempt entity. Based on
that ruling, provided that a tax-exempt stockholder, except certain tax-exempt
stockholders described below, has not held its shares as "debt financed
property" within the meaning of the Internal Revenue Code and the shares are not
otherwise used in a trade or business, dividend income from us will not be
unrelated business taxable income to a tax-exempt stockholder. Similarly, income
from the sale of shares will not constitute unrelated business taxable income
unless a tax-exempt stockholder has held its shares as "debt financed property"
within the meaning of the Internal Revenue Code or has used the shares in its
trade or business. Generally, debt financed property is property, the
acquisition or holding of which was financed through a borrowing by the tax
exempt stockholder
For tax-exempt stockholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from federal income taxation under Internal
Revenue Code Sections 501(c)(7), (c)(9), (c)(17) and (c)(20), respectively,
income from an investment in our shares will constitute unrelated business
taxable income unless the organization is able to properly claim a deduction for
amounts set aside or placed in reserve for certain purposes so as to offset the
income generated by its investment in our shares. These prospective investors
should consult their own tax advisors concerning these "set aside" and reserve
requirements.
Notwithstanding the above, however, a portion of the dividends paid by a
"pension held REIT" shall be treated as unrelated business taxable income as to
certain types of trusts which hold more than 10%, by value, of the interests in
the real estate investment trust.
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<PAGE> 64
A real estate investment trust will not be a "pension held REIT" if it is
able to satisfy the "not closely held" requirement without relying upon the
"look-through" exception with respect to certain trusts. As a result of certain
limitations on the transfer and ownership of stock contained in AMB's charter,
AMB does not expect to be classified as a "pension-held REIT," and as a result,
the tax treatment described above should be inapplicable to AMB's stockholders.
TAXATION OF NON-U.S. STOCKHOLDERS
The preceding discussion does not address the rules governing United States
federal income taxation of the ownership and disposition of common stock by
persons that are not U.S. stockholders. In general, non-U.S. stockholders may be
subject to special tax withholding requirements on distributions from AMB and
with respect to their sale or other disposition of common stock of AMB, except
to the extent reduced or eliminated by an income tax treaty between the United
States and the non-U.S. stockholder's country. A non-U.S. stockholder who is a
stockholder of record and is eligible for reduction or elimination of
withholding must file an appropriate form with AMB in order to claim such
treatment. non-U.S. stockholders should consult their own tax advisors
concerning the federal income tax consequences to them of an acquisition of
shares of common stock, including the federal income tax treatment of
dispositions of interests in, and the receipt of distributions from, AMB.
OTHER TAX CONSEQUENCES
AMB may be subject to state or local taxation in various state or local
jurisdictions, including those in which AMB transacts business, and AMB's
stockholders may be subject to state or local taxation in various state or local
jurisdictions, including those in which they reside. AMB's state and local tax
treatment may not conform to the federal income tax consequences discussed
above. In addition, your state and local tax treatment may not conform to the
federal income tax consequences discussed above. Consequently, you should
consult your tax advisors regarding the effect of state and local tax laws on an
investment in our shares.
PLAN OF DISTRIBUTION
Pursuant to the plan, we may be requested to approve optional cash
purchases in excess of the allowable maximum amounts pursuant to requests for
waiver on behalf of you or any another participant that may be engaged in the
securities business. In deciding whether to approve such a request, we will
consider relevant factors including, but not limited to:
- our need for additional funds,
- the attractiveness of obtaining such additional funds through the sale of
common stock as compared to other sources of funds,
- the purchase price likely to apply to any sale of common stock, and
- the aggregate amount of optional cash purchases in excess of $5,000 for
which requests for waiver have been submitted by all participants.
Persons who acquire shares of common stock through the plan and resell them
shortly after acquiring them, including coverage of short positions, under
certain circumstances, may be participating in a distribution of securities that
would require compliance with Regulation M under the Securities Exchange Act of
1934, as amended, and may be considered to be underwriters within the meaning of
the Securities Act. We will not extend to any such person any rights or
privileges other than those to which it would be entitled as a participant, nor
will we enter into any agreement with any such person regarding such person's
purchase of such shares or any resale or distribution thereof. We may, however,
approve requests for optional cash purchases by such persons in excess of
allowable maximum limitations. If such requests are submitted for any WDP
investment date for an aggregate amount in excess of the amount we are willing
to accept, we may honor such requests in order of receipt, pro rata or by any
other method which we determine to be appropriate.
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<PAGE> 65
EXPERTS
The audited financial statements and schedules incorporated by reference in
this prospectus and elsewhere in the registration statement to the extent and
for the periods indicated in their reports have been audited by Arthur Andersen
LLP, independent public accountants, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus. Any statement contained in a document which
is incorporated by reference in this prospectus is automatically updated and
superseded if information contained in this prospectus, or information that we
later file with the SEC, modifies or replaces this information. We incorporate
by reference the following documents we filed with the SEC:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
- the reports, financial statements and pro forma financial statements for
the Amberjack Portfolio, the Willow Lake Portfolio, the Willow Park
Portfolio, National Distribution Portfolio and the Mahwah Portfolio from
our Form 8-K filed on December 2, 1998;
- Current Report on Form 8-K filed on January 7, 1999;
- Current Report on Form 8-K filed on April 8, 1999;
- Amendment No. 1 to Current Report on Form 8-K/A filed on June 9, 1999;
- Current Report on Form 8-K filed on June 15, 1999;
- Current Report on Form 8-K filed on July 1, 1999;
- the reports and financial statements for the AMB Contributed Properties,
the Boston Industrial Portfolio, the Jamesburg Property, Orlando Central
Park, Totem Lake Malls, Dallas Warehouse Portfolio (Garland Industrial
Portfolio), Twin Cities Office/Showroom Portfolio (Minnetonka Industrial
Portfolio), Crysen Corridor Warehouse, Cabot Industrial Portfolio, Cabot
Business Park, Manhattan Village Shopping Center, Weslayan Plaza and
Silicon Valley R&D Portfolio from our Registration Statement on Form S-11
(No. 333-58107);
- the pro forma financial statements from our Registration Statement on
Form S-11 (no. 333-58107);
- the description of our common stock contained in our Registration
Statement on Form 8-A filed with the SEC on October 28, 1997; and
- all documents filed by us with the SEC pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") after the date of this prospectus and prior to the
termination of the offering.
To receive a free copy of any of the documents incorporated by reference in
this prospectus (other than exhibits, unless they are specifically incorporated
by reference in the documents), call or write AMB Property Corporation, 505
Montgomery Street, San Francisco, CA, Attention: Secretary (415/394-9000).
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<PAGE> 66
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "we," "us," "our" or the "Company" mean AMB
Property Corporation and its subsidiaries, including AMB Property, L.P., and its
subsidiaries and, with respect to the period prior to the Company's initial
public offering, the Company's predecessor, AMB Institutional Realty Advisors,
Inc., and certain real estate investment funds, trusts, corporations and
partnerships that prior to the Company's initial public offering owned
properties that they contributed to the operating partnership. In some
instances, in order to avoid confusion between AMB Property Corporation and the
operating partnership, we refer to AMB Property Corporation alone as the
"Company." When we refer to our "charter" we mean the Company's Articles of
Incorporation, as supplemented by the Articles Supplementary establishing the
terms of our 8 1/2% Series A Cumulative Redeemable Preferred Stock (the "Series
A Preferred Stock"), the Articles Supplementary establishing the terms of our
8 5/8% Series B Cumulative Redeemable Preferred Stock (the "Series B Preferred
Stock"), the Articles Supplementary establishing the terms of our 8.75% Series C
Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock") and the
Articles Supplementary establishing the terms of our 7.75% Series D Cumulative
Redeemable Preferred Stock (the "Series D Preferred Stock"). When we refer to
"Units" we mean the operating partnership's common units and preferred units,
including the 8 1/2% Series A Cumulative Redeemable Preferred Units (the "Series
A Preferred Units") and the 8 5/8% Series B Cumulative Redeemable Preferred
Units (the "Series B Preferred Units"), and other partnership interests of the
operating partnership of different classes and series with rights, preferences
and privileges that the Company may determine in its capacity as general partner
of the operating partnership.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act, and,
accordingly, file reports, proxy statements and other information with the SEC.
The registration statement, the exhibits and schedules forming a part thereof
and the reports, proxy statements and other information we filed with the SEC in
accordance with the Exchange Act can be inspected and copied at the SEC's Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the SEC: Seven World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. If available, such information also may be accessed through
the SEC's electronic data gathering, analysis and retrieval system ("EDGAR") via
electronic means, including the SEC's Internet web site (http://www.sec.gov). In
addition, our common stock is listed on the New York Stock Exchange and similar
information about us can be inspected and copied at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
We filed with the SEC a registration statement on Form S-3 together with
all amendments and exhibits, of which this prospectus is a part, under the
Securities Act. 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 SEC. Statements contained in
this prospectus or in any document incorporated by reference herein, 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 other document
filed as an exhibit to, or incorporated by reference in, the registration
statement, each such statement being qualified in all respects by such reference
and the exhibits and schedules thereto. For further information about us and our
common stock you are encouraged to refer to the registration statement and the
exhibits and schedules which may be obtained from the SEC at its principal
office in Washington, D.C. upon payment of the fees prescribed by the SEC.
63
<PAGE> 67
ANNEX I
AMB PROPERTY CORPORATION
ESTIMATED DATES FOR OPTIONAL CASH PURCHASES
<TABLE>
<CAPTION>
ESTIMATED
THRESHOLD PRICE AND ESTIMATED ESTIMATED
WAIVER DISCOUNT OPTIONAL CASH INVESTMENT PERIOD ESTIMATED DSPP
DETERMINATION DATE PAYMENT DUE DATE COMMENCEMENT DATE INVESTMENT DATE
- ------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
August 17, 1999 August 19, 1999 August 20, 1999 August 20, 1999
September 15, 1999 September 17, 1999 September 20, 1999 September 20, 1999
October 15, 1999 October 19, 1999 October 20, 1999 October 20, 1999
November 17, 1999 November 19, 1999 November 22, 1999 November 22, 1999
December 15, 1999 December 17, 1999 December 20, 1999 December 20, 1999
January 17, 2000 January 19, 2000 January 20, 2000 January 20, 2000
February 16, 2000 February 18, 2000 February 21, 2000 February 21, 2000
March 15, 2000 March 17, 2000 March 20, 2000 March 20, 2000
April 17, 2000 April 19, 2000 April 20, 2000 April 20, 2000
May 17, 2000 May 19, 2000 May 22, 2000 May 22, 2000
June 15, 2000 June 19, 2000 June 20, 2000 June 20, 2000
July 17, 2000 July 19, 2000 July 20, 2000 July 20, 2000
August 16, 2000 August 18, 2000 August 21, 2000 August 21, 2000
September 15, 2000 September 19, 2000 September 20, 2000 September 20, 2000
October 17, 2000 October 19, 2000 October 20, 2000 October 20, 2000
November 15, 2000 November 17, 2000 November 20, 2000 November 20, 2000
December 15, 2000 December 19, 2000 December 20, 2000 December 20, 2000
</TABLE>
<PAGE> 68
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses, other than underwriting discounts and commissions, in
connection with the offering of the securities being registered are set forth
below. All of such expenses are estimates.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 36,448
NYSE Filing Fee............................................. 10,500
Printing.................................................... 50,000
Legal Fees and Expenses..................................... 50,000
Accounting Fees and Expenses................................ 10,000
Plan Administrator Fees and Expenses........................ 7,500
Blue Sky Fees and Expenses.................................. 7,500
Miscellaneous Expenses...................................... 8,052
--------
Total............................................. $180,000
========
</TABLE>
All of the costs identified above will be paid by us.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 2-418 of the Maryland General Corporation Law permits a corporation
to indemnify its directors and officers and certain other parties against
judgments, penalties, fines, settlements, and reasonable expenses actually
incurred by them in connection with any proceeding to which they may be made a
party by reason of their service in those or other capacities unless it is
established that:
- the act or omission of the director or officer was material to the matter
giving rise to the proceeding and;
- was committed in bad faith or
- was the result of active and deliberate dishonesty;
- the director or officer actually received an improper personal benefit in
money, property or services; or
- in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.
Indemnification may be made against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by the director or officer
in connection with the proceeding; provided, however, that if the proceeding is
one by or in the right of the corporation, indemnification may not be made with
respect to any proceeding in which the director or officer has been adjudged to
be liable to the corporation. In addition, a director or officer may not be
indemnified with respect to any proceeding charging improper personal benefit to
the director or officer, whether or not involving action in the director's or
officer's official capacity, in which the director or officer was adjudged to be
liable on the basis that personal benefit was received. The termination of any
proceeding by conviction, or upon a plea of nolo contendere or its equivalent,
or an entry of any order of probation prior to judgment, creates a rebuttable
presumption that the director or officer did not meet the requisite standard of
conduct required for indemnification to be permitted.
In addition, Section 2-418 of the Maryland General Corporation Law requires
that, unless prohibited by its charter, a corporation indemnify any director or
officer who is made a party to any proceeding by reason of service in that
capacity against reasonable expenses incurred by the director or officer in
connection with the proceeding, in the event that the director or officer is
successful, on the merits or otherwise, in the defense of the proceeding.
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<PAGE> 69
Our charter and bylaws provide in effect that we will indemnify our
directors and officers to the fullest extent permitted by applicable law. We
have purchased directors' and officers' liability insurance for the benefit of
its directors and officers.
We have entered into indemnification agreements with each of our executive
officers and directors. The indemnification agreements require, among other
matters, that we indemnify our executive officers and directors to the fullest
extent permitted by law and reimburse them for all related expenses as incurred,
subject to return if it is subsequently determined that indemnification is not
permitted.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Articles of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Registrant's Registration
Statement on Form S-11 (No. 333-35915)).
4.2 Articles Supplementary establishing and fixing the rights
and preferences of the 8 1/2% Series A Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.4(4)
of the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1998).
4.3 Certificate of Correction of the Registrant's Articles
Supplementary establishing and fixing the rights and
preferences of the 8 1/2% Series A Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.2 of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1998).
4.4 Articles Supplementary establishing and fixing the rights
and preferences of the 8 5/8% Series B Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.1 of
the Registrant's current report on Form 8-K filed on January
7, 1999).
4.5 Articles Supplementary establishing and fixing the rights
and preferences of the 8.75% Series C Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.2 of
the Registrant's current report on Form 8-K filed on January
7, 1999).
4.6 Articles Supplementary establishing and fixing the rights
and preferences of the 7.75% Series D Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.1 of
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1999).
4.7 First Amended and Restated Bylaws of the Registrant
(incorporated by reference to Exhibit 3.5 of the
Registrant's Annual Report for the year ended December 31,
1998).
4.8 Specimen common stock certificate (incorporated by reference
to Exhibit 3.3 of the Registrant's Registration Statement on
Form S-11 (No. 333-35915)).
4.9 Indenture dated as of June 30, 1998 by and among the
Operating Partnership, the Company and State Street Bank and
Trust Company of California, N.A., as trustee (incorporated
by reference to Exhibit 4.1 of the Registrant's Registration
Statement on Form S-11 (No. 333-49163)).
4.10 First Supplemental Indenture dated as of June 30, 1998 by
and among the Operating Partnership, the Company and State
Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-11 (No.
333-49163)).
4.11 Second Supplemental Indenture dated as of June 30, 1998 by
and among the Operating Partnership, the Company and State
Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-11 (No.
333-49163)).
</TABLE>
II-2
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.12 Third Supplemental Indenture dated as of June 30, 1998 by
and among the Operating Partnership, the Company and State
Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.4 to the
Company's Registration Statement on Form S-11 (No.
333-49163)).
4.13 Specimen of 7.10% Notes due 2008 (included in the First
Supplemental Indenture incorporated by reference as Exhibit
4.2 to the Company's Registration Statement on Form S-11
(No. 333-49163)).
4.14 Specimen of 7.50% Notes due 2018 (included in the Second
Supplemental Indenture incorporated by reference as Exhibit
4.3 to the Company's Registration Statement on Form S-11
(No. 333-49163)).
4.15 Specimen of 6.90% Reset Put Securities due 2015 (included in
the Third Supplemental Indenture incorporated by reference
as Exhibit 4.4 to the Company's Registration Statement on
Form S-11 (No. 333-49163)).
*5.1 Opinion of Ballard, Spahr, Andrews & Ingersoll, LLP
regarding the validity of the common stock being registered.
*8.1 Opinion of Latham & Watkins regarding certain federal income
tax matters.
*10.1 Form of Dividend Reinvestment and Direct Purchase Plan
*23.1 Consent of Arthur Andersen, LLP.
*23.2 Consent of Ballard, Spahr, Andrews & Ingersoll, LLP
(included in Exhibit 5.1).
*23.3 Consent of Latham & Watkins (included in Exhibit 8.1).
24.1 Power of Attorney (included on signature page).
99.1 Third Amended and Restated Agreement of Limited Partnership
of AMB Property, L.P. (incorporated by reference to Exhibit
99.1 of the Registrant's Registration Statement on Form S-3
(No. 333-35915)).
*99.2 Enrollment Form
*99.3 Enrollment Form (for use by existing stockholders)
*99.4 Letter to Investor
*99.5 Letter to Stockholder
*99.6 Broker and Nominee Form
*99.7 Broker-Dealer Letter
*99.8 Request for Waiver Form
</TABLE>
- ---------------
* Filed herewith
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
II-3
<PAGE> 71
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change such information in the
registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by reference in
the registration statement.
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
The undersigned registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance under Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act, as amended, may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Exchange Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director. officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Exchange Act of 1934, as amended, and will be
governed by the final adjudication of such issue.
II-4
<PAGE> 72
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment
no. 1 to its registration statement to be signed on its behalf by the
undersigned thereunto duly authorized in the City of San Francisco, State of
California, on this 7th day of July 1999.
AMB PROPERTY CORPORATION
By: /s/ DAVID S. FRIES
------------------------------------
David S. Fries
Chief Administrative Officer,
Managing Director and General
Counsel
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment No. 1 to the registration statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board and July 7, 1999
- ----------------------------------------------------- Director
T. Robert Burke
* President, Chief Executive July 7, 1999
- ----------------------------------------------------- Officer and Director (Principal
Hamid R. Moghadam Executive Officer)
* Chairman of Investment Committee July 7, 1999
- ----------------------------------------------------- and Director
Douglas D. Abbey
* Director July 7, 1999
- -----------------------------------------------------
Daniel H. Case, III
* Director July 7, 1999
- -----------------------------------------------------
Robert H. Edelstein, Ph.D.
Director July 7, 1999
- -----------------------------------------------------
Lynn M. Sedway
* Director July 7, 1999
- -----------------------------------------------------
Jeffrey L. Skelton, Ph.D.
* Director July 7, 1999
- -----------------------------------------------------
Thomas W. Tusher
* Director July 7, 1999
- -----------------------------------------------------
Caryl B. Welborn
* Senior Vice President and Chief July 7, 1999
- ----------------------------------------------------- Financial Officer (Principal
Michael A. Coke Financial Officer and Principal
Accounting Officer)
*By: /s/ DAVID S. FRIES
------------------------------------------------
David S. Fries
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 73
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Articles of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Registrant's Registration
Statement on Form S-11 (No. 333-35915)).
4.2 Articles Supplementary establishing and fixing the rights
and preferences of the 8 1/2% Series A Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.4(4)
of the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1998).
4.3 Certificate of Correction of the Registrant's Articles
Supplementary establishing and fixing the rights and
preferences of the 8 1/2% Series A Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.2 of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1998).
4.4 Articles Supplementary establishing and fixing the rights
and preferences of the 8 5/8% Series B Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.1 of
the Registrant's current report on Form 8-K filed on January
7, 1999).
4.5 Articles Supplementary establishing and fixing the rights
and preferences of the 8.75% Series C Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.2 of
the Registrant's current report on Form 8-K filed on January
7, 1999).
4.6 Articles Supplementary establishing and fixing the rights
and preferences of the 7.75% Series D Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.1 of
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1999.
4.7 First Amended and Restated Bylaws of the Registrant
(incorporated by reference to Exhibit 3.5 of the
Registrant's Annual Report for the year ended December 31,
1998).
4.8 Specimen common stock certificate (incorporated by reference
to Exhibit 3.3 of the Registrant's Registration Statement on
Form S-11 (No. 333-35915)).
4.9 Indenture dated as of June 30, 1998 by and among the
Operating Partnership, the Company and State Street Bank and
Trust Company of California, N.A., as trustee (incorporated
by reference to Exhibit 4.1 of the Registrant's Registration
Statement on Form S-11 (No. 333-49163)).
4.10 First Supplemental Indenture dated as of June 30, 1998 by
and among the Operating Partnership, the Company and State
Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-11 (No.
333-49163)).
4.11 Second Supplemental Indenture dated as of June 30, 1998 by
and among the Operating Partnership, the Company and State
Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-11 (No.
333-49163)).
4.12 Third Supplemental Indenture dated as of June 30, 1998 by
and among the Operating Partnership, the Company and State
Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.4 to the
Company's Registration Statement on Form S-11 (No.
333-49163)).
4.13 Specimen of 7.10% Notes due 2008 (included in the First
Supplemental Indenture incorporated by reference as Exhibit
4.2 to the Company's Registration Statement on Form S-11
(No. 333-49163)).
4.14 Specimen of 7.50% Notes due 2018 (included in the Second
Supplemental Indenture incorporated by reference as Exhibit
4.3 to the Company's Registration Statement on Form S-11
(No. 333-49163)).
4.15 Specimen of 6.90% Reset Put Securities due 2015 (included in
the Third Supplemental Indenture incorporated by reference
as Exhibit 4.4 to the Company's Registration Statement on
Form S-11 (No. 333-49163)).
</TABLE>
<PAGE> 74
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
*5.1 Opinion of Ballard, Spahr, Andrews & Ingersoll, LLP
regarding the validity of the common stock being registered.
*8.1 Opinion of Latham & Watkins regarding certain federal income
tax matters
*10.1 Form of Dividend Reinvestment and Direct Purchase Plan
*23.1 Consent of Arthur Andersen, LLP.
*23.2 Consent of Ballard, Spahr, Andrews & Ingersoll, LLP
(included in Exhibit 5.1).
*23.3 Consent of Latham & Watkins (included in Exhibit 8.1)
24.1 Power of Attorney (included on signature page).
99.1 Third Amended and Restated Agreement of Limited Partnership
of AMB Property, L.P. (incorporated by reference to Exhibit
99.1 of the Registrant's Registration Statement on Form S-3
(No. 333-35915)).
*99.2 Enrollment Form
*99.3 Enrollment Form (for use by existing stockholders)
*99.4 Letter to Investor
*99.5 Letter to Stockholder
*99.6 Broker and Nominee Form
*99.7 Broker-Dealer Letter
*99.8 Request for Waiver Form
</TABLE>
- ---------------
* Filed herewith
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP]
July 8, 1999
AMB Property Corporation
505 Montgomery Street
San Francisco, California 94111
Re: Registration Statement on Form S-3
Registration No. 333-76823
Ladies and Gentlemen:
We have served as Maryland counsel to AMB Property Corporation, a
Maryland corporation (the "Company"), in connection with the registration with
the Securities and Exchange Commission (the "Commission") of up to 6,000,000
shares (the "Shares") of common stock, par value $.01 per share (the "Common
Stock"), of the Company covered by the Registration Statement (as defined
herein). The Shares are to be issued by the Company in accordance with the
Dividend Reinvestment and Direct Purchase Plan (the "Plan").
In connection with our representation of the Company, and as a basis
for the opinion hereinafter set forth, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"):
1. The Registration Statement on Form S-3 (Registration No.
333-76823) (the "Registration Statement"), in substantially the form filed by
the Company with the Commission (the "Commission") under the Securities Act of
1933, as amended, on April 22, 1999 together with Amendment No. 1 thereto in
substantially the form filed or to be filed by the Company with the Commission
on or about July 8, 1999 and the related form of prospectus, pursuant to which
the Shares are to be issued;
2. The Plan;
3. The charter of the Company (the "Charter");
4. The Bylaws of the Company, certified as of a recent date by an
officer of the Company;
<PAGE> 2
AMB Property Corporation
July 8, 1999
Page 2
5. Resolutions adopted by the Board of Directors of the Company on
or as of December 4, 1998, and June 4, 1999 authorizing, among other things,
the Plan, the issuance of the Shares under the Plan and the filing of the
Registration Statement with the Commission;
6. A certificate as of a recent date of the SDAT as to the good
standing of the Company;
7. A certificate executed by an officer of the Company, dated as of
a recent date; and
8. Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth in this letter, subject to the
assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed, and so
far as is known to us there are no facts inconsistent with, the following:
1. Each individual executing any of the Documents, whether on behalf
of such individual or another person, is legally competent to do so.
2. Each individual executing any of the Documents on behalf of a
party (other than the Company) is duly authorized to do so.
3. Any Documents submitted to us as originals are authentic. The
form and content of any documents submitted to us as unexecuted drafts do not
differ in any respect relevant to this opinion from the form and content of such
documents as executed and delivered. Any Documents submitted to us as certified
or photostatic copies conform to the original documents. All signatures on all
Documents are genuine. All public records reviewed or relied upon by us or on
our behalf are true and complete. All statements and information contained in
the Documents are true and complete. There has been no modification of or
amendment to any of the Documents, and there has been no waiver of any provision
of any of the Documents, by action or omission of the parties or otherwise.
<PAGE> 3
AMB Property Corporation
July 8, 1999
Page 3
4. The Shares have not and will not be issued in violation of any
restriction on transfer contained in the Charter.
The phrase "known to us" is limited to the actual knowledge, without
independent inquiry, of the lawyers at our firm who have performed legal
services in connection with the issuance of this opinion.
Based upon the foregoing, and subject to the assumptions,
limitations and qualifications stated herein, it is our opinion that:
1. The Company is a corporation duly formed and existing under and
by virtue of the laws of the State of Maryland and is in good standing with the
SDAT.
2. The Shares have been duly authorized for issuance and, when and
if issued and delivered in accordance with the Plan and the Resolutions in
exchange for the consideration therefor, will be validly issued, fully paid and
nonassessable.
The foregoing opinion is limited to the substantive laws of the
State of Maryland and we do not express any opinion herein concerning any other
law. We express no opinion as to the applicability or effect of any federal or
state securities laws, including the securities laws of the State of Maryland,
or as to federal or state laws regarding fraudulent transfers. To the extent
that any matter as to which our opinion is expressed herein would be governed by
any jurisdiction other than the State of Maryland, we do not express any opinion
on such matter.
We assume no obligation to supplement this opinion if any applicable
law changes after the date hereof or if we become aware of any fact that might
change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for submission to the
Commission as an exhibit to the Registration Statement. We consent to the filing
of this opinion as an exhibit to the Registration Statement and to the use of
the name of our firm in the section entitled "Legal Matters" in the Registration
Statement. In giving this consent, we do not admit that we are
<PAGE> 4
AMB Property Corporation
June 8, 1999
Page 4
within the category of persons whose consent is required by Section 7 of the
1933 Act.
Very truly yours,
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
<PAGE> 1
EXHIBIT 8.1
[Letterhead of Latham & Watkins]
July 8, 1999
AMB Property Corporation
505 Montgomery Street
San Francisco, California 94111
Re: AMB Property Corporation
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to AMB Property Corporation, a
Maryland corporation (the "Company"), in connection with the registration
statement on Form S-3 being filed by the Company on the date hereof with the
Securities and Exchange Commission in connection with the registration, under
the Securities Act of 1933, as amended, of 6,000,000 shares of the Company's
common stock, par value $.01 per share (together with all exhibits thereto and
documents incorporated by reference therein, the "Registration Statement").
This opinion is based on various facts and assumptions,
including the facts set forth in the Registration Statement concerning the
business, properties, and governing documents of the Company and its
subsidiaries. We have also been furnished with, and with your consent have
relied upon, certain representations made by the Company with respect to
factual matters through a certificate of an officer of the Company (the
"Officer's Certificate").
In our capacity as such counsel, we have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to our satisfaction of such documents,
corporate records and other instruments, as we have deemed necessary or
appropriate for purposes of this opinion. In our examination, we have assumed
the authenticity of all documents submitted to us as originals, the genuineness
of all signatures thereon,
<PAGE> 2
AMB Property Corporation
July 8, 1999
Page 2
the legal capacity of natural persons executing such documents and the
conformity to authentic original documents of all documents submitted to us as
copies.
We are opining herein as to the effect on the subject transaction
only of the federal income tax laws of the United States and we express no
opinion with respect to the applicability thereto, or the effect thereon, of
other federal laws, the laws of any state or other jurisdiction or as to any
matters of municipal law or the laws of any other local agencies with any state.
Based upon such facts, assumptions, and representations,
including the facts set forth in the Registration Statement and the Officer's
Certificate, it is our opinion that the information in the Registration
Statement set forth under the captions "THE PLAN--Taxes" and "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES ASSOCIATED WITH AN INVESTMENT IN COMMON STOCK," to the
extent that it constitutes matters of law, summaries of legal matters, documents
or proceedings, or legal conclusions, has been reviewed by us and is correct in
all material respects.
No opinion is expressed as to any matter not discussed herein.
This opinion is only being rendered to you as of the date of this
letter, and we undertake no obligation to update this opinion subsequent to the
date hereof. This opinion is based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, all of which are
subject to change either prospectively or retroactively. Also, any variation or
difference in the facts from those set forth in the Registration Statement or
the Officer's Certificate may affect the conclusions stated herein.
This opinion is rendered to you and is solely for your benefit in
connection with the Registration Statement. We hereby consent to the filing of
this opinion as an exhibit to the Registration Statement. This opinion may not
be relied upon by you for any other purpose, or furnished to, quoted to or
relied upon by any other person, firm or corporation for any purpose, without
our prior written consent.
Very truly yours,
/s/ LATHAM & WATKINS
--------------------
<PAGE> 1
EXHIBIT 10.1
AMB PROPERTY CORPORATION
FORM OF DIVIDEND REINVESTMENT AND DIRECT PURCHASE PLAN
JULY __, 1999
1. PURPOSE AND ADMINISTRATION
AMB Property Corporation, a Maryland corporation (the "Company"),
has adopted three plans for the direct purchase of shares of the Company's
common stock, par value $.01 per share (the "Common Stock"): (i) the Dividend
Reinvestment Program (the "DRIP"); (ii) the Discount Stock Purchase Plan (the
"DSPP"); and (iii) the Waiver Discount Plan (the "WDP"). The DRIP, DSPP and WDP
are collectively referred to as the "Plan." The purpose of the Plan is to
provide existing stockholders of the Company with an opportunity to invest
automatically the cash dividends paid upon shares of the Company's Common Stock
held by them, as well as to permit existing and prospective stockholders to make
voluntary cash purchases of such Common Stock. BankBoston N.A as agent, or such
successor plan administrator as we may designate (the "Agent"), will administer
the Plan. EquiServe L.L.C., a registered transfer agent, will provide certain
administrative support to the Agent.
2. PARTICIPATION
Any existing holder of shares of Common Stock with any of such
shares registered in his or her name on the records of the Agent and, with
respect to the DSPP and WDP, certain other persons as described below, may
enroll in the Plan (any such person so enrolled in the Plan is referred to
herein as a "Participant"). Beneficial owners of shares of Common Stock
registered in the name of another person or entity must make arrangements for
that person or entity to handle investment or reinvestment with respect to
dividends received upon such shares, or must arrange to have such shares
registered in the beneficial owner's name in order to participate.
If a Participant holds shares registered in the name of another
person, a Broker/Nominee Form ("B/N Form") provides the sole means whereby a
broker, bank or other nominee holding shares on a Participant's behalf may
request an Optional Cash Purchase for the Participant. In such case, the broker,
bank or other nominee must use a B/N Form for transmitting Optional Cash
Purchases on the Participant's behalf. A B/N Form must be delivered to the Agent
each time that such broker, bank or other nominee transmits Optional Cash
Purchases on the Participant's behalf. A Participant may request a B/N Form from
the Agent in writing or by telephone.
To enroll in the Plan, a prospective Participant must complete and
sign an enrollment form, substantially in the form attached hereto as Exhibit
A-1 or Exhibit A-2 (collectively the "Enrollment Form")
<PAGE> 2
and return it to the Agent and, if applicable, a Request for Waiver,
substantially in the form attached hereto as Exhibit B (the "Request for
Waiver"), and return it to the Company. If the shares of Common Stock are
registered in the more than one name (such as joint tenants, trustees, etc.),
all registered holders must sign an Enrollment Form and, if applicable, the
Request for Waiver.
A prospective Participant may join the Plan at any time.
Participation in the DRIP will begin with the first dividend payment after an
Enrollment Form, designating the reinvestment of dividends, is received by the
Agent, provided there is sufficient time for processing prior to the next
dividend record date. Participation in the DSPP will begin concurrently with the
first DSPP Investment Date after an Enrollment Form and the DSPP Payment (as
defined below) are received by the Agent, provided the payment is received two
full business days prior to the next DSPP Investment Date. Participation in the
WDP will begin upon commencement of the first Investment Period (as defined
below) after the Request for Waiver, approved by the Company, and the WDP
Payment (as defined below) are received by the Agent, provided the payment is
received two full business days prior to the next Investment Period.
By selecting the "Partial Reinvestment" option on the Enrollment
Form, stockholders may elect to receive cash dividends on a specified number
of their shares, and reinvest the dividends on the balance of such shares. A
Participant may change the dividend reinvestment option at any time by
submitting a newly executed Enrollment Form to the Agent or by writing to the
Agent. Enrollment Forms may be obtained by contacting the Agent at the address
set forth in Section 22. Any change in the number of shares with respect to
which the Agent is authorized to reinvest dividends must be received by the
Agent prior to the record date for a dividend to permit the new number of shares
to apply to that dividend.
3. DIVIDEND REINVESTMENT
Purchases of shares of Common Stock with reinvested dividends shall
occur on the dividend payment date or on the actual date of purchase if the
Company directs the Agent to extend the period used to purchase shares in the
open market or in privately negotiated transactions for up to an additional
trading 15 days after the applicable dividend payment date. Shares of Common
Stock purchased with such reinvested dividends shall be, at the Company's
option, either from (i) authorized but unissued shares of Common Stock or (ii)
shares of Common Stock purchased by the Agent in open market or privately
negotiated transactions. In either case, such shares of Common Stock will be
sold to the Participant at a price per share determined in accordance with
Section 5 hereof.
4. OPTIONAL CASH PURCHASES
A voluntary cash purchase may be made under either the DSPP or WDP
(the "Optional Cash Purchase") at the time a Participant enrolls in the Plan,
and thereafter from time to time as set forth below. Participants may make
Optional Cash Purchases under
2
<PAGE> 3
the DSPP by delivering a check or money order payable to AMB Investment Plan to
the Agent at the address set forth herein. Participants may make Optional Cash
Purchases under the WDP by transmitting immediately available funds to the Agent
to the account referenced on the Request for Waiver. Participants should send
all inquiries regarding other forms of payments and all other written inquiries
directly to the Agent at its address set forth in Section 22.
A. Direct Share Purchase Plan.
Any Participant may purchase additional shares of Common Stock under
the DSPP by delivering to the Agent a check or money order in U.S. currency made
payable to AMB Investment Plan at the address set forth in Section 22. Wire
transfers are not permitted for purchases under the DSPP. Under the DSPP, the
purchase of shares of Common Stock by a Participant will occur on the next DSPP
Investment Date following the date on which the Agent receives the DSPP Payment;
provided, however, that if any DSPP Payment is received less than two full
business days before the second DSPP Investment Date following the date the
payment is received by the Agent, such DSPP Payment will be used to purchase
shares of Common Stock on the next DSPP Investment Date following the date on
which the Agent receives the DSPP Payment if the Agent determines, in its sole
discretion, that insufficient time exists to process the DSPP Payment prior to
the next DSPP Investment Date. The aggregate amount of any DSPP Payment of a
Participant used to purchase shares of Common Stock during any calendar month
shall not be less than $500 nor more than $5,000. Shares of Common Stock
purchased under the DSPP shall be, at the Company's option, either from (i)
authorized but unissued shares of Common Stock or (ii) shares of Common Stock
purchased by the Agent in open market or privately negotiated transactions. In
either case, such shares of Common Stock will be sold to the Participant at a
price per share determined in accordance with Section 5.
B. Waiver Discount Plan.
Any Participant may purchase additional shares of Common Stock under
the WDP by transferring immediately available funds to the account referenced in
the Request for Waiver. The Agent must also receive written approval from the
Company of the Request for Waiver at least one full business day before the next
Investment Period. Under the WDP, a Participant shall purchase the maximum
number of shares of Common Stock that may be purchased on each trading day
during the applicable Investment Period (as defined below) with 1/12th of the
WDP Payment at a price per share equal to the average of the average high and
low price per share on that particular trading day during the applicable
Investment Period as reported by the New York Stock Exchange or, if the Common
Stock is not then listed on the New York Stock Exchange, any other securities
exchange or national quotation service on which the Common Stock is then traded
or listed for quotation, less a discount of up to 5% in the case of purchases of
previously unissued shares of Common Stock, subject to any applicable Threshold
Price (as defined below) established pursuant to Section 4.C below (the
"Investment Period
3
<PAGE> 4
Average Purchase Price"). "Investment Period" means the period of twelve (12)
consecutive trading days during any calendar month commencing on a date
determined at the sole discretion of the Company. Under the WDP, the purchase of
shares of Common Stock by a Participant will occur on each trading day during
the Investment Period on which shares are traded on the NYSE and, if applicable,
on which the average of the high and low sales price per share, as reported on
the NYSE, exceeds the applicable Threshold Price. Under the WDP, a Participant
will acquire, on each such trading day, all rights of ownership with respect to
the shares of Common Stock purchased on such day, including without limitation,
the right to dispose of or vote such shares. The WDP Payment must be received by
the Agent not less than two full business days before the commencement of the
Investment Period; provided, however, that if any WDP Payment is received less
than two full business days before the commencement of an Investment Period,
such WDP Payment will be used to purchase shares of Common Stock on the second
Investment Period following the date on which the Agent receives the WDP Payment
if the Agent determines, in its sole discretion, that insufficient time exists
to process the WDP Payment prior to commencement of the next Investment Period.
The aggregate amount of any WDP Payment of a Participant used to purchase shares
of Common Stock during any calendar month shall not be less than $5,000.
Shares of Common Stock purchased under the WDP shall be, at the Company's
option, either from (i) authorized and unissued shares of Common Stock or (ii)
shares of Common Stock purchased by the Agent in open market or privately
negotiated transactions. In either case, such shares of Common Stock will be
sold to the Participant at a price per share determined in accordance with
Section 5.
C. Threshold Pricing.
The Company may elect to establish for any Investment Period a
minimum threshold price (a "Threshold Price") applicable to Optional Cash
Purchases made under the WDP with respect to the purchase of newly issued shares
of Common Stock not later than three business days prior to the first day of the
applicable Investment Period. The Threshold Price, if any, shall be determined
by the Company in its sole discretion after reviewing the current market
conditions and shall be the per share price that the average of the high and low
prices of the Common Stock as reported on the New York Stock Exchange must equal
or exceed for each trading day of the relevant Investment Period. In the event
that (i) the average per share sale price does not equal or exceed the Threshold
Price for any particular trading day in the Investment Period or (ii) no trades
of Common Stock are made on the New York Stock Exchange on a day in the
Investment Period, then the Company shall exclude that trading day from the
Investment Period. The Agent shall return to a Participant one-twelfth of that
Participant's Optional Cash Purchase for each trading day of an Investment
Period that is excluded by the Company in accordance with the immediately
preceding sentence. The Company's election whether to establish a Threshold
Price for any particular Investment Period will not affect its rights to
establish a Threshold Price in any other Investment Period. Neither the Company
nor the Agent shall have any responsibility to notify any Participant regarding
the Company's establishment of a Threshold Price for an Investment Period. Any
Participant shall be able to confirm the existence of a Threshold Price by
telephoning the Company's Investor Relations at (877) 285-3111 during the three
business days preceding the applicable Investment Period.
4
<PAGE> 5
D. Discount Pricing.
The Company may elect to establish, each month and in no event later
than three business days prior to the dividend record date, DSPP Investment Date
or the first day of the applicable Investment Period, as applicable, a discount
from the market price applicable to reinvested dividends and Optional Cash
Purchases with respect to the purchase of newly issued shares from the Company.
Any discount set by the Company with respect to an Optional Cash Purchase shall
apply to the entire Optional Cash Purchase, subject to the limitations set forth
below. The Company's election whether to establish a discount for dividend
reinvestment or Optional Cash Purchases for any dividend payment date, DSPP
Investment Date or Investment Period, as applicable, will not affect its rights
to establish a discount for any other dividend payment date, DSPP Investment
Date or Investment Period in the future. Any Participant may obtain the discount
applicable to the next dividend payment date, DSPP Investment Date or Investment
Period by telephoning the Investor Relations at (877) 285-3111 during the three
business days prior to the applicable dividend payment date, DSPP Investment
Date or Investment Period, as applicable. The discount, if any, shall be
determined by the Company in its sole discretion after reviewing the current
market conditions, the level of participation in the plan, and current and
projected capital needs. Such discount may vary but shall at no time be more
than 5% of the average of the high and low sales price per share of Common Stock
as reported by the New York Stock Exchange on the applicable dividend payment
date or DSPP Investment Date, and for each day during an Investment Period.
Notwithstanding the foregoing, the discount may not be varied by the Company
during an Investment Period, and shall apply uniformly to all Optional Cash
Purchases made under the WDP for each day of the respective Investment Period,
provided however, that such purchase price for each share purchased on any
particular trading day during the applicable Investment Period, after giving
effect to the applicable discount, less the per share amount of any brokerage
commissions, trading fees and other costs of purchase paid by the Company on
behalf of the Participants on such day, shall not be less than the Minimum
Purchase Price as defined in Section 5 below.
E. Procedures Applicable to Optional Cash Purchases.
Participants shall not be obligated to make any DSPP investments or
WDP investments, and the amount of such investments may vary, in the case of a
purchase under the DSPP, among DSPP Investment Dates, and in the case of a
purchase under the WDP, among Investment Periods. With respect to a purchase
under the DSPP, if the "Optional Cash Only" box on the Enrollment Form is
checked, the Company will continue to pay cash dividends on the shares
registered in the Participant's name in the usual manner, but any DSPP Payment
received will be applied toward the purchase of additional shares of Common
Stock under the DSPP in accordance with the terms hereof. DSPP Payments shall be
delivered to the Agent at the address set forth in Section 22.
In the event that any Participant's check with respect to a DSPP
Payment is returned unpaid for any reason, the Agent will consider the request
for investment of such money null and void and shall immediately remove from the
Participant's account shares, if any, purchased upon the prior credit of such
money. The Agent shall thereupon be entitled to sell these shares to satisfy any
uncollected amounts. If the net proceeds of the sale of such shares are
insufficient to satisfy the balance of such uncollected amounts, the Agent, in
addition to any
5
<PAGE> 6
other legal remedies it may have, shall be entitled to sell such additional
shares from the Participant's account to satisfy the uncollected balance.
A Participant may obtain a refund of any DSPP Payment or WDP Payment
not yet invested upon written request to the Agent at the address set forth in
Section 22, provided such request is received not later than two business days
prior to, in the case of a DSPP Payment, the next DSPP Investment Date, and in
the case of a WDP Payment, the commencement of the next Investment Period. If
the Agent receives the Participant's request for refund later than these
specified times, the DSPP Payment or WDP Payment, as applicable, will be applied
to the purchase of shares of Common Stock.
5. SHARE PURCHASES
As Agent for the Participants in the Plan, the Agent will receive
cash dividends from the Company with respect to Common Shares held by the
Participants and Optional Cash Purchases from the Participants. Shares to be
purchased under the DRIP, the DSPP and the WDP with such cash dividends or
Optional Cash Purchases may be purchased in the open market by the Agent on the
New York Stock Exchange or any securities exchange where shares of the Company's
Common Stock are traded, in the over-the-counter market, or in negotiated
transactions, and may be subject to such terms with respect to price, delivery
and other matters as to which the Agent may agree. Alternatively, or in
combination with open market purchases, the Company has the right to satisfy its
obligations under the DRIP, the DSPP and the WDP, by registering and issuing
additional shares of Common Stock, subject to compliance with the Securities Act
of 1933, as amended, and the rules and regulations thereunder. We may, without
giving you prior notice, change our determination as to whether the Agent will
purchase shares of Common Stock directly from us or in the open market or in
privately negotiated transactions from third parties (although we may not effect
such a change more than once in any three-month period) in connection with the
purchase of shares with reinvested dividends or from Optional Cash Purchases
under the DSPP or the WDP.
In the event that the Company satisfies its obligations hereunder
by registering and issuing additional shares of Common Stock, the date of
issuance of shares to be purchased with reinvested dividends will be the
Dividend Payment Date, and the date of issuance of shares to be purchased with
Optional Cash Purchases will be the DSPP Investment Date or on each day on
which shares are purchased during the applicable WDP Investment Period, as the
case may be.
When the Company is issuing shares of Common Stock to satisfy its
obligations under the DRIP or the DSPP, the purchase price will be the average
of the highest and lowest price per share as reported by the New York Stock
Exchange or, if the Common Stock is not then listed on the New York Stock
Exchange, any other securities exchange or national quotation service on which
the Common Stock is then traded or listed for quotation on such Dividend Payment
Date or DSPP Investment Date. When the Company is issuing shares of Common Stock
to satisfy its obligations under the WDP, the purchase price will be the average
of the highest and lowest price per share as reported by the New York Stock
Exchange or, if the Common Stock is not then listed on the New York Stock
Exchange, any other securities exchange or national quotation service on which
the Common Stock is then traded or listed for quotation on each day shares are
purchased during the applicable Investment Period. Shares of Common Stock
purchased under the DRIP, the DSPP and the WDP on the open market or in
privately negotiated transactions shall occur on the applicable Dividend Payment
Date or DSPP Investment Date or during the WDP Investment Period, as the case
may be; provided,
6
<PAGE> 7
however, that the Company may in the future advise the Agent that the Agent may
effect such purchases from time to time in its discretion over such longer
period not to exceed the 15 trading days following the applicable Dividend
Payment Date, DSPP Investment Date or WDP Investment Period; provided, further,
that in the case of such a purchase to be effected following a DSPP Investment
Date or WDP Investment Period, in no event shall any such purchase occur on a
Dividend Payment Date. If the Company exercises its discretion to execute market
purchases over an extended period, the date of issuance will be the actual date
of purchase of the Common Stock. In making purchases for a Participant's
account, the Agent may commingle a Participant's funds with those of other
Participants. The price at which shares will be deemed to have been acquired for
a Participant's account shall be the average price (on a day-by-day basis) of
all shares purchased by the Agent for the Plan with reinvested dividends and/or
DSPP Payments and/or WDP Payments then being invested. No Participant shall have
any authority or power to direct the time or price at which Common Stock may be
purchased. No interest will be paid on funds held for investment.
Notwithstanding anything to the contrary in this Plan, the amount
per share paid by a Participant for any shares of Common Stock (whether from
reinvested dividends or Optional Cash Purchases, and whether acquired from the
Company or through open market or privately negotiated transactions) purchased
on any particular trading day, less the amount per share of any brokerage
commissions, trading fees and any other costs of purchase paid by the Company,
if any, shall not be less than 95% of the average of the high and low sales
price of the Common Stock reported by the New York Stock Exchange on that
particular trading day (the "Minimum Purchase Price") In the event that shares
would be purchased below the Minimum Purchase Price, the Company will instead
reduce the discount, if any, or charge the Participant for such commissions,
fees or costs on such share purchase so that the Participant's purchase price
per share will equal the Minimum Purchase Price.
The number of shares to be purchased for a Participant will depend
on the net amount of the Participant's dividends available for reinvestment
under the DRIP, and/or the aggregate amount of the DSPP Payment and/or WDP
Payment and the price per share of the Common Stock. Each Participant's account
will be credited with the number of shares, including fractions calculated to
four decimal places, equal to the total of a Participant's funds available for
investment, divided by the applicable per share purchase price of the shares
purchased.
The Agent shall have no responsibility as to the value of the Common
Stock acquired for a Participant's account. It is understood that for a number
of reasons, including observance of the Rules and Regulations of the Securities
and Exchange Commission requiring temporary curtailment or suspension of
purchases and the limitations on ownership contained in the Company's charter,
the whole amount of funds available in a Participant's account for the purchase
of Common Stock might not be applied to such purchase. The Agent shall not be
liable when conditions prevent the purchase of Common Stock or interfere with
the timing of such purchases.
6. COSTS
The Company will pay all of the costs of administrating the Plan
(other than brokerage commissions and trading fees). The Company will pass on to
each Participant the fees
7
<PAGE> 8
and commissions associated with the purchase and sale of shares of Common Stock
attributable to each Participant under the Plan.
7. CUSTODIAL SERVICE
All shares of Common Stock that are purchased by Participants under
the DRIP, DSPP or the WDP shall be held in the Participant's name and the shares
shall be added to the Participants' balance in the Plan. The Agent shall act as
custodian for all of the Participants' shares held in the Plan.
A Participant may send to the Agent for safekeeping all Common Stock
certificates which the Participant holds. The Agent will keep all shares
represented by such certificates for safekeeping in book entry form, combined
with any full and fractional shares then held in the Plan in the name of the
Participant. In order to deposit share certificates in the Plan, a Participant
must submit a letter of instruction to the Agent. Shares certificates may be
withdrawn from the Plan by instructing the Agent in writing.
8. STATEMENT OF ACCOUNT
As soon as practicable after the purchase of Common Stock is
completed, the Agent will send each Participant a statement of account
confirming the transaction and itemizing any previous investment activity for
the calendar year. If a Participant participates in the Plan through a broker,
bank or nominee, the Participant's statement of account will be sent to the
respective broker, bank or nominee and the Participant must contact the broker,
bank or nominee to obtain the statement.
9. DIVIDENDS ON PLAN SHARES
As the custodian for the Common Stock held in Participants' accounts
under the Plan (whether such shares were purchased under the DRIP, the DSPP or
the WDP) the Agent will receive dividends (less any applicable tax withholding
requirements imposed on the Company) for all Plan shares held on the applicable
record date, will credit such dividends to Participants' accounts on the basis
of shares held in these accounts, and will automatically reinvest such dividends
in additional Common Stock unless it is otherwise instructed in writing by the
Participant.
If the Company distributes stockholders' subscription rights to
purchase additional shares of common stock or other securities, the Agent shall
sell the rights accruing to all shares held in a Participant's name when the
rights become separately tradable. The Agent will apply the net proceeds from
the sale of the rights to the purchase of Common Stock with the next monthly
Optional Cash Purchase. If a Participant does not want the subscription or such
other rights sold, such Participant may notify the Agent by submitting an
updated Enrollment
8
<PAGE> 9
Form which shall direct the Agent to distribute the rights directly to the
Participant.
10. SALE OF PLAN SHARES
A Participant can instruct the Agent in writing to sell any or all
of the whole shares of Common Stock held in the Plan. The written notification
to the Agent must include the number of shares to be sold. Any such request that
does not clearly indicate the number of shares to be sold will be returned to
the Participant with no action taken. The Agent will make the sale as soon as
practicable after receipt of a Participant's proper request and a check for the
proceeds, less brokerage commission, transfer taxes (if any) and a $15.00
service fee, will be sent by the Agent promptly after the settlement date. No
Participant shall have the authority or power to direct the date or sales price
at which Common Stock may be sold. A withdrawal/termination form will be
provided on the reverse side of the statement of account for this purpose.
Participants should mail this form to the Agent at the address set forth in
Section 22.
A Participant may transfer ownership of all or any part of their
shares held in the Plan through gift, private sale or otherwise, by mailing to
the Agent at the above address a properly executed stock assignment, along with
a letter requesting the transfer and a Substitute Form W-9 completed by the
transferee. If any stock certificates in such Participant's account contain a
restrictive legend, the Agent will comply with the provisions of such
restrictive legend before effecting a sale or transfer of such restricted
shares. All transfers shall be subject to the limitations on ownership and
transfer provided herein and in the Company's charter.
11. ISSUANCE OF SHARE CERTIFICATES
Share certificates will not be issued unless a request is made to
the Agent. The number of shares held in the Plan by a Participant will be shown
on the regular statement of account provided to such Participant. By contacting
the Agent by telephone or in writing, a Participant may request, without charge,
a share certificate for any or all of the whole shares held for such Participant
in the Plan. Each certificate issued will be registered in the name or names in
which the account is maintained, unless otherwise instructed in writing. If a
certificate is to be issued in a name other than the name on the Plan Account,
the Participant or Participants must have their signature(s) guaranteed by a
commercial banker or broker. Certificates for fractional shares will not be
issued under any circumstances.
12. TERMINATION OF PLAN PARTICIPATION
In order to terminate participation in the Plan, a Participant must
notify the Agent in writing. The Company may also terminate the Plan by sending
written notice to the Participants and to the Agent. After the Agent receives
the termination notice, dividends will be sent to the stockholder in the usual
manner, and no further voluntary cash purchases may be made. A termination
notice will be effective upon receipt by the Agent, provided such notice is
9
<PAGE> 10
received at least two business days prior to the next dividend record date,
Optional Cash Purchase Payment Date or commencement of the next Investment
Period. If a termination notice is not received by the Agent at least two
business days prior to any dividend record date, in the case of the DRIP, and in
the case of the DSPP and WDP, at least two business days prior to the
commencement of the DSPP Investment Date or Investment Period respectively, it
will not be processed until after purchases made from dividends paid have been
completed and credited to Participants' accounts. Once termination has been
effected, the Agent will issue to the Participant a certificate for all whole
shares held by a Participant under the Plan. Alternatively, a Participant may
specify in the termination notice that some or all of the shares be sold. The
Agent will deliver a check to the Participant for the net proceeds.
If a Participant transfers shares represented by certificates
registered in such Participant's name on the Company's books but does not notify
the Agent, the Agent will continue to reinvest dividends on shares held in such
Participant's account under the Plan until otherwise directed.
If a Participant's Plan account balance falls below one full share,
the Agent reserves the right to sell the fractional share and remit the
proceeds, less any applicable fees, to the Participant at the Participant's
address appearing in the Agent's records.
13. PLAN ADMINISTRATION
The Agent, or a successor selected by the Company, will administer
the Plan for Participants, keep records, send statements of account to
Participants, answer Participants' questions and perform other duties set forth
herein or otherwise related to the Plan. All inquiries regarding the Plan should
be sent to the Agent at the address set forth in Section 22.
As soon as practicable after each purchase for a Participant's
account, a statement of account will be mailed to the Participant by the Agent.
In addition, the Agent shall send to each Participant all communications sent to
other stockholders, including, if applicable, any annual and quarterly reports
to stockholders, proxy statements and dividend income information for tax
reporting purposes.
The Company may remove the Agent upon 60 days prior written notice
to the Agent (the "Termination Notice"). The Agent may resign as Agent upon 60
days prior written notice to the Company. Upon any such removal or resignation,
the Agent shall be relieved and discharged of any further responsibilities with
respect to its duties thereunder. Not later than 30 days after the date on which
the Agent receives or delivers, as the case may be, the Termination Notice (the
"Termination Notice Date"), the Company shall deliver to the Agent a written
notice
10
<PAGE> 11
instructing the Agent to deliver to the Company or its designee all of the
statements of account, the shares of Common Stock held by the Agent under the
Plan, and all other books and records in connection with the administration of
the Plan (collectively, the "Plan Records"). The Agent shall comply with
instruction and deliver the Plan Records to the Company or its designee not
later than 10 business days following the date it receives such instruction;
provided, however, that if no instruction is received by the Agent by the 30th
day following the Termination Notice Date, the Agent shall deliver the Plan
Records to the Company not later than 45 days after the Termination Notice Date.
The Agent shall cooperate with and assist the Company or any successor agent
with the transfer of the Plan Records.
As Agent, BankBoston N.A. shall act in accordance with the Plan and
in accordance with applicable laws, including without limitation the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and interpretations
thereof by the Securities and Exchange Commission.
The Agent shall keep appropriate records concerning the Plan
accounts, purchases and sales of the Company's securities made under the Plan
and Participants' addresses of record and shall send statements of account and
confirmations to each Participant in accordance with the provisions hereof.
Without limiting the foregoing, the Agent shall maintain and retain for a period
of not less than two years from the date of the event the following information:
(i) the dates and substance of any materials distributed in connection with the
Plan, (ii) the number of Participants as of the end of each month; (iii) the
volume of Company securities purchased under the Plan by the Agent each month;
and (iv) a record of any period during which the Company is engaged in any other
distribution of shares of its Common Stock or other Company securities for
purposes of Regulation M under the Exchange Act. The Company shall notify the
Agent of the commencement and the termination of any such period on the date of
any such commencement or termination:
The Agent:
(a) shall have no duties or obligations other than those
specifically set forth herein or as may subsequently be agreed
to in writing between the Agent and the Company. Without
limiting the foregoing, nothing herein shall impose any
fiduciary duty upon the Agent to any Participant, as such term
is defined herein;
(b) shall be regarded as making no representation and having no
responsibilities as to the validity, sufficiency, value, or
genuineness of any of the Company's securities purchased or
sold in connection herewith, and will not be required to or be
responsible for and will make no representations as to, the
validity, sufficiency, value or genuineness of any of the
Company's securities;
(c) shall not be obligated to take any legal action hereunder;
if, however, the Agent determines to take any legal action
hereunder, and where the taking
11
<PAGE> 12
of such action might, in its reasonable judgment, subject or
expose it to any expense or liability, the Agent shall not be
required to act unless it shall have been furnished with an
indemnity reasonably satisfactory to it;
(d) may rely on and shall be fully authorized and protected in
acting or failing to act in good faith reliance upon any
certificate, instrument, opinion, notice, letter, telegram,
telex, facsimile transmission or other document or security
delivered to and believed by the Agent to be genuine and to
have been signed by the proper person or persons;
(e) shall not be liable or responsible for any failure on the part
of the Company or any Participant to comply with any of their
respective obligations relating to the Plan or under
applicable law, including without limitation obligations under
applicable securities laws;
(f) shall have no obligation to make any payment unless it has
received the necessary funds as set forth herein to make such
payments in full;
(g) may consult with counsel reasonably satisfactory to the Agent,
including in-house counsel, if any, or counsel to the Company,
and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered, or omitted by the Agent in good faith and in
accordance with the advice of such counsel;
(h) may perform any of its duties hereunder either directly or by
or through agents or attorney which are not affiliates of the
Company (except for purchase and sale orders submitted by
Participants, including accompanying funds, all of which will
be handled only by the Agent's personnel), provided that (i)
any activities that constitute transfer agent functions, as
defined in section 3(a)(25) of the Exchange Act, must be
conducted either by the Agent itself or by a service
organization that is a registered transfer agent under the
Exchange Act, and (ii) no such agent or attorney shall receive
compensation based on the number and type of orders or
transactions processed through the Plan. The Agent shall not
be liable or responsible for any misconduct or negligence on
the part of any agent or attorney appointed with reasonable
care by it hereunder; and
(i) is not authorized, and shall have no obligation, to pay any
brokers, dealers, or soliciting fees to any person.
In exercising all of its duties and obligations hereunder, the Agent
shall use the same degree of skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
Notwithstanding the foregoing, the Agent may not be relieved from
liability for its
12
<PAGE> 13
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that the Agent shall not be liable for any error or judgment
made in good faith unless it is proved that the Agent was negligent in
ascertaining the pertinent facts.
The Agent may charge reasonable fees for its services in connection
with the Plan (to the extent consistent with the provisions of the Plan)
including without limitation fees for purchase and sale order processing,
enrollment, custody, account maintenance and dividend reinvestment and shall be
reimbursed for all its reasonable out-of-pocket costs and expenses. All such
fees, costs and expenses shall be paid by the Company, except that Participants
and other eligible book entry stockholders will be required to pay a nominal
commission and fee for each sale order and a nominal fee for the issuance of
duplicate statements of account or transaction notices. The Agent may from time
to time by notice to the Company and the Participants establish the amount of
any such fees.
The Agent shall have the authority to undertake any act reasonably
necessary to fulfill its duties as set forth herein.
In administering the Plan, neither the Agent, the Company nor any
agent for either will be liable for (i) any act done in good faith or for any
good faith omission to act, including, without limitation, any claim of
liability arising out of failure to terminate a Participant's account upon such
Participant's death or adjudicated incompetence prior to the receipt of written
notice of such death or adjudicated incompetence, (ii) the prices at which
Common Stock are purchased for the Participant's account, (iii) the times when
purchases are made or (iv) fluctuations in the per share market value of the
Common Stock. The Agent shall not be liable for any failure or delays arising
out of conditions beyond its reasonable control including, but not limited to,
work stoppages, fires, civil disobedience, riots, rebellions, storms,
electrical, mechanical, computer or communications facilities failures, acts of
God or similar occurrences.
Neither the Agent, the Company nor any agent for either shall have
any duties, responsibilities or liabilities except such as are expressly set
forth herein and in the Agent Agreement. The Company specifically disclaims any
responsibility for any of the Agent's actions or inactions in connection with
the administration hereof.
The Company will indemnify and hold harmless the Agent and its
officers, directors, shareholders, and agents from and against any loss,
liability, damage or expense (including reasonable attorneys' fees and expenses)
(a "Loss") incurred as a result of the performance of the Agent's duties
hereunder, provided that such Loss is not (a) due to any negligent or bad faith
act or omission by the Agent, (b) due to a failure by the Agent to act in
accordance with the provisions hereof or the written instructions of the Company
or (c) due to a breach by the Agent of its agreements set forth herein.
14. PLEDGE OF SHARES
Shares held in the Plan may not be pledged or assigned, and any such
purported
13
<PAGE> 14
pledge or assignment shall be void.
15. VOTING
The Agent will not vote any shares that it holds for a Participant's
account except as directed by the Participant. If no instructions are received,
the shares will not be voted. Each Participant that is a registered holder will
receive a proxy voting card for the total of their whole shares, including
shares that they hold in the Plan. Neither the Company nor the Agent shall be
required to send proxy materials to any Participant that holds shares of Common
Stock through a broker, bank or nominee and any such Participant must contact
such broker, bank or nominee to vote their shares.
16. SHARE DIVIDENDS, ETC.
Any Common Stock dividend upon, or shares of Common Stock issued as
a result of, splits of Common Stock, both full and fractional, will be credited
by the Agent to Participants' accounts. Participation in any rights offering
will be based upon both the Common Stock registered in Participants' names and
the Common Stock credited to Participants' accounts. Rights applicable to Common
Stock credited to a Participant's account under the Plan will be sold by the
Agent and proceeds will be credited to the Participant's account under the Plan
and applied to the purchase of Common Stock on the next DSPP Investment Date (or
over the 15 trading days following the next DSPP Investment Date as provided in
Section 5 of this Plan). Any Participant who wishes to exercise, transfer or
sell the rights applicable to the Common Stock credited to the Participant's
account under the Plan must request, prior to the record date for the issuance
of any such rights, that the Common Stock credited to the Participant's account
be transferred from the Participant's account and registered in the
Participant's name.
17. OWNERSHIP LIMITATIONS
The Company's charter places certain restrictions upon the actual
and constructive ownership of shares of each class or series of stock, applied
to each class or series of stock separately. With respect to the Common Stock of
the Company, any one person or entity is limited to owning, actually and
constructively, no more than 9.8% of the outstanding Common Stock of the Company
(the "Ownership Limit"). The percentage of ownership is measured by either value
or absolute number of shares, whichever measurement is more restrictive. To the
extent any transfer of Common Stock, reinvestment of dividends or Optional Cash
Purchase elected by a stockholder would cause such stockholder or any other
person or entity to exceed the Ownership Limit or otherwise violate the
Company's charter, such transfer or investment will be void ab initio as to that
stockholder or the other person or entity, and such stockholder or other person
or entity will be entitled to receive cash dividends (without interest) in lieu
of such reinvestment or to a return of such Optional Cash Purchase (without
interest), as applicable.
14
<PAGE> 15
In order to monitor the Ownership Limit and the limitation of cash
purchases which may be made under the Plan, the Company has right to aggregate
all plan accounts that it believes, in its sole discretion, are under common
control or management or to have common ultimate beneficial ownership. If the
Company exercises such right, it shall aggregate the accounts and return,
without interest, within 35 days of receipt, any amounts in excess of the
investment limitations applicable to a single account received in respect of all
such accounts.
18. AMENDMENT OR TERMINATION OF PLAN
The Plan may be amended, modified, suspended, supplemented or
terminated by the Company at any time, provided, however, that when necessary or
appropriate to comply with law or the rules or policies of the Securities and
Exchange Commission or other applicable regulatory authority, such action shall
be effective only by mailing appropriate written notice at least 30 days prior
to the effective date of such action to each Participant. Any such action shall
be deemed accepted by the Participant unless prior to the effective date
thereof, the Agent receives written notice of the termination of the
Participant's account. Any such amendment may include an appointment by the
Company of a successor agent under the terms and conditions set forth herein, in
which event the Company is authorized to pay such successor agent for the
account of each Participant all dividends and distributions payable on Common
Stock held by the Participant under the Plan for application by such successor
agent as provided herein. Notwithstanding the foregoing, such action shall not
have any retroactive effect that would prejudice the interests of the
Participants. In the event of termination, certificates for whole shares held by
each Participant in the Plan will be delivered to such Participant together with
a check for the net proceeds of the value of any fractional shares, which value
will be equal to the average of the highest and lowest price per share as then
reported by the New York Stock Exchange or, if the Common Stock is not then
listed on the New York Stock Exchange, any other securities exchange or national
quotation service on which the Common Stock is then traded or listed for
quotation on the date of such termination.
19. GOVERNING LAW
The terms and conditions of the Plan and its operation shall be
governed by the internal laws of the State of Maryland, without regard to
otherwise applicable principles of conflicts of law.
20. INTERPRETATION
Any question of interpretation arising under the Plan will be
determined by the Company, and any such determination will be final.
15
<PAGE> 16
21. EFFECTIVE DATE
The effective date of the Plan shall be July ____,1999.
22. CORRESPONDENCE AND QUESTIONS
All correspondence and questions regarding the Plan and any account
thereunder should be directed to:
BankBoston N.A.
c/o EquiServe Limited Partnership
150 Royall Street
Canton, Massachusetts 02021
Telephone (800) 331-9474
16
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated as follows:
<TABLE>
<S> <C>
AMB Property Corporation and subsidiaries February 2, 1999
AMB Contributed Properties March 27, 1998
Crysen Corridor Warehouse February 24, 1998
Boston Industrial Portfolio March 27, 1998
The Jamesburg Property March 27, 1998
Orlando Central Park March 27, 1998
Totem Lake Malls March 27, 1998
Dallas Warehouse Portfolio (Garland Industrial Portfolio) April 21, 1998
Twin Cities Office/Showroom Portfolio (Minnetonka Industrial May 1, 1998
Portfolio)
Willow Park Portfolio June 8, 1998
Amberjack Portfolio July 9, 1998
Willow Lake Portfolio July 21, 1998
National Distribution Portfolio July 31, 1998
Mawah Portfolio July 31, 1998
Cabot Industrial Portfolio October 29, 1997
Cabot Business Park October 29, 1997
Manhattan Village Shopping Center October 17, 1997
Weslayan Plaza October 17, 1997
Silicon Valley R&D Portfolio October 17, 1997
and to all references to our Firm included in this
registration statement.
</TABLE>
/s/ ARTHUR ANDERSEN LLP
--------------------------------------
ARTHUR ANDERSEN LLP
San Francisco, California
July 1, 1999
<PAGE> 1
EXHIBIT 99.2
ENROLLMENT FORM
AMB PROPERTY CORPORATION c/o BankBoston, N.A.
P.O. Box 8040 Boston, MA 02266-8040
Any questions, please call toll free: 1-800-331-9474
(Please use enclosed envelope.)
- --------------------------------------------------------------------------------
I wish to enroll in the AMB Property Corporation Dividend
Reinvestment and Direct Purchase Plan (the "Plan") available to
Enrolling interested investors of AMB Property Corporation (the "Company")
in the by making an Initial Investment. Enclosed is a check or money
Plan order for $____ ($500 minimum/$5,000 maximum per calendar month)
payable to "AMB Investment Plan". Check must be received by the
"Optional Cash Purchase Due Date" as defined in the Plan
Prospectus.
Please note any address corrections directly on
this form to the left.
Please provide your day and evening phone
numbers to assist us in processing your
enrollment.
Daytime Phone: ( ) - _______________
Evening Phone: ( ) - _______________
- --------------------------------------------------------------------------------
[ ] Check here if registration desired matches mailing information
above. Social Security Number ______________________________
Account
Registra- [ ] INDIVIDUAL OR JOINT. Joint accounts will be presumed to be joint
tion tenants unless restricted by applicable state law or otherwise
indicated. Only one Social Security Number is required for tax
reporting.
<TABLE>
<S> <C> <C>
____________________________________________________________________________________________________________________
Owner's First Name M.I. Last Name Owner's Social Security Number Joint Owner's First Name M.I. Last Name
Please
check one
box and [ ] CUSTODIAL. A minor is the beneficial owner of the account with an adult Custodian managing the account until the
provide minor becomes of age, as specified in the Uniform Gifts/Transfers to Minors Act in the minor's state of residence.
requested
informa- ____________________________________________________________________________________________________________________
tion. Custodian's First Name M.I. Last Name
Please
print ____________________________________________________________________________________________________________________
clearly. Minor's First Name M.I. Last Name Minor's Social Security Number Minor's State of Residence
[ ] TRUST. Account is established in accordance with provisions of a trust agreement.
____________________________________________________________________________________________________________________
Trustee Name Name of Trust Trust Date Tax ID Number Beneficiary
</TABLE>
- --------------------------------------------------------------------------------
You may choose to reinvest all, a portion or none of the cash
dividends paid on Common Stock registered in your name
and held for you under the Plan. If you do not indicate a
choice, you automatically will default into the full dividend
Dividend reinvestment election with all dividends reinvested.
Election
Please [ ] FULL DIVIDEND REINVESTMENT. I wish to reinvest all of my Common
check one Stock cash dividends in additional shares of Common Stock. I may
box and also make optional purchases under the Plan. (You will not
provide the receive a dividend check.)
requested
informa- [ ] PARTIAL DIVIDEND REINVESTMENT. I wish to have cash dividends on
tion _________ whole shares of Common Stock sent to me in cash, and
cash dividends on the rest of my shares of Common Stock
reinvested in additional shares of Common Stock. I may also make
optional purchases under the Plan.
[ ] OPTIONAL CASH ONLY. I wish to make only optional cash purchases
under the Plan. (You will receive a dividend check for all
shares.)
- --------------------------------------------------------------------------------
By signing this form, I request enrollment, certify that I have
received and read the prospectus describing the Plan and agree
to abide by the terms and conditions of the Plan. I hereby
Signatures appoint BankBoston, N.A. as my agent to apply dividends and any
investments I may make to the purchase of shares of Common Stock
under the Plan. I understand that I may revoke this
authorization at any time by written notice to BankBoston, N.A.
All joint owners must sign.
Under penalties of perjury, I also certify that: A. The number
shown on this form is my/our correct Social Security Number or
Taxpayer ID Number. B. I am not subject to backup withholding
either because (1) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as
a result of a failure to report all interest or dividends, or
(2) the IRS has notified me that I am no longer subject to
backup withholding. (Check here ___ if you have been notified
by the IRS that you are subject to backup withholding because of
under reporting of interest or dividends on your tax returns.)
________________________________________________________________
Signature Date Signature Date
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT. You may authorize automatic monthly
deductions from your personal bank account. BankBoston, N.A.
Automatic will invest these deductions in Common Stock and credit
Investment the account you designate above. To initiate these deductions,
please complete the reverse side of this form and check this
box. YOUR AUTHORIZED MONTHLY DEDUCTION FROM YOUR BANK ACCOUNT
MUST BE FOR AT LEAST $500 AND CANNOT EXCEED $5,000 IN A CALENDAR
MONTH.
52-3021 New 5/99 SEE REVERSE
<PAGE> 2
Automatic Please complete the information below to commence automatic
Investment withdrawals from your bank account to purchase additional
Application shares. Deductions and investments will continue until you
notify BankBoston, N.A. to change or discontinue them. You must
notify BankBoston, N.A. by telephone or written request at
least five (5) business days prior to the Optional Cash Payment
Due Date as defined in the Plan Prospectus for any change to be
effective. Should your bank account contain insufficient funds
to cover the authorized deduction, no investment will occur. In
such event, you will be charged a $25.00 fee by BankBoston, N.A.
and you may be charged an additional fee by your bank for
insufficient funds.
Please see sample below illustrating where these numbers can be
found.
ABA Routing Number Checking or Money Market Savings
_ _ _ _ _ _ _ _ _ _ _
Bank Account Number
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _____________________________
Name on Account (Please Print)
Amount to be Withdrawn
_, _ _ _. _ _ ($500 minimum, $5,000 maximum per calendar
month)
<TABLE>
<S> <C>
I hereby authorize BankBoston, N.A. to make ____________________________________________________
monthly automatic transfers of funds from my Name of Financial Institution
saving/checking account in the amount indicated
on this form. These funds will be used to ____________________________________________________
purchase common shares of beneficial interest Mailing Address of Financial Institution
for my account. Note: If Joint Account, both
holders must sign. ____________________________________________________
City State Zip
</TABLE>
________________________________________________________________________________
Signature Date Signature Date
John Smith 63-85 ****
123 Your Street -----
Anywhere, USA 12345 670
________________ 19 ___
PAY TO THE
ORDER OF $ [ ]
____________________________________________________________
___________________________________________________________________DOLLARS
YOUR 000-001
BANK 123 Main Street
Anywhere, USA 12345
FOR SAMPLE (NON-NEGOTIABLE)
__________________________________________ ___________________________
*********** *********** *******
ABA Number Account Number Check Number
(Do not include as part of your
Bank Account Number)
<PAGE> 1
EXHIBIT 99.3
FORM OF CHECK
NOTE: This is not a Proxy
AMB PROPERTY CORPORATION
Dividend Reinvestment and Direct Purchase Plan
Enrollment Form
(for use by existing stockholders)
I wish to participate in the Dividend Reinvestment and Direct Purchase Plan as
indicated below:
[ ] FULL DIVIDEND REINVESTMENT: [ ] PARTIAL DIVIDEND REINVESTMENT:
I wish to reinvest all cash dividends I wish to receive cash
for this account. I may also make dividends on _______ shares of
optional cash purchases of a minimum common stock and to reinvest my
of $500 to a maximum of $5,000 of cash dividends on the remainder
common stock per calendar month. of any shares of common stock
for this account. I may also
make optional cash purchases
of a minimum of $500 to a
maximum of $5,000 of common
stock per calendar month.
[ ] OPTIONAL CASH ONLY:
I wish to make only optional cash
purchases of a minimum of $500 to a
maximum of $5,000 of common stock
per calendar month. I will receive a
dividend check for cash dividends on
all shares of common stock. (Please
make check or money order to AMB
Investment Plan.)
Sign this card only after reading the reverse side.
If you have questions, please contact EquiServe at 1-800-331-9474
-----------------------------------
Stockholder Signature
-----------------------------------
Stockholder Signature
-----------------------------------
Date
SEE OTHER SIDE
- --------------------------------------------------------------------------------
FULL DIVIDEND REINVESTMENT - The dividends on all AMB Property Corporation
shares of common stock for this account as well as dividends of shares of common
stock credited to your account under the Plan will be invested to purchase
additional shares. You may also invest by making optional cash purchases of a
minimum of $500 up to a maximum of $5,000 of common stock per calendar month.
PARTIAL DIVIDEND REINVESTMENT - The dividends on less than all AMB Property
Corporation shares of common stock held by you may be reinvested in the Plan.
For example, if you own 300 shares and want to receive cash dividends on 100
shares, check the "Partial Dividend Reinvestment" box and write 100 on the blank
line. (The cash dividends you wish to receive must be on full shares.) Cash
dividends on the remaining 200 shares will be reinvested to purchase additional
shares of common stock. You may also invest by making optional cash purchases of
a minimum of $500 up to a maximum of $5,000 of common stock per calendar month.
OPTIONAL CASH ONLY - You may make optional purchases of a minimum of $500 up to
a maximum of $5,000 of common stock per calendar month without reinvesting
dividends on the shares you hold. Any shares purchased through optional payments
will be credited to your account under the Plan. Dividends on all shares
credited to your account under the Plan will be paid to you in cash
automatically. Payments for optional cash purchases must be received by the
Agent by the "Optional Cash Payment Due Date" as defined in the Plan Prospectus.
QUESTIONS - If you have any questions, please write to AMB Property Corporation
at BankBoston, N.A. c/o EquiServe at P.O. Box 8040, Boston MA 02266-8040 or call
toll-free: 1-800-331-9474.
Your participation in the Plan is subject to the terms set forth in the
accompanying Plan Prospectus. You may terminate participation in the Plan at any
time by written notice to BankBoston, N.A. c/o EquiServe, AMB Dividend
Reinvestment and Direct Purchase Plan, P.O. Box 8040, Boston, MA 02266-8040.
Do not return this form unless you intend to participate in the Plan since this
form authorizes BankBoston, N.A. to enroll your account in the Plan. If this
form is signed but no box checked, you will be enrolled in the Plan under the
Full Dividend Reinvestment option.
<PAGE> 1
EXHIBIT 99.4
[AMB LETTERHEAD]
Dear Investor:
We are pleased to offer you a convenient and economic method of purchasing
shares of AMB Property Corporation's common stock and investing all or a portion
of your cash dividends in additional shares of common stock through our Dividend
Reinvestment and Direct Purchase Plan (the "Plan"). The Plan is a comprehensive
package of shareholder services. A copy of the Plan Prospectus is enclosed for
your review along with the Enrollment Form.
Some of the highlights of the Plan are as follows:
- - You may purchase additional shares of common stock by automatically
reinvesting all or a portion of your cash dividends in common stock through
the Plan.
- - You may also purchase shares of stock by making optional cash purchases of
$500 to $5,000 in any calendar month.
- - You may purchase shares of stock in excess of $5,000 in any calendar month
with our prior written consent through our Waiver Discount Program.
- - We may offer a discount of up to 5% determined by us from time to time on
newly issued shares of common stock.
- - You may deposit your common stock certificate for safekeeping with the Plan
Administrator.
If after reading the enclosed prospectus you would like to enroll, please
complete the Enrollment Form as indicated and return it in the enclosed envelope
to the Plan Administrator, EquiServe.
If you have any questions regarding the Plan please contact EquiServe at
1-800-331-9474 or AMB's Investor Relations line at 877-285-3111 (toll free). We
hope that you find the features offered in this Plan interesting and thank you
for your support of AMB Property Corporation.
Sincerely,
/s/ CHRISTINE G. SCHADLICH
Christine G. Schadlich
Vice President, Investor Relations and Corporate Communication
<PAGE> 1
EXHIBIT 99.5
[AMB LETTERHEAD]
Dear Fellow Stockholders:
We are pleased to offer you a convenient and economic method of purchasing
shares of AMB Property Corporation's common stock and investing all or a portion
of your cash dividends in additional shares of common stock through our Dividend
Reinvestment and Share Purchase Plan (the "Plan"). The Plan as a comprehensive
package of shareholder services. A copy of the Plan Prospectus is enclosed for
your review along with the Enrollment Form.
some of the highlights of the Plan are as follows:
o You may purchase additional shares of common stock, by automatically
reinvesting all or a portion of your cash dividends in common stock through
the Plan.
o You may purchase shares of common stock by making optional cash purchases
of $500 to $5,000 in any calendar month.
o You may purchase shares of stock in excess of $5,000 in any calendar month
with our prior written consent through our Waiver Discount Program.
o We may offer a discount of up to 5% determined by us from time to time on
newly issued shares of common stock.
o You may deposit your common stock certificates for safekeeping with the
Plan Administrator.
If you after reading the enclosed prospectus you would like to enroll, please
complete the Enrollment Form as indicated and return it in the enclosed
envelope to the Plan Administrator.
If you have any questions regarding the Plan please contact EquiServe at
1-800-331-9474 or AMB's Investor Relations line at 877-285-3111 (toll free). We
hope that you find the features offered in this Plan interesting and thank you
for your continued support of AMB Property Corporation.
Sincerely
/s/ CHRISTINE G. SCHADLICH
- --------------------------
Christine G. Schadlich
Vice President, Investor Relations and Corporate Communication
<PAGE> 1
EXHIBIT 99.6
AMB PROPERTY CORPORATION
DIVIDEND REINVESTMENT AND DIRECT PURCHASE PLAN
Broker and Nominee Form
By Mail:
To: BankBoston, N.A.
c/o EquiServe, L.P.
P.O. Box 8040
Boston, MA 02266-8040
Telephone:
Instructions Dated:
As provided in the Prospectus dated July 9, 1999 (the "Prospectus")
relating to AMB Property Corporation (the "Company") Dividend Reinvestment and
Direct Purchase Plan (the "Plan"), this form is to be used only by a broker,
bank, or other nominee directing the reinvestment of all or a portion of the
dividends payable to, or making an optional cash purchase under the Plan on
behalf of, one or more, a beneficial owner(s) whose shares are held in the name
of a securities depository.
The broker, bank, or other nominee submitting this form hereby certifies
that (a) the information contained herein is true and correct as of the date of
this form; (b) a current copy of the Prospectus has been delivered to each
beneficial owner on whose behalf the optional cash purchase or initial cash
purchase listed below is being transmitted; and (c) the amount of the optional
cash purchase or initial cash purchase listed below together with any other
optional cash purchases this month is at least $500 and does not exceed $5,000
for each beneficial owner represented. BankBoston, N.A. is hereby appointed as
agent to apply any optional cash purchases or initial cash purchases toward the
purchase of shares under the Plan.
A new Broker and Nominee Form must be completed and submitted each month
that an optional cash purchase or initial cash purchase is submitted. This form
will not be accepted unless it is completed in its entirety and accompanies the
full amount of the optional cash purchase or initial cash purchase.
For further information abut the Plan please call .
- --------------------------------------------------------------------------------
Total Initial Cash Purchase or Optional Cash Purchase
- --------------------------------------------------------------------------------
Name of Depository Participant Submitting Payment
- --------------------------------------------------------------------------------
Participant Number with Depository
- --------------------------------------------------------------------------------
Contact
- --------------------------------------------------------------------------------
Name of Depository
- --------------------------------------------------------------------------------
Name of Beneficial Owner Represented
Address
- --------------------------------------------------------------------------------
City State Zip
- --------------------------------------------------------------------------------
Tax I.D. Number
--------------
Telephone Fax Date
-------------- ------------- -----------------------
<PAGE> 2
Method of Payment:
Check [ ] Money Order [ ] Other (Specify) [ ]
Please enroll my account in the Plan as indicated below:
[ ] Full Dividend Reinvestment [ ] Partial Dividend Reinvestment
[ ] Optional Cash Only
If you do not indicate a choice, you automatically will default into the Full
Dividend Reinvestment election with all cash dividends reinvested in shares of
common stock.
- -----------------------------------
Name of Broker, Bank or Nominee By:
---------------------------------
Name: Title:
- ----------------------------------- ------------------------------
<PAGE> 1
EXHIBIT 99.7
[MOORS & CABOT, INC. LETTERHEAD]
Dear Prospective Investor:
As you requested, enclosed is a copy of the AMB Property Corporation Dividend
Reinvestment and Direct Purchase Plan Prospectus and related enrollment
materials. To comply with the securities laws and regulations of certain
states, the Plan materials have been sent to you by Moors & Cabot, Inc., a
registered broker/dealer. Please review the Prospectus for complete details
regarding the Plan.
Enrollment materials relating to the Plan should be addressed to BankBoston
N.A., the Plan Agent, at the address and telephone number set forth in the
Prospectus.
Moors & Cabot, Inc. is forwarding these materials to you on behalf of AMB
Property Corporation. We make no recommendations on this offer nor do we assume
any responsibility for the accuracy of the statements made in the enclosed
materials.
Very truly yours,
Moors & Cabot, Inc.
<PAGE> 1
EXHIBIT 99.8
REQUEST FOR WAIVER
DIVIDEND REINVESTMENT AND DIRECT PURCHASE PLAN
This form is to be used only by Participants in the AMB Property Corporation
(the "Company") Dividend Reinvestment and Direct Purchase Plan (the "Plan") who
are requesting authorization from the Company to make an optional cash
investment under the Plan in excess of the $5,000 monthly maximum.
A new form must be completed each quarter in which the Participant wishes to
make an optional cash investment in excess of the $5,000 monthly maximum.
This form will not be accepted by the Agent, unless it is completed in its
entirety.
The Participant submitting this form hereby certifies that (a) the information
contained herein is true and correct as of the date of this form and (b) the
Participant has received a current copy of the Prospectus relating to the Plan
(the "Prospectus").
This form should be completed and returned via facsimile at (415) 394-9001,
Attention: Investor Relations by 2:00 p.m. San Francisco Time, on the day that
is at least three business days prior to the first day of the applicable
Investment Period. (See Annex 1 to the Prospectus.) For information regarding
the discount (if any) and threshold price (if any) that may be applicable to
optional cash investments made pursuant to an approved Request for Waiver,
please call our Investor Relations at (877) 285-3111.
PARTICIPANT INFORMATION:
Please Fill Out Entirely. Bids with Incomplete Information will be rejected.
- --------------------------------------------------------------------------------
Participant Name Participant Signature Date
- --------------------------------------------------------------------------------
Tax I.D. Number Phone Number Fax Number
- --------------------------------------------------------------------------------
Street Address City State Zip
- --------------------------------------------------------------------------------
PAYMENT INFORMATION:
Amount of Payment Request: $____________
*Wired funds should be directed to the following account: ABA # __________,
account # _________, with a reference to AMB Investment Plan. The Agent must
receive all funds at least two business days prior to the first day of the
Investment Period for the applicable investment date.
FOR COMPANY USE ONLY:
- --------------------------------------------------------------------------------
Amount Approved Approved by
- --------------------------------------------------------------------------------
Discount Approved Title Date
- --------------------------------------------------------------------------------
