<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 21, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ARDEN REALTY
LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS GOVERNING DOCUMENTS)
<TABLE>
<S> <C> <C>
MARYLAND 6512 95-4599813
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OF ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
11601 WILSHIRE BOULEVARD
FOURTH FLOOR
LOS ANGELES, CALIFORNIA 90025
(310) 966-2600
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
RICHARD S. ZIMAN
11601 WILSHIRE BOULEVARD
FOURTH FLOOR
LOS ANGELES, CALIFORNIA 90025
(310) 966-2600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
WILLIAM J. CERNIUS, ESQ.
DAVID L. KUIPER, ESQ.
LATHAM & WATKINS
650 TOWN CENTER DRIVE, 20TH FLOOR
COSTA MESA, CALIFORNIA 92626-1925
(714) 540-1235
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the registration statement becomes effective.
If the only securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER SECURITY PRICE REGISTRATION FEE(1)
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8.875% Senior Notes due
2005........................ $200,000,000 100% $200,000,000 $52,800
9.150% Senior Notes due
2010........................ $ 50,000,000 100% $ 50,000,000 $13,200
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TOTAL....................... $250,000,000 100% $250,000,000 $66,000
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</TABLE>
(1) Calculated pursuant to Rule 457(f) of the rules and regulations under the
Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED APRIL 21, 2000
PROSPECTUS
ARDEN REALTY
LIMITED PARTNERSHIP
OFFER TO EXCHANGE
$200,000,000 8.875% SENIOR NOTES DUE 2005 FOR ANY AND ALL
UNREGISTERED 8.875% SENIOR NOTES DUE 2005
$50,000,000 9.150% SENIOR NOTES DUE 2010 FOR ANY AND ALL
UNREGISTERED 9.150% SENIOR NOTES DUE 2010
-------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON MAY , 2000,
UNLESS EXTENDED.
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TERMS OF THE EXCHANGE OFFER
Arden Realty Limited Partnership hereby offers, upon the terms and subject
to the conditions contained in this prospectus, to exchange its 8.875% senior
notes due 2005, registered under the Securities Act of 1933, for its
unregistered 8.875% senior notes due 2005, and its 9.150% senior notes due 2010,
registered under the Securities Act of 1933, for its unregistered 9.150% senior
notes due 2010. The registered notes received in exchange for the unregistered
notes are sometimes collectively referred to in this prospectus as the exchange
notes.
Interest on the notes is payable on March 1 and September 1 of each year,
beginning September 1, 2000. The terms of the exchange notes to be issued are
substantially identical to the terms of the unregistered notes, except for
specific transfer restrictions and registration rights relating to the
unregistered notes.
We will not receive any proceeds from the exchange offer.
You should carefully review the procedures for tendering the unregistered
notes beginning on page 60 of this prospectus. If you do not follow these
procedures, we may not exchange your unregistered notes for registered exchange
notes.
You may withdraw tendered unregistered notes at any time before the
expiration of the exchange offer.
If you do not validly tender your unregistered notes and accept our
exchange offer, you will continue to hold unregistered notes and will continue
to be subject to the rights and limitations applicable to those notes, including
existing transfer restrictions.
The exchange notes will not be listed on any securities exchange. A public
market for the exchange notes may not develop, which could make selling the
exchange notes difficult. If a market for the exchange notes develops, the
exchange notes could trade at prices that are higher or lower than the initial
prices of the unregistered notes.
You should read the section entitled "Risk Factors" beginning on page 15
for a discussion of specific factors that should be considered in evaluating an
investment in the exchange notes.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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 IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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The date of this prospectus is , 2000.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FORWARD-LOOKING STATEMENTS.................................. 2
PROSPECTUS SUMMARY.......................................... 3
RISK FACTORS................................................ 15
NO CASH PROCEEDS............................................ 23
RATIO OF EARNINGS TO FIXED CHARGES.......................... 23
CAPITALIZATION.............................................. 24
SELECTED FINANCIAL DATA..................................... 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 27
BUSINESS.................................................... 39
MARKET INFORMATION.......................................... 43
PROPERTIES.................................................. 44
DESCRIPTION OF OTHER DEBT................................... 56
THE EXCHANGE OFFER.......................................... 58
DESCRIPTION OF EXCHANGE NOTES............................... 68
DESCRIPTION OF SPECIFIC PROVISIONS OF OUR PARTNERSHIP
AGREEMENT................................................. 84
MANAGEMENT.................................................. 89
TRANSACTIONS WITH RELATED PARTIES........................... 98
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES................. 99
FEDERAL INCOME TAX CONSEQUENCES............................. 102
PLAN OF DISTRIBUTION........................................ 103
LEGAL MATTERS............................................... 104
EXPERTS..................................................... 104
WHERE YOU CAN FIND MORE INFORMATION......................... 104
FINANCIAL STATEMENTS........................................ F-1
</TABLE>
i
<PAGE> 4
FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" including, in
particular, the statements about our plans, strategies, and prospects under the
headings "Prospectus Summary," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and "Business." Although we
believe that our plans, intentions and expectations reflected in or suggested by
these forward-looking statements are reasonable, we can give no assurance that
our plans, intentions or expectations will be achieved. Important factors that
could cause actual results to differ materially from the forward-looking
statements we make in this prospectus include those found in the section
entitled "Risk Factors" and the following:
- the national and Southern California economic climate;
- Southern California real estate conditions;
- the perceptions of prospective tenants of the attractiveness of our
properties;
- our ability to manage and maintain our properties and secure adequate
insurance;
- potential increases in operating costs, including real estate taxes and
utilities;
- applicable laws, including tax laws;
- interest rate levels; and
- the availability of financing.
All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by these cautionary statements.
2
<PAGE> 5
PROSPECTUS SUMMARY
In this prospectus, the terms "Partnership," "us," "we" and "our" refers to
Arden Realty Limited Partnership and our affiliated entities as a consolidated
group and the terms "Arden Realty" and "General Partner" refer to Arden Realty,
Inc. The following summary contains basic information about the exchange offer.
It likely does not contain all the information that is important to you. For a
more complete understanding of the exchange offer, we encourage you to read this
entire prospectus and the documents we refer to in this prospectus.
ARDEN REALTY LIMITED PARTNERSHIP
Arden Realty Limited Partnership is an operating partnership that owns,
manages, leases, develops, renovates and acquires commercial properties located
in Southern California. Arden Realty, Inc., a real estate investment trust, or
REIT, is our sole general partner and, as of December 31, 1999, owned 96.7% of
our common partnership units. Arden Realty conducts substantially all of its
operations through us and our subsidiaries.
We are a full-service real estate organization managed by 11 senior
executive officers who have an average of 16 years of experience in the real
estate industry. We perform all property management, accounting, finance and
acquisition activities and a majority of our leasing transactions with our own
staff of approximately 280 employees.
We are Southern California's largest office landlord as measured by total
net rentable square feet owned, as of December 31, 1999. Since our formation in
1996, we have acquired 118 properties containing approximately 14.5 million net
rentable square feet for a total purchase price of approximately $1.9 billion.
As of December 31, 1999, our portfolio consisted of 142 primarily suburban
office properties containing approximately 18.5 million net rentable square feet
and three properties with approximately 700,000 net rentable square feet under
development. As of December 31, 1999, our properties were approximately 95.1%
leased, excluding three existing properties under renovation.
PORTFOLIO MANAGEMENT
We perform all portfolio management activities, including management of all
lease negotiations, tenant build-outs, property renovations, capital
expenditures and on-site property management for our portfolio. We directly
manage these activities from approximately 45 management offices located
throughout our portfolio. The activities of these management offices are
supervised by five regional offices with oversight by our corporate office to
ensure consistency of the application of our operating policies and procedures.
Each regional office is strategically located within the Southern California
submarkets where our properties are located and is co-managed by a regional
property manager and a regional leasing manager who are responsible for
supervising the day-to-day activities of our management offices. Each regional
office is staffed with leasing, property management, building engineering,
construction, accounting and information systems specialists. By maintaining a
regionally focused organizational structure headed by seasoned managers, we are
able to quickly respond to our tenants' needs and market opportunities.
We currently lease approximately 70% of our properties using our in-house
staff. We employ outside brokers who are monitored by our leasing managers for
the remainder of our properties. We believe that our in-house leasing program
will continue to generate cost savings and revenue increases by reducing
third-party leasing commissions and allowing us to closely monitor our asking
rents and leasing terms.
All of our management and regional offices are networked with our corporate
office and have access to the Internet and our e-mail, accounting and lease
management systems. Our accounting and lease management systems employ the
latest technology and allow both corporate and field personnel access to tenant
and prospective tenant-related information to enhance responsiveness and
communication of marketing and leasing activity for each property.
3
<PAGE> 6
PROPERTIES
Our portfolio consists of 142 primarily office properties, containing
approximately 18.5 million net rentable square feet, that individually range
from approximately 12,000 -- 600,000 net rentable square feet. Our portfolio
consists of primarily suburban office properties located in Los Angeles, Orange,
San Diego, Ventura, Riverside, San Bernardino and Kern Counties. We believe that
our properties are located within desirable and established business communities
and are well maintained. Our properties offer an array of amenities, including
security, parking, conference facilities, on-site management, food services and
health clubs.
Following is a summary of our property portfolio as of December 31, 1999:
<TABLE>
<CAPTION>
ANNUALIZED
PERCENT OF BASE RENT PER
NUMBER APPROXIMATE TOTAL NET LEASED NET
OF NET RENTABLE RENTABLE PERCENT RENTABLE
LOCATION PROPERTIES SQUARE FEET SQUARE FEET LEASED SQUARE FOOT(1)
-------- ---------- ------------ ----------- ------- --------------
<S> <C> <C> <C> <C> <C>
Los Angeles County:
West................................... 29 4,720,574 25.5% 94.8% $22.67
North.................................. 31 2,767,592 15.0 94.0 21.04
South.................................. 16 2,201,823 11.9 94.6 18.90
Central................................ 3 608,789 3.3 96.1 19.74
Orange County............................ 21 3,317,302 17.9 96.4 18.54
San Diego County......................... 21 2,486,777 13.5 97.6 18.51
Ventura County........................... 4 561,841 3.0 97.6 17.16
Riverside/San Bernardino Counties........ 12 968,570 5.2 86.1 17.23
Kern County.............................. 2 216,522 1.2 99.1 --
--- ---------- ----- ---- ------
Subtotal/Weighted Average........... 139 17,849,790 96.5% 95.1% $20.40
Renovation Properties.................... 3 642,178 3.5% 28.4% $21.69
--- ---------- ----- ---- ------
Total/Weighted Average............ 142 18,491,968 100.0% 92.7% $20.42
=== ========== ===== ==== ======
</TABLE>
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(1) Calculated as monthly contractual base rent under existing leases as of
December 31, 1999, multiplied by 12 and divided by leased net rentable
square feet; for those leases where rent has not yet commenced or which are
in a free rent period, the first month in which rent is to be received is
used to determine annualized base rent. Excludes 48 properties and 4,722,281
net rentable square feet under triple net and modified gross leases. If
these properties and square footage had been included, our total weighted
average annualized base rent per leased net rentable square foot would be
$18.48.
DEVELOPMENT AND ACQUISITION ACTIVITIES
In addition to the properties listed above, we currently have three
properties under development containing approximately 700,000 net rentable
square feet. We estimate the total costs of developing these three properties
will be approximately $177.7 million, of which $34.3 million had been incurred
as of December 31, 1999. Estimated total costs include purchase and closing
costs and anticipated construction costs, tenant improvements, leasing
commissions and carrying costs during development. One of the properties, 6060
Center Drive, is an approximately 241,000 net rentable square foot multi-tenant
building. The second property is an approximately 159,000 net rentable square
foot build-to-suit office building being developed for Univision Communications,
Inc. The third property, 6080 Center Drive, is an approximately 300,000 net
rentable square foot multi-tenant building.
These properties are both located in the Howard Hughes Center, a 70-acre
commercial development located two miles north of Los Angeles International
Airport and immediately adjacent to the San Diego Freeway (I-405), with on- and
off-ramps that directly serve the site. We have entitlements to construct an
additional approximately 600,000 net rentable square feet of office space at the
Howard Hughes Center.
4
<PAGE> 7
We acquired four properties totaling approximately 524,000 net rentable
square feet during 1999 for a total cost of approximately $89.8 million. We have
not acquired any additional properties since December 31, 1999.
TENANT INFORMATION
We believe that the location, quality of construction and building
amenities, as well as our high level of tenant service, have enabled us to
attract and retain a diverse tenant base. As of December 31, 1999, we had over
3,000 tenants, with no one tenant representing more than 2.0% of the aggregate
annualized base rent of our properties, and only three tenants individually
representing more than 1.0% of our aggregate annualized base rent. Our
properties are leased to local, national and foreign companies engaged in a
variety of businesses including financial services, entertainment, health care
services, accounting, law, computer technology, education and publishing.
Our leases are typically structured for terms of three, five or ten years.
Leases typically contain provisions permitting tenants to renew expiring leases
at prevailing market rates. A majority of our leases are full service gross
leases under which tenants typically pay for all real property taxes and
operating expenses above those for an established base year or expense stop.
Tenants generally pay directly, without regard to a base year or expense stop,
for overtime use of heating and air conditioning and for on-site monthly
employee and visitor parking. We are generally responsible for structural
repairs.
BUSINESS STRATEGIES
Our primary business strategy is to actively manage our portfolio to
achieve gains in occupancy and rental rates, to maximize income from ancillary
operations and services and to reduce operating expenses. When market conditions
permit, we may also develop or acquire properties in submarkets where we can use
our local market expertise and extensive real estate experience.
Through our corporate office and regional offices, we implement our
business strategies by:
- using integrated decision making to provide pro-active solutions to the
space needs of users in the markets where we have extensive real estate
and technical expertise;
- emphasizing quality service, tenant satisfaction and retention;
- employing intensive property marketing and leasing programs; and
- implementing cost control management techniques and systems that
capitalize on economies of scale and concentration arising from the size
and geographic focus of our portfolio.
We believe the implementation of these operating practices has been
instrumental in the increased occupancy and improved operating results of our
existing portfolio.
GROWTH STRATEGIES
Based on our geographic focus in Southern California and our evaluation of
local market conditions, we believe the following key factors provide us with
opportunities to maximize returns:
- the continued strength of the Southern California economy, particularly
in the submarkets where our properties are located; and
- the limited construction of new office properties in the Southern
California region due to substantial building construction limitations
and a minimal amount of developable land in many key submarkets.
5
<PAGE> 8
INTERNAL GROWTH
We believe that opportunities exist to increase cash flow from our existing
portfolio and that these opportunities will be enhanced as the Southern
California commercial real estate market continues to improve. We achieve
internal growth by:
- maintaining or improving current occupancy throughout our portfolio by
actively managing and aggressively leasing our properties;
- leasing space and renewing leases as they expire at increasing rents due
to the increased demand for commercial office space in Southern
California;
- controlling operating expenses through active cost control management and
systems;
- realizing economies of scale and concentration due to the size and
geographic focus of our portfolio; and
- sourcing new and innovative revenue streams while providing high quality
services to our tenants.
EXTERNAL GROWTH
We believe in the strength and potential of the Southern California
commercial real estate market, and we intend to continue to focus our resources
in this region. We have assembled a management team that has extensive
experience and knowledge in this market that we believe provides us with a
competitive advantage in identifying and capitalizing on development, renovation
and acquisition opportunities.
Subject to capital availability and market conditions, our approach is to
seek development, renovation and acquisition opportunities in Southern
California submarkets where we have an existing presence and where the following
conditions exist:
- low vacancy rates;
- opportunities for rising rents due to employment growth and population
movements;
- a minimal amount of developable land; and
- significant barriers to entry because of constraints on new development,
including challenging entitlement processes, strictly enforced height and
density restrictions and governmental requirements resulting in
significant additional construction costs.
FINANCIAL POLICIES
We are committed to financial policies based on controlled growth and the
maintenance of a strong balance sheet and consistent cash flow. We are committed
to conservative leverage and fixed charge coverage levels throughout the
economic and investment cycle. Leverage will vary around target levels based on
the timing of equity issuances and relative debt and equity capital market
conditions. Our targeted debt and coverage levels are: (1) total debt to total
market capitalization ratio between 30% and 45%, (2) EBITDA to interest expense
of at least 3.0 to 1, and (3) EBITDA to fixed charges of at least 2.5 to 1. In
addition, covenants contained in the indenture, dated March 14, 2000, by and
between The Bank of New York and us, will limit our ability to incur debt in the
future. Going forward, we plan to monitor and access private and public capital
markets to continue to issue equity and equity-related and unsecured debt
instruments on attractive terms. We intend to limit our floating rate debt by
using more long-term fixed rate debt. We are in the process of expanding and
extending our unsecured line of credit to provide added flexibility during the
economic and capital markets cycles.
6
<PAGE> 9
ABOUT US
We are a Maryland limited partnership. Arden Realty is a Maryland
corporation. Arden Realty's common stock is listed on the New York Stock
Exchange under the symbol "ARI." Our executive offices are located at 11601
Wilshire Boulevard, Fourth Floor, Los Angeles, California 90025. Our telephone
number is (310) 966-2600.
7
<PAGE> 10
THE EXCHANGE OFFER
Following is a summary of the principal terms of our exchange offer. A more
detailed description is contained in this prospectus under the heading "The
Exchange Offer."
THE EXCHANGE OFFER......... We are offering to issue up to $250 million in
principal amount of exchange notes, registered
under the Securities Act of 1933, in exchange for a
like principal amount of our unregistered notes.
You may tender your unregistered notes by following
the procedures described under the heading "The
Exchange Offer."
If you do not validly tender your unregistered
notes and accept our exchange offer, you will
continue to hold unregistered notes and will
continue to be subject to the rights and
limitations applicable to those notes, including
existing transfer restrictions. After the exchange
offer, we will have no further obligation to
provide for the registration under the Securities
Act of 1933 of your unregistered notes, except in
limited circumstances.
Based on an interpretation by the staff of the
Securities and Exchange Commission set forth in
no-action letters issued to third parties, we
believe that the exchange notes issued to you
pursuant to the exchange offer in exchange for your
unregistered notes may be offered for resale,
resold and otherwise transferred by you unless you
are (1) a broker-dealer who purchases such exchange
notes directly from us to resell pursuant to Rule
144A or any other available exemption under the
Securities Act of 1933 or (2) a person that is our
affiliate (within the meaning of Rule 405 under the
Securities Act of 1933), without compliance with
the registration and prospectus delivery provisions
of the Securities Act of 1933; provided that you
are acquiring exchange notes in the ordinary course
of your business and are not participating, and
have no arrangement or understanding with any
person to participate, in the distribution of the
exchange notes. Each broker-dealer that receives
exchange notes for its own account in exchange for
unregistered notes, where the unregistered notes
were acquired by the broker-dealer as a result of
market-making activities or other trading
activities, must acknowledge that it will deliver a
prospectus in connection with any resale of its
exchange notes. See "The Exchange Offer -- Resale
of the Exchange Notes."
REGISTRATION RIGHTS
AGREEMENT.................. We sold the unregistered notes pursuant to a
purchase agreement, dated March 14, 2000, by and
among us and Lehman Brothers Inc., Morgan Stanley &
Co. Incorporated, Salomon Smith Barney Inc., Chase
Securities Inc., Banc One Capitals Markets, Inc.
and A.G. Edwards & Sons, Inc., who collectively
were the initial purchasers of the unregistered
notes. Pursuant to the purchase agreement, we and
the initial purchasers entered into a registration
rights agreement, dated as of March 17, 2000, which
grants the holders of the unregistered notes
specific exchange and registration rights. The
exchange offer is intended to satisfy those rights.
See "The Exchange Offer -- Termination of Specific
Rights."
EXPIRATION DATE............ The exchange offer will expire at 5:00 p.m., New
York City time, on May , 2000, unless we, in our
sole discretion, extend the exchange offer, in
which case the term expiration date shall mean the
latest date
8
<PAGE> 11
and time to which the exchange offer is extended.
See "The Exchange Offer -- Expiration Date;
Extensions; Amendments."
CONDITIONS TO THE EXCHANGE
OFFER.................... The exchange offer is subject to specific customary
conditions that may be waived by us. The exchange
offer is not conditioned upon any minimum aggregate
principal amount of unregistered notes being
tendered for exchange. See "The Exchange Offer --
Conditions."
PROCEDURES FOR TENDERING
THE UNREGISTERED NOTES..... To accept our exchange offer, you must complete,
sign and date the letter of transmittal, or a
facsimile in accordance with its instructions, and
mail or otherwise deliver the letter of
transmittal, or facsimile, together with your
unregistered notes and any other required
documentation to The Bank of New York, as exchange
agent, at the address set forth herein. By
executing the letter of transmittal, you will
represent to and agree with us that, among other
things:
(i) the exchange notes to be acquired by you in
connection with the exchange offer are being
acquired by you in the ordinary course of your
business;
(ii) if you are not a broker-dealer, you are not
currently participating in, do not intend to
participate in, and have no arrangement or
understanding with any person to participate
in, a distribution of the exchange notes;
(iii) if you are a broker-dealer registered under
the Securities Exchange Act of 1934 or are
participating in the exchange offer for the
purposes of distributing the exchange notes,
you will comply with the registration and
prospectus delivery requirements of the
Securities Act of 1933 in connection with a
secondary resale transaction of the exchange
notes acquired by that person and cannot rely
on the position of the staff of the
Securities and Exchange Commission set forth
in no-action letters;
(iv) you understand that a secondary resale
transaction described in clause (iii) above
and any resales of exchange notes obtained by
you in exchange for unregistered notes
acquired by you directly from us should be
covered by an effective registration statement
containing the selling securityholder
information required by Item 507 or Item 508,
as applicable, of Regulation S-K of the
Securities and Exchange Commission; and
(v) you are not our "affiliate," as defined in
Rule 405 under the Securities Act of 1933.
If you are a broker-dealer that will receive
exchange notes for your own account in exchange for
unregistered notes that were acquired as a result
of market-making activities or other trading
activities, you will be required to acknowledge in
the letter of transmittal that you will deliver a
prospectus in connection with any resale of your
exchange notes; however, by so acknowledging and by
delivering a prospectus, you will not be deemed to
be admitting that you are an "underwriter"
9
<PAGE> 12
within the meaning of the Securities Act of 1933.
See "The Exchange Offer -- Procedures for
Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS.......... If your unregistered notes are registered in the
name of a broker, dealer, commercial bank, trust
company or other nominee and you wish to tender
your unregistered notes, you should contact the
registered holder promptly and instruct the
registered holder to tender your unregistered notes
on your behalf. If you wish to tender on your own
behalf, you must, prior to completing and executing
the letter of transmittal and delivering your
unregistered notes, either make appropriate
arrangements to register ownership of the
unregistered notes in your name or obtain a
properly completed bond power from the registered
holder. The transfer of registered ownership may
take considerable time and may not be able to be
completed prior to the expiration date. See "The
Exchange Offer -- Procedures for Tendering."
GUARANTEED DELIVERY
PROCEDURES................. If you wish to tender your unregistered notes but
your unregistered notes are not immediately
available or you cannot deliver your unregistered
notes, the letter of transmittal or any other
documentation required by the letter of transmittal
to the exchange agent prior to the expiration date,
then you must tender your unregistered notes
according to the guaranteed delivery procedures
listed under "The Exchange Offer -- Guaranteed
Delivery Procedures."
ACCEPTANCE OF THE
UNREGISTERED NOTES AND
DELIVERY OF THE EXCHANGE
NOTES.................... Subject to the satisfaction or waiver of the
conditions to the exchange offer, we will accept
for exchange any and all unregistered notes that
are properly tendered prior (and not withdrawn) to
the expiration date. The exchange notes will be
delivered on the earliest practicable date
following the expiration date. See "The Exchange
Offer -- Terms of the Exchange Offer."
WITHDRAWAL RIGHTS.......... Tenders of unregistered notes may be withdrawn at
any time prior to the expiration date. See "The
Exchange Offer -- Withdrawal of Tenders."
FEDERAL INCOME TAX
CONSEQUENCES............. The exchange of unregistered notes for exchange
notes in the exchange offer will not be a taxable
event for U.S. federal income tax purposes. See
"Federal Income Tax Consequences."
NO CASH PROCEEDS........... We will not receive any proceeds from the issuance
of the exchange notes.
EXCHANGE AGENT............. The Bank of New York is serving as the exchange
agent.
10
<PAGE> 13
THE EXCHANGE NOTES
The form and terms of the respective exchange notes will be identical in
all material respects to the form and terms of the unregistered notes, except
that the exchange notes will not bear legends restricting their transfer and the
holders of the exchange notes will not be entitled to any of the registration
rights of holders of the unregistered notes under the registration rights
agreement, which rights will terminate upon consummation of the exchange offer.
The exchange notes will evidence the same indebtedness as the unregistered notes
which they replace and will be issued under, and be entitled to the benefits of,
the indenture dated as of March 14, 2000, as amended or supplemented. For a more
complete description of the terms of the exchange notes, see "Description of
Exchange Notes."
ISSUER..................... Arden Realty Limited Partnership
EXCHANGE NOTES............. $200 million in principal amount of 8.875% senior
notes due 2005 $50 million in principal amount of
9.150% senior notes due 2010
MATURITY DATES............. March 1, 2005 for the 2005 notes
March 1, 2010 for the 2010 notes
INTEREST PAYMENT DATES..... March 1 and September 1 of each year, beginning
September 1, 2000
The unregistered notes tendered for exchange will
cease to accrue interest on the day immediately
preceding the date of issuance of the exchange
notes and the exchange notes will bear interest
from their date of issuance. All of this interest
on the registered and unregistered notes will be
paid on September 1, 2000.
RANKING.................... The exchange notes will be our senior unsecured
obligations and will rank equally with all of our
other existing and future senior unsecured
indebtedness. See "Description of Exchange
Notes -- General."
Assuming we had completed the offering of the
unregistered notes on December 31, 1999, and
applied the proceeds as we have done, the exchange
notes:
- would have ranked equally with $192.8
million of other unsecured debt; and
- would have been subordinated to $590.3
million of secured debt.
OPTIONAL REDEMPTION........ We may redeem some or all of the exchange notes at
any time at the redemption prices described under
"Description of Exchange Notes -- Optional
Redemption."
COVENANTS.................. The indenture governing the exchange notes contains
various covenants including covenants with respect
to:
- limitations on the incurrence of debt;
- limitations on encumbering assets; and
- limitations on specified mergers,
consolidations and other similar
transactions.
These covenants are subject to a number of
important qualifications and exceptions. See
"Description of Exchange Notes -- Covenants."
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<PAGE> 14
ABSENCE OF A PUBLIC MARKET
FOR THE EXCHANGE NOTES..... The exchange notes are new securities. The exchange
notes will not be listed on any securities
exchange. We cannot assure you that any active or
liquid market will develop for the exchange notes.
See "Plan of Distribution."
RISK FACTORS............... See "Risk Factors" and the other information in
this prospectus for a discussion of factors you
should carefully consider before deciding to tender
your unregistered notes in the exchange offer.
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<PAGE> 15
SUMMARY OF FINANCIAL AND OPERATING DATA
You should read the following consolidated financial and operating data for
Arden Realty Limited Partnership and the following combined financial and
operating data for its predecessors together with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our consolidated
financial statements included elsewhere in this prospectus. The Arden
predecessors are comprised primarily of partnerships and limited liability
companies owned by Mr. Richard S. Ziman, Arden Realty's Chairman and Chief
Executive Officer, and Mr. Victor J. Coleman, Arden Realty's President and Chief
Operating Officer, their relatives and affiliates and other third parties. The
properties held by the Arden predecessors were directly or indirectly
contributed to us in the formation transactions completed prior to Arden
Realty's initial public offering of its common stock.
<TABLE>
<CAPTION>
ARDEN REALTY LIMITED PARTNERSHIP ARDEN PREDECESSORS
------------------------------------------------------ --------------------------------
FOR THE YEARS ENDED FOR THE PERIOD FOR THE PERIOD FOR THE YEAR
DECEMBER 31, OCTOBER 9, 1996 JANUARY 1, 1996 ENDED
----------------------------------- TO DECEMBER 31, TO OCTOBER 8, DECEMBER 31,
1999 1998 1997 1996 1996 1995
--------- ----------- --------- ---------------- --------------- --------------
(IN THOUSANDS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue............................... $ 340,675 $ 284,582 $ 135,447 $ 19,572 $ 40,465 $ 11,693
Property operating expenses........... 101,284 86,570 44,332 6,005 14,224 3,340
General and administrative expenses... 6,753 6,264 3,888 753 1,758 1,377
Depreciation and amortization......... 69,837 51,822 20,260 3,108 5,264 1,898
162,801 139,926 66,967 9,706 19,219 5,078
--------- ----------- --------- --------- --------- ---------
Interest expense...................... 60,239 43,403 19,511 1,280 24,521 5,537
Loss on valuation of derivative....... -- -- 3,111 -- -- --
Equity in net loss of noncombined
entities............................ -- -- -- -- 336 116
Minority interest..................... 169 729 59 -- (721) 1
--------- ----------- --------- --------- --------- ---------
Income (loss) before extraordinary
items............................... 102,393 95,794 44,286 8,426 (4,917) (576)
Extraordinary (loss) gain on early
extinguishment of debt, net of
minority interest................... -- -- -- (13,105) 1,877 --
--------- ----------- --------- --------- --------- ---------
Net income (loss)..................... $ 102,393 $ 95,794 $ 44,286 $ (4,679) $ (3,040) $ (576)
========= =========== ========= ========= ========= =========
Net income (loss) allocated to:
Preferred partner................... $ 1,354 $ -- $ -- $ --
========= =========== ========= =========
General and limited partners........ $ 101,039 $ 95,794 $ 44,286 $ (4,679)
========= =========== ========= =========
OTHER DATA:
Cash provided by operating
activities.......................... $ 151,753 $ 133,694 $ 36,307 $ 8,665 $ 5,221 $ 2,830
Cash used in investing activities..... (264,832) (1,083,117) (656,821) (164,763) (119,083) (123,358)
Cash provided by financing
activities.......................... 115,557 948,701 618,182 163,730 122,074 120,707
Funds from operations(1).............. 170,876 147,616 64,546 11,534 (374) 1,323
EBITDA(2)............................. $ 232,638 $ 191,748 $ 87,227 $ 12,814 $ 24,483 $ 6,976
Ratio of EBITDA to interest
expense(2).......................... 3.86 4.42 4.47 10.01 1.00 1.26
Ratio of EBITDA to fixed
charges(2)(3)....................... 3.27 3.66 4.22 9.58 1.00 1.26
Ratio of earnings to fixed
charges(3)(4)....................... 2.28 2.66 3.08 7.26 0.80 0.89
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------------------------------------
1999 1998 1997 1996 1996
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net investment in real estate......................... $2,442,164 $2,239,598 $1,203,172 $529,568 $160,874
Total assets.......................................... 2,572,904 2,333,866 1,287,287 551,256 182,379
Total indebtedness.................................... 1,029,656 840,377 477,566 155,000 168,451
Other liabilities..................................... 50,555 35,720 23,305 9,768 5,712
Partners' capital..................................... 1,489,740 1,454,844 756,008 386,488 8,216
</TABLE>
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<PAGE> 16
- -------------------------
(1) We consider funds from operations, as defined by the National Association of
Real Estate Investment Trusts, or NAREIT to be a useful financial measure of
our operating performance. We believe that funds from operations provides
investors with an additional basis to evaluate our ability to service debt
and to fund acquisitions and other capital expenditures. Funds from
operations should not be considered an alternative to net income determined
in accordance with GAAP, as an indicator of our financial performance or as
a substitute for cash flow from operating activities determined in
accordance with GAAP as a measure of our liquidity. Funds from operations
also is not necessarily indicative of funds available to fund our cash
needs, including our ability to service our debt.
The White Paper on funds from operations approved by the Board of Governors
of NAREIT in October 1999 defines funds from operations as net income or
loss computed in accordance with GAAP, excluding gains or losses from
extraordinary items, as defined by GAAP, and gains and losses from sales of
depreciable operating property plus real estate-related depreciation and
amortization and after adjustments for unconsolidated partnerships and joint
ventures. We compute funds from operations in accordance with standards
established by the White Paper which may differ from the standards used by
other real estate companies and, accordingly, our funds from operations may
not be comparable to those companies' funds from operations.
(2) As used in this prospectus, EBITDA means revenue less property operating
expenses and general and administrative expenses. EBITDA does not represent
cash generated from operating activities in accordance with GAAP and should
not be considered as an alternative to operating income or net income as an
indicator of performance or as a substitute for cash flow from operating
activities determined in accordance with GAAP as a measure of our liquidity.
We have included information with respect to EBITDA because we understand
that this information is used by investors as one measure of operating
performance.
(3) Fixed charges consist of interest costs, whether expensed or capitalized,
amortization of deferred financing costs, amortization of discounts or
premiums related to indebtedness and preferred unit distributions.
(4) The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings have been calculated by adding
fixed charges, excluding capitalized interest and preferred unit
distributions, to income or loss before extraordinary items.
14
<PAGE> 17
RISK FACTORS
FINANCING RISKS
OUR SIGNIFICANT AMOUNT OF DEBT COULD LIMIT OUR OPERATIONAL FLEXIBILITY OR
OTHERWISE ADVERSELY AFFECT OUR FINANCIAL CONDITION.
We have now and will continue to have a significant amount of debt. If the
offering of the unregistered notes had been completed as of December 31, 1999
and the proceeds applied accordingly, we would have had total debt of $1.0
billion, consisting of $590.3 million in secured debt and $442.8 million of
unsecured debt.
Our substantial indebtedness could have important consequences to you. For
example, it could:
- require us to dedicate a substantial portion of our cash flow to pay our
debt, thereby reducing the availability of our cash flow to fund working
capital, capital expenditures, acquisition and development activity and
other business purposes;
- make it more difficult for us to satisfy our obligations with respect to
the exchange notes;
- limit our ability to refinance our debt and obtain additional debt
financing; and
- increase our vulnerability to general adverse economic and real estate
industry conditions and limit our flexibility in planning for, or
reacting to, changes in our business and the real estate industry.
WE MAY BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT WHICH WOULD INCREASE THE RISKS
ASSOCIATED WITH OUR SUBSTANTIAL LEVERAGE.
Despite current indebtedness levels, we may still be able to incur
substantially more debt in the future. The terms of the indenture do not fully
prohibit us from doing so. We may borrow up to a maximum of $310 million under
our existing lines of credit. If new debt is added to our current debt levels,
the related risks that we now face could intensify and could increase the risk
of default on our indebtedness. See "Description of Other Debt -- Lines of
Credit."
SCHEDULED DEBT PAYMENTS AND RISING INTEREST RATES COULD ADVERSELY AFFECT OUR
FINANCIAL CONDITION.
We are subject to risks normally associated with debt financing. Cash flow
could be insufficient to meet required payments of principal and interest. We
may not be able to refinance existing indebtedness, which in virtually all cases
requires substantial principal payments at maturity, and, if we can, the terms
of the refinancing might not be as favorable as the terms of our existing
indebtedness. If principal payments due at maturity cannot be refinanced,
extended or paid with proceeds of other capital transactions, such as new equity
capital, our cash flow will not be sufficient in all years to repay all maturing
debt. In addition, at December 31, 1999, approximately 41.9% of our debt was
variable rate debt. Assuming the offering of the unregistered notes had been
completed on December 31, 1999, and after application of the proceeds from that
offering, our as adjusted variable rate debt would have been reduced to
approximately 18.7% of our outstanding debt, and we would have had the ability
to borrow under existing lines of credit an additional $117.2 million of
variable rate debt. If prevailing interest rates or other factors result in
higher interest rates, the increased interest expense would adversely affect our
cash flow and our ability to service our debt, including the exchange notes. As
a protection against rising interest rates, we may enter into agreements such as
interest rate swaps, caps, floors and other interest rate exchange contracts.
These agreements, however, increase our risks as to the other parties to the
agreements not performing or that the agreements could be unenforceable.
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<PAGE> 18
MANY OF OUR PROPERTIES ARE SUBJECT TO MORTGAGE FINANCING WHICH COULD RESULT IN
FORECLOSURE IF WE ARE UNABLE TO PAY OR REFINANCE THE MORTGAGES WHEN DUE.
We currently have outstanding five mortgage financings totaling $558.7
million that are secured by 67 of our properties. The properties in each of
these financings are fully cross-collateralized and cross-defaulted. To the
extent mortgages are cross-collateralized, lenders may seek to foreclose upon
properties that are not the primary collateral for their loans, which may, in
turn, result in acceleration of other debt secured by the properties. Six
additional properties are subject to single property mortgages. See "Description
of Other Debt." If we are unable to meet our obligations under these mortgages,
the properties subject to the mortgages could be foreclosed upon, which would
have a material adverse effect on us and our ability to pay or refinance our
debt obligations, including the exchange notes.
THE EXCHANGE NOTES ARE JUNIOR IN RIGHT OF PAYMENT TO OUR SECURED DEBT AND WE CAN
INCUR ADDITIONAL DEBT THAT IS SENIOR TO THE EXCHANGE NOTES.
The exchange notes are effectively subordinated to claims by holders of
debt secured by our properties and any other debt secured by any of our assets.
The exchange notes are also effectively subordinated to the debt obligations of
our subsidiaries. We may incur additional debt that may be senior to the
exchange notes. The subordination of the exchange notes may adversely affect our
ability to make payments on the exchange notes.
REAL ESTATE INVESTMENT RISKS
AN INABILITY TO RETAIN TENANTS OR RENT SPACE UPON LEASE EXPIRATIONS MAY
ADVERSELY AFFECT OUR ABILITY TO SERVICE OUR DEBT.
Over the next five years, 2,837 leases comprising 77.4% of our leased net
rentable square footage and 76.4% of our annualized base rents at December 31,
1999, will expire. If we are unable to promptly relet or renew leases for all or
a substantial portion of this space, or if the rent upon renewal or reletting is
significantly lower than expected, our cash flow and ability to pay or refinance
our debt obligations could be adversely affected.
OUR OPERATING PERFORMANCE AND PROPERTY VALUES WILL BE AFFECTED BY CHANGES IN THE
ECONOMIC CLIMATE IN SOUTHERN CALIFORNIA.
All of our properties are located in Southern California. Our revenue and
the value of our properties may be affected by a number of factors, including
the Southern California economic climate and real estate market, which may
adversely affect our ability to pay or refinance our debt obligations, including
the exchange notes.
COMPETITION AFFECTS OCCUPANCY LEVELS AND RENTS WHICH COULD ADVERSELY AFFECT OUR
REVENUES.
Many office properties compete with our properties in attracting tenants to
lease space. Some of the competing properties may be newer, better located or
owned by parties better capitalized than we are. The number of competitive
commercial properties in a particular area could have a material adverse effect
on the rents we can charge and our ability to lease space in our existing
properties or at newly acquired or developed properties.
THE FINANCIAL CONDITION AND SOLVENCY OF OUR TENANTS MAY REDUCE OUR CASH FLOW.
Tenants may experience a downturn in their business which may cause them to
miss rental payments when due or to seek the protection of bankruptcy laws,
which could result in rejection and termination of their leases or a delay in
recovering possession of their premises. Although we have not experienced
material losses from tenant bankruptcies, we cannot assure you that tenants will
not file for bankruptcy
16
<PAGE> 19
protection in the future or, if any tenants file, that they will affirm their
leases and continue to make rental payments in a timely manner.
BECAUSE REAL ESTATE INVESTMENTS ARE ILLIQUID, WE MAY NOT BE ABLE TO SELL
PROPERTIES WHEN APPROPRIATE.
Equity real estate investments are relatively illiquid. That illiquidity
will tend to limit our ability to vary our portfolio promptly in response to
changes in economic or other conditions. In addition, the Internal Revenue Code
of 1986, as amended, may under specified circumstances impose a 100% prohibited
transaction tax on the profits derived from Arden Realty's sale of properties
held for fewer than four years, which may affect our ability to sell properties
if necessary to repay debt.
INCREASES IN TAXES AND REGULATORY COMPLIANCE COSTS MAY REDUCE OUR REVENUE.
Except for our triple net leases, tax increases are generally not passed
through to tenants under our leases. Therefore, any tax increases may adversely
affect our cash flow and our ability to pay or refinance our debt obligations,
including the exchange notes. Our properties are also subject to various
federal, state and local regulatory requirements, such as requirements of the
Americans with Disabilities Act, and state and local fire and life safety
requirements. Failure to comply with these requirements could result in the
imposition of fines by governmental authorities or awards of damages to private
litigants. We believe that our properties are currently in substantial
compliance with these regulatory requirements and that any noncompliance would
not have a material adverse effect on us. We cannot assure you, however, that
these requirements will not be changed or that new requirements will not be
imposed that would require significant unanticipated expenditures by us and
could have an adverse effect on our cash flow and ability to pay or refinance
our debt obligations.
WE MAY ACQUIRE PROPERTIES THROUGH PARTNERSHIPS OR JOINT VENTURES WITH THIRD
PARTIES THAT COULD RESULT IN FINANCIAL DEPENDENCY AND MANAGEMENT CONFLICTS.
Although we currently do not have plans to do so, we may participate with
other entities in property ownership through joint ventures or partnerships in
the future. Partnership or joint venture investments may, under some
circumstances, involve risks not otherwise present, including:
- our partners or co-venturers might become bankrupt;
- our partners or co-venturers might at any time have economic or other
business interests or goals which are inconsistent with our business
interests or goals; and
- our partners or co-venturers may be in a position to take action contrary
to our instructions or requests contrary to our policies or objectives.
We will, however, seek to maintain sufficient control of any partnerships
or joint ventures with which we may become involved to permit our business
objectives to be achieved.
WE MAY NOT BE ABLE TO INTEGRATE OR FINANCE OUR ACQUISITIONS AND RENOVATION
ACTIVITIES AND OUR ACQUISITIONS AND RENOVATIONS MAY NOT PERFORM AS EXPECTED.
As we acquire additional properties, we will be subject to risks associated
with managing new properties, including lease-up and tenant retention. In
addition, our ability to manage our growth effectively will require us to
successfully integrate our new acquisitions into our existing management
structure. We cannot assure you that we will be able to succeed with that
integration or effectively manage additional properties or that newly acquired
properties will perform as expected. Changing market conditions, including
competition from other purchasers of suburban office properties, may diminish
our opportunities for attractive additional acquisitions.
17
<PAGE> 20
We intend to expand and renovate our properties from time to time.
Expansion and renovation projects generally require expenditures of capital as
well as various government and other approvals, the receipt of which cannot be
assured. While our policies with respect to expansion and renovation activities
are intended to limit some of the risks otherwise associated with these
activities, we will nevertheless incur risks, including expenditures of funds
on, and devotion of our time to, projects that may not be completed.
WE MAY NOT BE ABLE TO INTEGRATE OR FINANCE OUR DEVELOPMENT ACTIVITIES.
We also intend to review, from time to time, opportunities for developing
and constructing office buildings and other commercial properties in accordance
with our development and underwriting policies. Risks associated with our
development and construction activities may include:
- abandonment of development opportunities due to a lack of financing or
other reasons;
- construction costs of a property exceeding original estimates, possibly
making the property uneconomical;
- occupancy rates and rents at a newly completed property may not be
sufficient to make the property profitable;
- construction and lease-up may not be completed on schedule, resulting in
increased debt service expense and construction costs; and
- development activities would also be subject to risks relating to the
inability to obtain, or delays in obtaining, all necessary zoning,
land-use, building, occupancy and other required governmental permits and
authorizations.
WE MAY NOT BE ABLE TO EXPAND INTO NEW MARKETS SUCCESSFULLY.
While we have generally limited our business primarily to the Southern
California market, it is possible that we will in the future expand our business
to new geographic markets. We will not initially possess the same level of
familiarity with new markets outside of Southern California, which could
adversely affect our ability to manage, lease, develop or acquire properties in
new localities.
TAX RISKS
OUR PARTNERSHIP AGREEMENT RESTRICTS OUR ABILITY TO ACCUMULATE CASH THAT MIGHT BE
USED IN FUTURE PERIODS TO MAKE DEBT PAYMENTS OR TO FUND FUTURE GROWTH.
In order to qualify as a REIT and avoid federal income tax liability, Arden
Realty must distribute to its stockholders at least 95% of its net taxable
income, excluding net capital gain, and to avoid income taxation, its
distributions must not be less than 100% of its net taxable income, including
capital gains. To avoid excise tax liability, Arden Realty's distributions to
its stockholders for the year must exceed the sum of 85% of its ordinary income,
95% of its capital gain net income, and any undistributed taxable income from
prior years. Our partnership agreement generally requires us to distribute
substantially all of our available cash generated from operations each quarter
and make reasonable efforts to distribute to Arden Realty enough cash for it to
meet the 95% distribution requirement and to avoid any federal income or excise
tax liability. As a result of these distribution requirements, we do not expect
to accumulate significant amounts of cash. Accordingly, these distributions
could significantly reduce the cash available to us in subsequent periods to
make payments on the exchange notes and other debt obligations and to fund
future growth.
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<PAGE> 21
WE INTEND TO QUALIFY AS A PARTNERSHIP, BUT WE CANNOT GUARANTEE THAT WE WILL
QUALIFY.
We intend to qualify as a partnership for federal income tax purposes.
However, if we are a "publicly traded partnership," we will be treated as a
corporation instead of a partnership for federal income tax purposes unless at
least 90% of our income is qualifying income as defined in the Internal Revenue
Code. The income requirements applicable to REITs and the definition of
"qualifying income" for purposes of this 90% test are similar in most respects.
Qualifying income for the 90% test generally includes passive income, such as
specified types of real property rents, dividends and interest. We believe that
we would meet this 90% test, but we cannot guarantee that we would. If we were
to be taxed as a corporation, we would incur substantial tax liabilities, Arden
Realty would fail to qualify as a REIT for federal income tax purposes, and our
and Arden Realty's ability to raise additional capital could be significantly
impaired.
WE MAY SUFFER ADVERSE TAX CONSEQUENCES AND BE UNABLE TO ATTRACT CAPITAL IF ARDEN
REALTY FAILS TO QUALIFY AS A REIT.
We believe that since its taxable year ended December 31, 1996, Arden
Realty has been organized and operated, and intends to continue to operate, so
as to qualify for taxation as a REIT under the Internal Revenue Code. Although
we believe that Arden Realty has been and will continue to be organized and has
operated and will continue to operate so as to qualify for taxation as a REIT,
we cannot assure you that it has been or will continue to be organized or
operated in a manner so as to qualify or remain so qualified. Qualification as a
REIT involves the satisfaction of numerous requirements 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
Arden Realty's control. The complexity of these provisions and of the applicable
Treasury Regulations that have been promulgated under the Internal Revenue Code
is greater in the case of a REIT, like Arden Realty, that holds its assets
through an investment in a partnership. No assurance can be given that
legislation, new regulations, administrative interpretations or court decisions
will not significantly change the tax laws with respect to qualification as a
REIT or the federal income tax consequences of qualification. We are, however,
not aware of any pending legislation that would adversely affect Arden Realty's
ability to operate as a REIT. Arden Realty's qualification and taxation as a
REIT depends on its ability to meet, through actual annual operating results,
asset diversification, distribution levels and diversity of stock ownership, the
various qualification tests imposed under the Internal Revenue Code, the results
of which have not been and will not be reviewed by our tax counsel.
If Arden Realty failed to qualify as a REIT in any taxable year, it would
be subject to federal income tax, including any applicable alternative minimum
tax, on its taxable income at regular corporate rates. Moreover, unless entitled
to relief under specific statutory provisions, it also would be disqualified as
a REIT for the four taxable years following the year during which qualification
was lost. If it were disqualified as a REIT, Arden Realty might cause us to
distribute adequate amounts so as to permit it to pay its tax liabilities. In
addition, Arden Realty's ability to raise additional capital for us could be
significantly impaired. This could significantly reduce the cash we would have
available to service debt, including the exchange notes.
Even if Arden Realty qualifies for and maintains its REIT status, it will
be subject to federal, state and local taxes on its income and property. For
example, if Arden Realty has net income from a prohibited transaction,
specifically sales or other taxable dispositions of property held primarily for
sale to customers in the ordinary course of business, that income will be
subject to a 100% tax.
19
<PAGE> 22
OTHER RISKS
THE RESTRICTIONS ON TRANSFER OF THE UNREGISTERED NOTES WILL CONTINUE IF THEY ARE
NOT TENDERED OR ARE NOT ACCEPTED FOR EXCHANGE.
We will issue the exchange notes in exchange for the unregistered notes
timely received by the exchange agent and accompanied by a properly completed
and duly executed letter of transmittal and all other documentation. Therefore,
if you want to tender your unregistered notes, you must properly complete all
documentation and allow sufficient time to ensure timely delivery. Neither we
nor the exchange agent is under any duty to give notification of defects or
irregularities with respect to your tender of the unregistered notes.
If you do not tender your unregistered notes or they are not accepted by
the exchange agent, your unregistered notes will continue to be subject to the
existing restrictions upon transfer thereof even after the exchange offer and
you will be required, in the absence of an applicable exemption, to comply with
the registration and prospectus delivery requirements of the Securities Act of
1933 in connection with any resale transaction. See "The Exchange Offer." In
addition, you will no longer be able to obligate us to register the unregistered
notes under the Securities Act except in the limited circumstances provided
under our registration rights agreement.
To the extent that unregistered notes are tendered and accepted in the
exchange offer, the trading market for the untendered and the tendered but
unaccepted unregistered notes could be adversely affected due to the limited
principal amount of the unregistered notes that is expected to remain
outstanding following the exchange offer. A small outstanding amount of
unregistered notes could result in less demand to purchase unregistered notes,
and could, therefore, result in lower prices for the unregistered notes.
Moreover, if you do not tender your unregistered notes, you will hold an
investment subject to some restrictions on transfer not applicable to the
exchange notes and, as a result, you may only be able to sell your unregistered
notes at a price that is less than the price available to sellers of the freely
tradable exchange notes.
OUR GENERAL PARTNER MAY CHANGE POLICIES WITHOUT STOCKHOLDER OR PARTNER APPROVAL.
Our investment, financing, borrowing and distribution policies and our
policies with respect to all other activities, including growth, debt,
capitalization and operations, will be determined by our general partner.
Although Arden Realty has no present intention to do so, these policies may be
amended or revised at any time and from time to time at the discretion of Arden
Realty without a vote of its stockholders or approval by the limited partners.
In addition, Arden Realty may change policies with respect to conflicts of
interest provided that the changes are consistent with applicable legal
requirements. A change in these policies could adversely affect our financial
condition and results of operations. See "Policies with Respect to Certain
Activities."
LOSSES IN EXCESS OF OUR INSURANCE COVERAGE OR UNINSURED LOSSES COULD ADVERSELY
AFFECT OUR CASH FLOW.
We carry comprehensive liability, fire, extended coverage and rental loss
insurance policies which currently cover all of our properties with
specifications and insured limits that we believe are adequate and appropriate
under the circumstances. Some losses, however, are generally not insured against
because it is not economically feasible to do so. Should an uninsured loss or a
loss in excess of insured limits occur, we could lose our capital invested in
the property, as well as the anticipated future revenue from the property and,
in the case of debt which is recourse to us, we would remain obligated for any
mortgage debt or other financial obligations related to the property. Any loss
would adversely affect our ability to repay our debt. Moreover, we would
generally be liable for any unsatisfied obligations other than non-recourse
obligations. We cannot assure you that material losses in excess of insurance
proceeds will not occur in the future.
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<PAGE> 23
AN EARTHQUAKE COULD ADVERSELY AFFECT OUR BUSINESS.
Southern California is in a high risk geographical area for earthquakes.
Depending upon its magnitude, an earthquake could severely damage our properties
which would adversely affect our business. We maintain earthquake insurance for
our properties and the resulting business interruption. We cannot assure you
that our insurance will be sufficient if there is a major earthquake.
OUR PROPERTIES MAY BE SUBJECT TO ENVIRONMENTAL LIABILITIES.
Under federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real estate may be
required to investigate and clean up hazardous or toxic substances or petroleum
product releases at the property and may be held liable to a governmental entity
or to third parties for property damage and for investigation and clean-up costs
in connection with the contamination. These laws typically impose clean-up
responsibility and liability without regard to whether the owner knew of or
caused the presence of the contaminants, and the liability under these laws has
been interpreted to be joint and several unless the harm is divisible and there
is a reasonable basis for allocation of responsibility. These costs may be
substantial, and the presence of these substances, or the failure to remediate
the contamination on the property, may adversely affect the owner's ability to
sell or rent the property or to borrow against the property. Persons who arrange
for the disposal or treatment of hazardous or toxic substances at a disposal or
treatment facility also may be liable for the costs of removal or remediation of
a release of hazardous or toxic substances at the disposal or treatment
facility, whether or not the facility is owned or operated by that person. Some
laws create a lien on the contaminated site in favor of the government for
damages and costs incurred in connection with the contamination. Finally, third
parties may have claims against the owner of the site based on damages and costs
resulting from environmental contamination emanating from that site.
Specific federal, state and local laws, regulations and ordinances govern
the removal, encapsulation or disturbance of asbestos-containing materials when
those materials are in poor condition or in the event of construction,
remodeling, renovation or demolition of a building. These laws may impose
liability for release of asbestos-containing material and may provide for third
parties to seek recovery from owners or operators of real properties for
personal injury associated with asbestos-containing materials. In connection
with the ownership and operation of our properties, we may be potentially liable
for those costs. Except for two properties, one of which is currently undergoing
abatement activities, we are not aware of any friable asbestos-containing
materials at any of our properties.
In the past few years, independent environmental consultants have conducted
or updated Phase I environmental assessments and other environmental
investigations as appropriate at our properties. These environmental site
assessments have included, among other things, a visual inspection of the
properties and the surrounding area and a review of relevant state, federal and
historical documents. Soil and groundwater samplings were performed where
warranted and remediation, if necessary, has or is being conducted.
The environmental site assessments of our properties identified several
properties that may be impacted by known or suspected regional contamination.
The environmental site assessments have not, however, revealed any environmental
liability that we believe would have a material adverse effect on our business,
assets or results of operations taken as a whole, nor are we aware of any
material environmental liability. Nevertheless, it is possible that our
environmental site assessments do not reveal all environmental liabilities or
that there are material environmental liabilities of which we are unaware.
Moreover, we cannot assure you that future laws, ordinances or regulations will
not impose any material environmental liability or the current environmental
condition of our properties will not be affected by tenants, by the condition of
land or operations in the vicinity of our properties, such as the presence of
underground storage tanks, or by third parties unrelated to us.
We believe that our properties are in compliance in all material respects
with all federal, state and local laws, ordinances and regulations regarding
hazardous or toxic substances or petroleum products,
21
<PAGE> 24
except as noted above. We have not been notified by any governmental authority,
and are not otherwise aware, of any material noncompliance, liability or claim
relating to hazardous or toxic substances or petroleum products in connection
with any of our present properties, other than as noted above.
THERE IS NO CURRENT PUBLIC MARKET FOR THE EXCHANGE NOTES.
The exchange notes are a new issue of securities for which there is
currently no trading market. We will not be listing the exchange notes on any
securities exchange. We cannot guarantee:
- the liquidity of any market that may develop for the exchange notes;
- your ability to sell the exchange notes; or
- the price at which you would be able to sell the exchange notes.
Liquidity of any market for the exchange notes and future trading prices of
the exchange notes will depend on many factors, including:
- prevailing interest rates;
- our operating results; and
- the market for similar securities.
The initial purchasers have advised us that they currently intend to make a
market in the exchange notes, but they are not obligated to do so and may cease
any market-making at any time without notice.
22
<PAGE> 25
NO CASH PROCEEDS
We will not receive any proceeds from the issuance of the exchange notes
and we have agreed to pay the expenses of the exchange offer. The unregistered
notes surrendered in exchange for exchange notes will be cancelled.
We used the approximately $246.6 million of net proceeds from the issuance
of the unregistered notes as follows:
- We repaid approximately $145.5 million under two prepayable term loans to
an affiliate of Lehman Brothers, one of the initial purchasers of the
unregistered notes.
- We repaid a $5.0 million mortgage loan secured by the property located at
299 North Euclid in Pasadena.
- We repaid approximately $96.1 million under our $300 million unsecured
line of credit. Affiliates of Lehman Brothers, Chase Securities Inc. and
Banc One Capital Markets, Inc., three of the initial purchasers of the
unregistered notes, are lenders on our $300 million unsecured line of
credit and received their proportionate share of this line of credit that
was repaid.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- -----------------------------------------------------------------
1996 1996
1999 1998 1997 (OCT. 9 - DEC. 31) (JAN. 1 - OCT. 8) 1995
- ---- ---- ---- ------------------ ----------------- ----
<S> <C> <C> <C> <C> <C>
2.28 2.66 3.08 7.26 0.80 0.89
</TABLE>
Fixed charges consist of interest costs, whether expensed or capitalized,
amortization of deferred financing costs, amortization of discounts or premiums
related to indebtedness and preferred unit distributions. The ratios of earnings
to fixed charges were computed by dividing earnings by fixed charges. For this
purpose, earnings have been calculated by adding fixed charges, excluding
capitalized interest and preferred unit distributions, to income or loss before
extraordinary items.
23
<PAGE> 26
CAPITALIZATION
The following table presents our historical capitalization as of December
31, 1999, and on an as adjusted basis to reflect the application of the net
proceeds from the offering of the unregistered notes. We will not receive any
proceeds from the exchange offer. This table should be read together with the
consolidated financial statements elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Mortgage loans(1)......................................... $ 740,806(2) $ 590,306
Unsecured lines of credit(3).............................. 288,850 192,750
Notes..................................................... -- 250,000
---------- ----------
Total debt............................................. 1,029,656 1,033,056
---------- ----------
Partners' capital:
Preferred units, 2,000,000 units outstanding.............. 50,000 50,000
Common units, 65,509,347 units outstanding................ 1,441,907 1,441,907
Receivable from general partner for common units.......... (2,167) (2,167)
---------- ----------
Total partners' capital................................ 1,489,740 1,489,740
---------- ----------
Total capitalization................................... $2,519,396 $2,522,796
========== ==========
</TABLE>
- -------------------------
(1) We used the net proceeds of the unregistered notes offering to repay
approximately $150.5 million of the outstanding balance under the mortgage
loans. See "No Cash Proceeds."
(2) Does not reflect $25 million in additional debt incurred on January 25, 2000
under a prepayable term loan. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
(3) We used the net proceeds of the unregistered notes offering to repay
approximately $96.1 million of the outstanding balance under the $300
million line of credit. See "No Cash Proceeds."
24
<PAGE> 27
SELECTED FINANCIAL DATA
You should read the following consolidated financial and operating data for
Arden Realty Limited Partnership and the following combined financial and
operating data for its predecessors together with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our consolidated
financial statements included elsewhere in this prospectus. The Arden
predecessors are comprised primarily of partnerships and limited liability
companies owned by Messrs. Ziman and Coleman, their relatives and affiliates and
other third parties. The properties held by the Arden predecessors were directly
or indirectly contributed to us in the formation transactions completed prior to
Arden Realty's initial public offering of its common stock.
<TABLE>
<CAPTION>
ARDEN REALTY LIMITED PARTNERSHIP ARDEN PREDECESSORS
----------------------------------------------------- ------------------------------
FOR THE YEARS ENDED FOR THE PERIOD FOR THE PERIOD FOR THE YEAR
DECEMBER 31, OCTOBER 9, 1996 JANUARY 1, 1996 ENDED
----------------------------------- TO DECEMBER 31, TO OCTOBER 8, DECEMBER 31,
1999 1998 1997 1996 1996 1995
--------- ----------- --------- --------------- --------------- ------------
(IN THOUSANDS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue.................................. $ 340,675 $ 284,582 $ 135,447 $ 19,572 $ 40,465 $ 11,693
Property operating expenses.............. 101,284 86,570 44,332 6,005 14,224 3,340
General and administrative expenses...... 6,753 6,264 3,888 753 1,758 1,377
Depreciation and amortization............ 69,837 51,822 20,260 3,108 5,264 1,898
--------- ----------- --------- --------- --------- ---------
162,801 139,926 66,967 9,706 19,219 5,078
Interest expense......................... 60,239 43,403 19,511 1,280 24,521 5,537
Loss on valuation of derivative.......... -- -- 3,111 -- -- --
Equity in net loss of noncombined
entities............................... -- -- -- -- 336 116
Minority interest........................ 169 729 59 -- (721) 1
--------- ----------- --------- --------- --------- ---------
Income (loss) before extraordinary
items.................................. 102,393 95,794 44,286 8,426 (4,917) (576)
Extraordinary (loss) gain on early
extinguishment of debt, net of minority
interest............................... -- -- -- (13,105) 1,877 --
--------- ----------- --------- --------- --------- ---------
Net income (loss)........................ $ 102,393 $ 95,794 $ 44,286 $ (4,679) $ (3,040) $ (576)
========= =========== ========= ========= ========= =========
Net income (loss) allocated to:
Preferred partner...................... $ 1,354 $ -- $ -- $ --
--------- ----------- --------- ---------
General and limited partners........... $ 101,039 $ 95,794 $ 44,286 $ (4,679)
========= =========== ========= =========
OTHER DATA:
Cash provided by operating activities.... $ 151,753 $ 133,694 $ 36,307 $ 8,665 $ 5,221 $ 2,830
Cash used in investing activities........ (264,832) (1,083,117) (656,821) (164,763) (119,083) (123,358)
Cash provided by financing activities.... 115,557 948,701 618,182 163,730 122,074 120,707
Funds from operations(1)................. 170,876 147,616 64,546 11,534 (374) 1,323
EBITDA(2)................................ $ 232,638 $ 191,748 $ 87,227 $ 12,814 $ 24,483 $ 6,976
Ratio of EBITDA to interest expense(2)... 3.86 4.42 4.47 10.01 1.00 1.26
Ratio of EBITDA to fixed charges(2)(3)... 3.27 3.66 4.22 9.58 1.00 1.26
Ratio of earnings to fixed
charges(3)(4).......................... 2.28 2.66 3.08 7.26 0.80 0.89
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------------------------------------------
1999 1998 1997 1996 1996
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net investment in real estate............................... $2,442,164 $2,239,598 $1,203,172 $529,568 $160,874
Total assets................................................ 2,572,904 2,333,866 1,287,287 551,256 182,379
Total indebtedness.......................................... 1,029,656 840,377 477,566 155,000 168,451
Other liabilities........................................... 50,555 35,720 23,305 9,768 5,712
Partners' capital........................................... 1,489,740 1,454,844 756,008 386,488 8,216
</TABLE>
25
<PAGE> 28
- -------------------------
(1) We consider funds from operations, as defined by NAREIT to be a useful
financial measure of our operating performance. We believe that funds from
operations provides investors with an additional basis to evaluate our
ability to service debt and to fund acquisitions and other capital
expenditures. Funds from operations should not be considered an alternative
to net income determined in accordance with GAAP, as an indicator of our
financial performance or as a substitute for cash flow from operating
activities determined in accordance with GAAP as a measure of our liquidity.
Funds from operations also is not necessarily indicative of funds available
to fund our cash needs, including our ability to service our debt.
The White Paper on funds from operations approved by the Board of Governors
of NAREIT in October 1999 defines funds from operations as net income or
loss computed in accordance with GAAP, excluding gains or losses from
extraordinary items, as defined by GAAP, and gains and losses from sales of
depreciable operating property plus real estate-related depreciation and
amortization and after adjustments for unconsolidated partnerships and joint
ventures. We compute funds from operations in accordance with standards
established by the White Paper which may differ from the standards used by
other real estate companies and, accordingly, our funds from operations may
not be comparable to those companies' funds from operations.
(2) As used in this prospectus, EBITDA means revenue less property operating
expenses and general and administrative expenses. EBITDA does not represent
cash generated from operating activities in accordance with GAAP and should
not be considered as an alternative to operating income or net income as an
indicator of performance or as a substitute for cash flow from operating
activities determined in accordance with GAAP as a measure of our liquidity.
We have included information with respect to EBITDA because we understand
that this information is used by investors as one measure of operating
performance.
(3) Fixed charges consist of interest costs, whether expensed or capitalized,
amortization of deferred financing costs, amortization of discounts or
premiums related to indebtedness and preferred unit distributions.
(4) The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings have been calculated by adding
fixed charges, excluding capitalized interest and preferred unit
distributions, to income or loss before extraordinary items.
26
<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion should be read together with the "Selected
Financial Data" and our historical consolidated financial statements and related
notes included elsewhere in this prospectus.
We are an operating partnership that owns, manages, leases, develops,
renovates and acquires commercial properties located in Southern California.
Arden Realty, a REIT, is our sole general partner and, as of December 31, 1999,
owned 96.7% of our common partnership units. Arden Realty conducts substantially
all of its operations through us and our subsidiaries.
We are a full-service real estate organization managed by 11 senior
executive officers who have an average of 16 years of experience in the real
estate industry. We perform all property management, accounting, finance and
acquisition activities and a majority of our leasing transactions with our own
staff of approximately 280 employees.
We are Southern California's largest office landlord as measured by total
net rentable square feet owned, as of December 31, 1999. Since our formation in
1996, we have acquired 118 properties containing approximately 14.5 million net
rentable square feet for a total purchase price of approximately $1.9 billion.
As of December 31, 1999, our portfolio consisted of 142 primarily office
properties containing approximately 18.5 million net rentable square feet and
three properties with approximately 700,000 net rentable square feet under
development. As of December 31, 1999, our properties were approximately 95.1%
leased, excluding three existing properties currently under renovation.
Our primary business strategy is to actively manage our portfolio to
achieve gains in occupancy and rental rates, maximize income from ancillary
operations and services and to reduce operating expenses. When market conditions
permit, we may also develop or acquire new properties in submarkets where we can
use our local market expertise and extensive real estate experience.
RESULTS OF OPERATIONS
Our financial position and operating results are primarily comprised of our
portfolio of commercial properties and income derived from those properties.
Therefore, financial data from period to period is affected by the timing of
significant property acquisitions.
27
<PAGE> 30
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1999 TO THE YEAR ENDED DECEMBER 31,
1998
(IN THOUSANDS, EXCEPT NUMBER OF PROPERTIES AND PERCENTAGES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------ DOLLAR PERCENT
1999 1998 CHANGE CHANGE
---------- ---------- ------- -------
<S> <C> <C> <C> <C>
REVENUE
Revenue from rental operations:
Rental.......................................... $292,688 $250,467 $42,221 17%
Tenant reimbursements........................... 13,863 9,505 4,358 46
Parking, net of expense......................... 14,384 12,223 2,161 18
Other rental operations......................... 16,918 8,872 8,046 91
-------- -------- ------- ---
Total......................................... 337,853 281,067 56,786 20%
Interest and other income....................... 2,822 3,515 (693) (20)%
-------- -------- ------- ---
Total revenue................................. $340,675 $284,582 $56,093 20%
======== ======== ======= ===
EXPENSES
Property expenses:
Repairs and maintenance......................... $ 32,902 $ 27,141 $ 5,761 21%
Utilities....................................... 28,305 26,559 1,746 7
Real estate taxes............................... 23,167 19,433 3,734 19
Insurance....................................... 3,993 4,110 (117) (3)
Ground rent..................................... 891 714 177 25
Marketing and other............................. 12,026 8,613 3,413 40
-------- -------- ------- ---
Total property expenses....................... 101,284 86,570 14,714 17%
General and administrative...................... 6,753 6,264 489 8%
Interest........................................ 60,239 43,403 16,836 39
Depreciation and amortization................... 69,837 51,822 18,015 35
-------- -------- ------- ---
Total expenses................................ $238,113 $188,059 $50,054 27%
======== ======== ======= ===
OTHER DATA:
Number of properties:
Acquired during period.......................... 4 66
Owned at end of period.......................... 142 138
Net rentable square feet:
Acquired during period.......................... 524 7,664
Owned at end of period.......................... 18,492 17,968
</TABLE>
The increase in revenue from rental operations and property expenses in
1999 is primarily from properties acquired during 1998 and 1999. The 1998
amounts do not include a full year of operations for the 66 properties we
acquired during 1998 or for the four properties we acquired during 1999.
28
<PAGE> 31
Following is a summary of the 1999 increase in revenue from rental
operations and property expenses that relates to the 70 properties that we
acquired during 1998 and 1999 and for the 72 properties we owned for all of 1998
and 1999 (in thousands, except number of properties).
<TABLE>
<CAPTION>
PROPERTIES PROPERTIES
ACQUIRED DURING OWNED FOR ALL OF
TOTAL VARIANCE 1998 AND 1999 1998 AND 1999(1)
-------------- --------------- ----------------
<S> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Rental............................................ $42,221 $32,177 $10,044
Tenant reimbursements............................. 4,358 3,551 807
Parking, net of expense........................... 2,161 1,323 838
Other rental operations........................... 8,046 2,400 5,646
------- ------- -------
$56,786 $39,451 $17,335
======= ======= =======
PROPERTY EXPENSES:
Repairs and maintenance........................... $ 5,761 $ 3,708 $ 2,053
Utilities......................................... 1,746 1,904 (158)
Real estate taxes................................. 3,734 2,033 1,701
Insurance......................................... (117) 190 (307)
Ground rent....................................... 177 1 176
Marketing and other............................... 3,413 1,938 1,475
------- ------- -------
$14,714 $ 9,774 $ 4,940
======= ======= =======
OTHER DATA:
Number of properties.............................. 70 72
Net rentable square feet.......................... 8,188 10,304
</TABLE>
- -------------------------
(1) See analysis of Properties Owned for all of 1998 and 1999.
Interest and other income decreased by approximately $700,000 in 1999 as
compared to 1998, primarily due to lower interest income earned on amortizing
mortgage notes receivable acquired in September 1997.
General and administrative expenses were approximately $6.8 million, or
2.0% of total revenue, in 1999 as compared to $6.3 million, or 2.2% of total
revenue, in 1998. General and administrative expenses as a percentage of total
revenue decreased in 1999 compared to 1998 primarily due to benefits achieved
from economies of scale and concentration over a larger property portfolio.
Interest expense increased approximately $16.8 million in 1999 as compared
to 1998. This increase was due to higher outstanding debt balances in 1999
primarily to fund property acquisitions and tenant improvement build-outs, which
was partially offset by slightly lower effective interest rates in 1999.
Depreciation and amortization expense increased by approximately $18.0
million in 1999, primarily due to the 70 properties we acquired in 1998 and
1999.
29
<PAGE> 32
PROPERTIES OWNED FOR ALL OF 1998 AND 1999
(IN THOUSANDS, EXCEPT NUMBER OF PROPERTIES AND PERCENTAGES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------ DOLLAR PERCENT
1999 1998 CHANGE CHANGE
---------- ---------- ------- -------
<S> <C> <C> <C> <C>
GAAP BASIS:
Revenue from rental operations..................... $210,312 $192,977 $17,335 9%
Property expenses.................................. 65,270 60,330 4,940 8%
-------- -------- ------- --
$145,042 $132,647 $12,395 9%
======== ======== ======= ==
CASH BASIS(1):
Revenue from rental operations..................... $207,357 $189,181 $18,176 10%
Property expenses.................................. 65,270 60,330 4,940 8%
-------- -------- ------- --
$142,087 $128,851 $13,236 10%
======== ======== ======= ==
Number of properties................................. 72 72
Average occupancy.................................... 89.4% 85.4%
Net rentable square feet............................. 10,304 10,304
Percentage of total portfolio........................ 55.7% 57.3%
</TABLE>
- -------------------------
(1) Excludes straight-line rent adjustments.
Revenue from rental operations for the 72 properties we owned for all of
1998 and 1999 computed on a GAAP basis increased by approximately $17.3 million
in 1999 compared to 1998. This increase was primarily due to increases in rental
rates and a four percentage point increase in average occupancy in 1999 for this
pool of properties representing approximately 10.3 million net rentable square
feet. This increase in occupancy not only contributed to higher rental revenue
but also resulted in higher tenant expense reimbursements, parking income and
miscellaneous tenant charges. Miscellaneous tenant charges include revenue from
after-hour utility billings, signage, satellite income and lease termination
settlements. Lease termination settlements totaled approximately $9.7 million in
1999 compared to $4.1 million in 1998 for these properties.
Excluding only the straight-line rent adjustments for these properties,
revenue from rental operations, computed on a cash basis, increased by
approximately $18.2 million for the reasons described above.
Property operating expenses for these properties increased by approximately
$4.9 million in 1999 compared to 1998, primarily due to higher repairs,
maintenance and marketing and overhead expenses. These increases were primarily
related to the four percentage point increase in average occupancy in 1999.
30
<PAGE> 33
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER 31,
1997
(IN THOUSANDS, EXCEPT NUMBER OF PROPERTIES AND PERCENTAGES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------ DOLLAR PERCENT
1998 1997 CHANGE CHANGE
---------- ---------- -------- -------
<S> <C> <C> <C> <C>
REVENUE
Revenue from rental operations: $250,467 $118,085 $132,382 112%
Rental......................................... 9,505 5,945 3,560 60
Tenant reimbursements.......................... 12,223 7,397 4,826 65
Parking, net of expense........................ 8,872 2,390 6,482 271
-------- -------- -------- ----
Other rental operations........................ 281,067 133,817 147,250 110%
Total........................................ 3,515 1,630 1,885 116%
Interest and other income...................... $284,582 $135,447 $149,135 110%
======== ======== ======== ====
Total revenue................................
EXPENSES
Property expenses: $ 27,141 $ 15,154 $ 11,987 79%
Repairs and maintenance........................ 26,559 14,321 12,238 85
Utilities...................................... 19,433 8,003 11,430 143
Real estate taxes.............................. 4,110 2,125 1,985 93
Insurance...................................... 714 314 400 127
Ground rent.................................... 8,613 4,415 4,198 95
-------- -------- -------- ----
Marketing and other............................ 86,570 44,332 42,238 95%
Total property expenses...................... 6,264 3,888 2,376 61%
General and administrative..................... 43,403 19,511 23,892 122
Interest....................................... -- 3,111 (3,111) (100)
Depreciation and amortization.................. 51,822 20,260 31,562 156
-------- -------- -------- ----
Total expenses............................... $188,059 $ 91,102 $ 96,957 106%
-------- -------- -------- ----
OTHER DATA:
Number of properties:
Acquired during period......................... 66 38
Owned at end of period......................... 138 72
Net rentable square feet:
Acquired during period......................... 7,664 4,864
Owned at end of period......................... 17,968 10,304
</TABLE>
The increase in revenue from rental operations and property expenses in
1998 is primarily from properties acquired during 1997 and 1998. The 1997
amounts do not include a full year of operations for the 38 properties we
acquired during 1997 or for the 66 properties we acquired during 1998.
31
<PAGE> 34
Following is a summary of the 1998 increase in revenue from rental
operations and property expenses that relate to the 104 properties that we
acquired during 1997 and 1998 and for the 34 properties we owned for all of 1997
and 1998 (in thousands, except number of properties).
<TABLE>
<CAPTION>
PROPERTIES
PROPERTIES OWNED FOR ALL OF
ACQUIRED DURING 1997 AND
TOTAL VARIANCE 1997 AND 1998 1998(1)
-------------- --------------- ----------------
<S> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Rental........................................ $132,382 $131,760 $ 622
Tenant reimbursements......................... 3,560 4,931 (1,371)
Parking, net of expense....................... 4,826 4,811 15
Other rental operations....................... 6,482 4,683 1,799
-------- -------- -------
$147,250 $146,185 $ 1,065
======== ======== =======
PROPERTY EXPENSES:
Repairs and maintenance....................... $ 11,987 $ 13,117 $(1,130)
Utilities..................................... 12,238 12,587 (349)
Real estate taxes............................. 11,430 11,061 369
Insurance..................................... 1,985 2,126 (141)
Ground rent................................... 400 374 26
Marketing and other........................... 4,198 4,901 (703)
-------- -------- -------
$ 42,238 $ 44,166 $(1,928)
======== ======== =======
OTHER DATA:
Number of properties.......................... 104 34
Net rentable square feet...................... 12,528 5,440
</TABLE>
- -------------------------
(1) See analysis of Properties Owned for all of 1997 and 1998.
Interest and other income increased by approximately $1.9 million in 1998
as compared to 1997, primarily due to higher interest income earned on mortgage
notes receivable acquired in September 1997 and on cash deposits required by
some of our mortgage loans.
General and administrative expenses were approximately $6.3 million, or
2.2% of total revenue, in 1998 as compared to $3.9 million, or 2.9% of total
revenue, in 1997. General and administrative expenses as a percentage of total
revenue decreased in 1998 compared to 1997 primarily due to benefits achieved
from economies of scale and concentration over a larger property portfolio.
Interest expense increased approximately $23.9 million in 1998 as compared
to 1997. This increase was due to higher outstanding debt balances in 1998
primarily to fund property acquisitions, which was partially offset by slightly
lower effective interest rates in 1998.
In September 1997, we recorded a loss of approximately $3.1 million related
to the retirement of agreements to convert some floating rate debt liabilities
to fixed rate liabilities. The underlying variable rate liabilities were repaid
in full with proceeds from an equity offering in July 1997.
Depreciation and amortization expense increased by approximately $31.6
million in 1998, primarily due to the 104 properties we acquired in 1997 and
1998.
32
<PAGE> 35
PROPERTIES OWNED FOR ALL OF 1997 AND 1998
(IN THOUSANDS, EXCEPT NUMBER OF PROPERTIES AND PERCENTAGES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------- DOLLAR PERCENT
1998 1997 CHANGE CHANGE
---------- ---------- ------- -------
<S> <C> <C> <C> <C>
GAAP BASIS:
Revenue from rental operations....................... $101,505 $100,440 $ 1,065 1%
Property expenses.................................... 31,421 33,349 (1,928) (6)%
-------- -------- ------- --
$ 70,084 $ 67,091 $ 2,993 4%
======== ======== ======= ==
CASH BASIS(1):
Revenue from rental operations....................... $100,554 $ 98,701 $ 1,853 2%
Property expenses.................................... 31,421 33,349 (1,928) (6)%
-------- -------- ------- --
$ 69,133 $ 65,352 $ 3,781 6%
======== ======== ======= ==
Number of properties................................... 34 34
Average occupancy...................................... 87.5% 85.7%
Net rentable square feet............................... 5,440 5,440
Percentage of total portfolio.......................... 30.3% 52.8%
</TABLE>
- -------------------------
(1) Excludes straight-line rent adjustments.
Revenue from rental operations for the 34 properties we owned for all of
1997 and 1998 computed on a GAAP basis increased by approximately $1.1 million
in 1998 compared to 1997. This increase was primarily due to increases in rental
rates, a two percentage point increase in average occupancy in 1998 and higher
miscellaneous tenant charges for this pool of properties representing
approximately 5.4 million net rentable square feet. Miscellaneous tenant charges
include revenue from after-hour utility billings, signage, satellite income and
lease termination settlements. Lease termination settlements totaled
approximately $2.0 million in 1998 compared to $316,000 in 1997 for these
properties. These increases were partially offset by lower tenant expense
reimbursements in 1998, primarily due to resetting base years for leases that
were retenanted in 1998 and the reversing effect of straight-line rent
adjustments on specific properties in 1998.
Excluding only the straight-line rent adjustments for these properties,
revenue from rental operations, computed on a cash basis, increased by
approximately $1.9 million for the reasons described above.
Property operating expenses for these properties decreased by approximately
$1.9 million in 1998 compared to 1997, primarily due to lower repairs,
maintenance and marketing and overhead expenses achieved primarily from
economies of scale and concentration over a larger property portfolio.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Cash provided by operating activities increased by $18.1 million to $151.8
million for the year ended December 31, 1999, as compared to $133.7 million for
the year ended December 31, 1998, primarily due to operating results from the 70
properties acquired in 1998 and 1999.
Cash used in investing activities decreased by $818.3 million to $264.8
million in 1999 compared to $1.1 billion in 1998, primarily due to a reduction
in property acquisitions in 1999.
Cash provided by financing activities decreased by $833.1 million to $115.6
million, as compared to $948.7 million in 1998. This decrease was primarily due
to the timing of equity issuances. During 1998, we
33
<PAGE> 36
had net proceeds of approximately $708.6 million from equity issuances as
compared to $49.0 million in net proceeds from equity issuances in 1999. Cash
provided by financing activities for the year ended December 31, 1999 consisted
primarily of net proceeds from mortgage loans, unsecured lines of credit, and
the issuance of 2,000,000 8 5/8% Series B Cumulative Redeemable Preferred Units,
partially offset by distributions to partners and minority interests.
CAPITAL COMMITMENTS
As of December 31, 1999, we had approximately $23.6 million outstanding in
capital commitments related to tenant improvements, development, renovation
costs and property-related capital expenditures.
AVAILABLE BORROWINGS, CASH BALANCES AND CAPITAL RESOURCES
We have a $300 million unsecured line of credit from a group of banks led
by Wells Fargo. This line of credit bears interest at a rate ranging between
LIBOR plus 1.2% and LIBOR plus 1.45%, depending on our leverage ratio. The
agreement governing this line of credit provides for the rate to be lowered to
between LIBOR plus 0.9% and LIBOR plus 1.15%, depending on our unsecured debt
rating. Under specified circumstances, we have the option to convert the
interest rate to the prime rate plus 0.5%. This line of credit has a commitment
fee ranging from 0.125% to 0.25% on the unused balance. As of December 31, 1999,
the effective interest rate on this line of credit was 7.52%, the aggregate
outstanding balance on this line of credit was $280.9 million, and $19.1 million
was available for additional borrowing. This line of credit matures on June 1,
2000. Proceeds from this line of credit have been used, among other things, to
fund acquisitions, provide funds for tenant improvements and capital
expenditures and provide for working capital and other purposes.
We also have an unsecured line of credit with a total commitment of $10
million from City National Bank. This line of credit accrues interest at the
City National Bank Prime Rate less 0.875% and is scheduled to mature on August
1, 2000. As of December 31, 1999, the effective interest rate on this line of
credit was 7.625%, there was an outstanding balance of $8.0 million, and $2.0
million was available for additional borrowing. Proceeds from this line of
credit have been used, among other things, to provide funds for tenant
improvements, capital expenditures and working capital.
On January 20, 1999, we increased our prepayable term loan with an
affiliate of Lehman Brothers from $81.4 million to $111.4 million. This loan was
secured by seven of our properties, bore interest at LIBOR plus 2.25% per year
and required monthly payments of interest only. As discussed below, we
refinanced this loan on May 5, 1999.
On April 5, 1999, we closed a $115 million loan with Mass Mutual Life
Insurance Company that is secured by twelve of our properties, has a 10-year
term, bears interest at a fixed rate of 6.94%, requires monthly payments of
principal and interest and is amortized over a 25-year period. Proceeds from
this loan were used to repay $76.4 million of our prepayable term loan with an
affiliate of Lehman Brothers and to repay a portion of our lines of credit.
On April 30, 1999, we closed a $22.5 million loan with an affiliate of
Lehman Brothers that is secured by three of our properties, has a 10-year term,
bears interest at a fixed rate of 7.54%, requires monthly payments of principal
and interest and is amortized over a 30-year period. Proceeds from this loan
were used to repay a portion of our lines of credit.
On May 5, 1999, we refinanced the remaining $35 million outstanding under
our loan with an affiliate of Lehman Brothers with a promissory note for $62.5
million that is secured by three of our properties, bears interest at LIBOR plus
2.25% per year, requires monthly payments of interest only and matures on
November 1, 2000. This loan had an effective interest rate of 8.07% at December
31, 1999. The remaining proceeds from this loan were used to repay a portion of
our lines of credit.
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<PAGE> 37
On July 23, 1999, we entered into a construction loan with a total
commitment of $50 million related to our development of the approximately
241,000 net rentable square foot 6060 Center Drive office building in the Howard
Hughes Center. This loan is secured by specific property and construction
improvements, bears interest at LIBOR plus 2.0% per year, requires monthly
payments of interest only and matures on December 30, 2000, with two one-year
extension options. If we meet construction completion and leasing benchmarks,
the interest rate on the construction loan may be reduced to LIBOR plus 1.75%,
and then to LIBOR plus 1.5%. As of December 31, 1999, the effective interest
rate of this loan was 8.23%, there was an outstanding principal balance of $22.0
million and $28.0 million was available for additional borrowing.
On July 27, 1999, we closed a $58 million prepayable term loan with an
affiliate of Lehman Brothers. This loan is secured by six of our properties and
has the same terms as the loan that was increased on May 5, 1999, as described
above. Proceeds from this loan were used to repay a portion of our lines of
credit and to fund specific capital expenditures.
On September 7, 1999, we completed a $50 million private placement of 2
million 8 5/8% Series B Cumulative Redeemable Preferred Units to an
institutional investor. These preferred units are callable by us after five
years and are exchangeable after 10 years by the holder into Arden Realty's
8 5/8% Series B Cumulative Redeemable Preferred Stock on a one-for-one basis.
The preferred units have no stated maturity or mandatory redemption and are
subordinated to all debt. We used the net proceeds from this private placement
to repay a portion of our lines of credit.
On January 25, 2000, we expanded one of our two prepayable term loans with
an affiliate of Lehman Brothers totaling $120.5 million by $25 million,
resulting in a combined outstanding balance of $145.5 million for both loans.
The two loans are secured by nine of our properties, bear interest at LIBOR plus
2.25% per year, require monthly payments of interest only and mature on November
1, 2000. These loans had an effective interest rate of 8.07% at December 31,
1999. Proceeds from this loan expansion were used, among other things, to
provide funds for tenant improvements, capital expenditures and working capital.
On March 17, 2000, we completed a private placement of $200 million 8.875%
senior notes due 2005 and $50 million 9.150% senior notes due 2010. We used the
net proceeds from this private placement to repay secured and unsecured
indebtedness. See "No Cash Proceeds."
The following is a summary of scheduled principal payments for our mortgage
loans as of December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------
<S> <C>
2000.............................................. $145,299
2001.............................................. 3,004
2002.............................................. 8,236
2003.............................................. 16,838
2004.............................................. 178,292
Thereafter........................................ 389,137
--------
Total........................................... $740,806
========
</TABLE>
35
<PAGE> 38
The following is other information related to our indebtedness as of
December 31, 1999 (in thousands, except percentage and interest rate data):
UNSECURED AND SECURED DEBT ANALYSIS
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
PERCENT OF INTEREST
BALANCE TOTAL DEBT RATE(1)
---------- ---------- --------
<S> <C> <C> <C>
Unsecured debt..................................... $ 288,850 28% 7.85%(2)
Secured debt....................................... 740,806 72% 7.60%
---------- ---- -----
Total/Weighted average........................... $1,029,656 100% 7.67%(2)
========== ==== =====
</TABLE>
FLOATING AND FIXED RATE DEBT ANALYSIS
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
PERCENT OF INTEREST
BALANCE TOTAL DEBT RATE(1)
---------- ---------- --------
<S> <C> <C> <C>
Floating rate...................................... $ 431,362 42% 8.07%(2)
Fixed rate......................................... 598,294 58% 7.38%
---------- ---- --------
Total/Weighted average........................... $1,029,656 100% 7.67%(2)
========== ==== ========
</TABLE>
- -------------------------
(1) Includes amortization of prepaid financing costs.
(2) Based on contractual rates effective at December 31, 1999 that expire
through February 29, 2000. Assuming market LIBOR rates at December 31, 1999,
the unsecured debt and floating rate debt weighted average interest rates
would have been 7.46% and 7.75%, respectively, while the total debt weighted
average interest rate would have been 7.54%.
As of December 31, 1999, we had approximately $25.6 million in cash and
cash equivalents, including $18.5 million in restricted cash, representing $13.7
million in interest-bearing cash deposits required by some of our mortgage loans
payable. In addition, we had $4.8 million in cash impound accounts for real
estate taxes and insurance as required by several of our mortgage loans payable.
As of December 31, 1999, we had $21.1 million available under our lines of
credit.
We expect to continue meeting our short-term liquidity and capital
requirements generally through our net cash provided by operating activities and
from proceeds from our lines of credit. We believe that the net cash provided by
operating activities will continue to be sufficient to pay any distributions
necessary to enable Arden Realty to continue qualifying as a REIT. We also
believe that the foregoing sources of capital will be sufficient to fund our
short-term liquidity needs, other than specific scheduled debt principal
repayments, for the foreseeable future, including recurring non-revenue
enhancing capital expenditures, tenant improvements and leasing commissions.
We expect to meet long-term liquidity and capital requirements, such as
specific scheduled debt principal repayments, renovation costs, property
acquisitions and other non-recurring capital expenditures, through long-term
secured and unsecured indebtedness and the issuance of additional equity or
equity-related securities.
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<PAGE> 39
FUNDS FROM OPERATIONS
The following table reflects the calculation of our funds from operations
for the years ended December 31, 1999, 1998 and 1997 (in thousands):
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1999 1998 1997
--------- --------- --------
<S> <C> <C> <C>
Funds from operations(1):
Net income................................................ $102,393 $ 95,794 $44,286
Depreciation and amortization............................. 69,837 51,822 20,260
Distributions on preferred units.......................... (1,354) -- --
-------- -------- -------
Funds from operations..................................... $170,876 $147,616 $64,546
======== ======== =======
</TABLE>
- -------------------------
(1) We consider funds from operations, as defined by NAREIT to be a useful
financial measure of our operating performance. We believe that funds from
operations provides investors with an additional basis to evaluate our
ability to service debt and to fund acquisitions and other capital
expenditures. Funds from operations should not be considered an alternative
to net income determined in accordance with GAAP, as an indicator of our
financial performance or as a substitute for cash flow from operating
activities determined in accordance with GAAP as a measure of our liquidity.
Funds from operations also is not necessarily indicative of funds available
to fund our cash needs, including our ability to service our debt.
The White Paper on funds from operations approved by the Board of Governors
of NAREIT in October 1999 defines funds from operations as net income or
loss computed in accordance with GAAP, excluding gains or losses from
extraordinary items, as defined by GAAP, and gains and losses from sales of
depreciable operating property plus real estate-related depreciation and
amortization and after adjustments for unconsolidated partnerships and joint
ventures. We compute funds from operations in accordance with standards
established by the White Paper which may differ from the standards used by
other real estate companies and, accordingly, our funds from operations may
not be comparable to those companies' funds from operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risk is the exposure or loss resulting from changes in interest
rates, foreign currency exchange rates, commodity prices and equity prices. The
primary market risk to which we are exposed is interest rate risk, which is
sensitive to many factors, including governmental monetary and tax policies,
domestic and international economic and political considerations and other
factors that are beyond our control.
INTEREST RATE RISK
In order to modify and manage the interest characteristics of our
outstanding debt and limit the effects of interest rates on our operations, we
may use a variety of financial instruments, including interest rate swaps, caps,
floors and other interest rate exchange contracts. The use of these types of
instruments to hedge our exposure to changes in interest rates carries
additional risks such as counter-party credit risk and legal enforceability of
hedging contracts. We do not enter into any transactions for speculative or
trading purposes.
Some of our future earnings, cash flows and fair values relating to
financial instruments are dependent upon prevailing market rates of interest,
such as LIBOR. Based on interest rates and outstanding balances as of December
31, 1999, a 1% increase in interest rates on our $431.4 million of floating rate
debt would decrease annual future earnings and cash flows by approximately $4.3
million and would not have an impact on the fair value of the floating rate
debt. A 1% decrease in interest rates on our $431.4 million of floating rate
debt would increase annual future earnings and cash flows by approximately $4.3
million and would not have an impact on the fair value of the floating rate
debt. A 1% increase or decrease in interest
37
<PAGE> 40
rates on our secured notes receivable would not have a material impact on annual
future earnings, cash flows and the fair value of our secured notes receivable.
These amounts are determined by considering the impact of the hypothetical
interest rates on our borrowing cost. These analyses do not consider the effects
of the reduced level of overall economic activity that could exist in that
environment. Further, in the event of a change of this magnitude, we would
consider taking actions to further mitigate our exposure to the change. Due to
the uncertainty of the specific actions that would be taken and their possible
effects, however, this sensitivity analysis assumes no changes in our capital
structure.
IMPACT OF YEAR 2000
In 1999, we completed our remediation and testing of systems with respect
to the Year 2000 date change. As a result of our planning and implementation
efforts, we experienced no significant disruptions in mission critical
information technology and non-information technology systems and believe those
systems successfully responded to the Year 2000 date change. We incurred costs
of approximately $500,000 during 1999 in connection with remediating our
systems. We are not aware of any material problems resulting from Year 2000
issues, either with our products, our internal systems or the products and
services of third parties. We will continue to monitor our mission critical
computer applications and those of our suppliers and vendors throughout the year
to ensure that any latent Year 2000 matters that may arise are addressed
promptly.
38
<PAGE> 41
BUSINESS
We are an operating partnership that owns, manages, leases, develops,
renovates and acquires commercial properties located in Southern California.
Arden Realty, a REIT, is our sole general partner and, as of December 31, 1999,
owned 96.7% of our common partnership units. Arden Realty conducts substantially
all of its operations through us and our subsidiaries.
BUSINESS STRATEGIES
Our primary business strategy is to actively manage our portfolio to
achieve gains in occupancy and rental rates, to maximize income from ancillary
operations and services and to reduce operating expenses. When market conditions
permit, we may also develop or acquire properties in submarkets where we can use
our local market expertise and extensive real estate experience.
In addition to our corporate office, we maintain five regional offices and
approximately 45 separate management offices. Each regional office is co-managed
by a regional property manager and a regional leasing manager that oversee and
direct on-site service teams located in the management offices. Each of the
regional offices is staffed to provide a full range of services to our tenants
including management, leasing, tenant improvements, building engineering,
accounting and information systems. By maintaining a regionally focused
organizational structure headed by seasoned managers, we are able to quickly
respond to our tenants' needs and market opportunities.
In addition, to increase operational efficiency, all of our management and
regional offices are networked with our corporate office and have access to the
Internet and our e-mail, accounting and lease management systems. Our accounting
and lease management systems employ the latest technology and allow both
corporate and field personnel access to tenant and prospective tenant-related
information to enhance responsiveness and communication of marketing and leasing
activity for each property.
Through our corporate infrastructure, we implement our business strategies
by:
- using integrated decision making to provide pro-active solutions to the
space needs of users in the markets where we have extensive real estate
and technical expertise;
- emphasizing quality service, tenant satisfaction and retention;
- employing intensive property marketing and leasing programs; and
- implementing cost control management techniques and systems that
capitalize on economies of scale and concentration arising from the size
and geographic focus of our portfolio.
We believe the implementation of these operating practices has been
instrumental in the increased occupancy and improved operating results of our
existing portfolio.
INTEGRATED DECISION MAKING
Our management, leasing, development, renovation, acquisition and finance
teams coordinate their activities to enhance responsiveness to market
opportunities and to provide pro-active solutions to the space needs of users in
the submarkets where we have extensive real estate and technical expertise. This
integrated approach permits us to analyze the specific requirements of existing
and prospective tenants and the economic terms and costs for each transaction on
a timely and efficient basis. We are therefore able to commit to leasing,
development or acquisition terms quickly, which facilitates an efficient
completion of tenant space build-out, minimal downtime after lease expirations
and the timely completion of development and acquisition transactions.
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<PAGE> 42
QUALITY SERVICE AND TENANT SATISFACTION
We strive to provide quality service through our multidisciplinary
operating approach resulting in timely responses to our tenants' needs. Our
seasoned on-site service teams interact and resolve most issues relating to
tenant satisfaction and day-to-day operations. For portfolio-wide operational
and administrative functions, our corporate office provides support to all
regional offices and provides immediate response for critical operational
issues. This customer service approach has contributed to an average tenant
retention rate of approximately 75% since our formation.
AGGRESSIVE LEASING
The concentration of many of our properties within particular office
submarkets and our relationships with a broad array of tenants and brokers
enable us to pursue aggressive leasing strategies, to effectively monitor the
office space requirements of existing and prospective tenants and to offer
tenants a variety of space alternatives across our portfolio. In an effort to
realize cost savings and exercise more control over lease negotiations, we
currently lease approximately 70% of our properties using our in-house staff. We
employ outside brokers who are monitored by our leasing managers for the
remainder of our properties. In 1999, we signed approximately 990 leases for
approximately 4 million net rentable square feet, including approximately
716,000 square feet of net absorption.
COST CONTROL AND OPERATING EFFICIENCIES
The size and geographic focus of our portfolio permits us to enhance
portfolio value by lowering operating costs. We seek to capitalize on the
economies of scale and concentration which result from the geographic focus of
our portfolio, the ownership and management of multiple properties within
particular submarkets and the maintenance of a centralized purchasing and
accounting system for cost control at each of our properties.
GROWTH STRATEGIES
Based on our geographic focus in Southern California and our evaluation of
local market conditions, we believe the following key factors provide us with
opportunities to maximize returns:
- the continued strength of the Southern California economy, particularly
in the submarkets where our properties are located; and
- the limited construction of new office properties in the Southern
California region due to substantial building construction limitations
and a minimal amount of developable land in many key submarkets.
INTERNAL GROWTH
We believe that opportunities exist to increase cash flow from our existing
portfolio and that these opportunities will be enhanced as the Southern
California commercial real estate market continues to improve. We achieve
internal growth by:
- maintaining or improving current occupancy throughout our portfolio by
actively managing and aggressively leasing our properties;
- leasing space and renewing leases as they expire at increasing rents due
to the increased demand for commercial office space in Southern
California;
- controlling operating expenses through active cost control management and
systems;
40
<PAGE> 43
- realizing economies of scale and concentration due to the size and
geographic focus of our portfolio; and
- sourcing new and innovative revenue streams while providing high quality
services to our tenants.
MAINTAINING OR IMPROVING CURRENT OCCUPANCY
We believe that we have been successful in attracting, expanding and
retaining a diverse tenant base by actively managing our properties with an
emphasis on tenant satisfaction and retention. Our in-house leasing teams,
working with outside leasing brokers, continuously monitor each market to
identify strong prospective tenants who are in need of new or additional space.
We also strive to be responsive to the needs of existing tenants through our
on-site professional management staff and by providing them with alternative
space within our portfolio to accommodate their changing space requirements. Our
success in maintaining and improving occupancy rates is demonstrated, in part,
by the number of existing tenants that have renewed or re-leased their space,
leased additional space to support their expansion needs, or moved to other
space within our portfolio.
LEASING SPACE AND RENEWING LEASES AS THEY EXPIRE AT INCREASING RENTS
We believe that as the commercial real estate market in Southern California
continues to gain strength, there will be a continued increase in demand for
office space and a decline in vacancy rates, which are expected to result over
time in increasing market rents. We believe we will have significant
opportunities to increase cash flow during periods of increasing market rents by
renewing or re-leasing space as leases expire at higher rents.
COST CONTROL MANAGEMENT AND SYSTEMS
We plan to continue lowering our operating expenses through active cost
control management at all of our properties. We focus on cost control in various
areas of our operations. We continuously monitor the operating performance of
our properties and employ energy-enhancing and expense recovery technologies
when appropriate. These system enhancements include:
- lighting retrofits;
- replacement of inefficient heating, ventilation and air conditioning
systems;
- computer-driven energy management systems that monitor and react to the
climatic requirements of individual properties;
- automated security systems that allow us to provide security services to
our tenants at a lower cost;
- enhancement of billing systems, which enable us to more efficiently
recover operating expenses from our tenants; and
- on-going preventive maintenance programs to operate our building systems
efficiently, thereby reducing operating costs.
CAPITALIZING ON ECONOMIES OF SCALE AND CONCENTRATION
In order to capitalize on economies of scale and concentration arising from
the size and geographic focus of our portfolio, our property managers and
building engineers are often responsible for several properties, which spreads
administrative and maintenance costs over those properties and reduces per
square foot expenses. In addition, we believe that parking operations and
building services and supplies purchased in bulk on a portfolio-wide basis will
facilitate further benefits from these economies of scale and concentration.
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<PAGE> 44
SOURCING ADDITIONAL REVENUE WHILE PROVIDING HIGH QUALITY SERVICES TO TENANTS
By implementing the next generation of technology in our properties, we
believe we will be able to further increase occupancy, tenant retention and
rents in the future. In 1998, we entered into an agreement with a national
technology/access management firm that has successfully marketed our rooftop
space to telecommunications providers as antennae sites resulting in additional
revenue and providing additional voice and data technology options to our
tenants. During 1999, we completed an agreement with a premium broadband
Internet access and applications services provider to deploy its
building-centric, fiber optic network in a majority of our portfolio. In
addition to high speed Internet services, this network will provide our tenants
with a wide range of next generation business applications and e-commerce tools,
including video and audio conferencing, e-mail and unified messaging.
EXTERNAL GROWTH
We believe in the strength and potential of the Southern California
commercial real estate market, and we intend to continue to focus our resources
in this region. We have assembled a management team that has extensive
experience and knowledge in this market that we believe provides us with a
competitive advantage in identifying and capitalizing on development, renovation
and acquisition opportunities.
Subject to capital availability and market conditions, our approach is to
seek development, renovation and acquisition opportunities in Southern
California submarkets where we have an existing presence and where the following
conditions exist:
- low vacancy rates;
- opportunities for rising rents due to employment growth and population
movements;
- a minimal amount of developable land; and
- significant barriers to entry because of constraints on new development,
including challenging entitlement processes, strictly enforced height and
density restrictions and governmental requirements resulting in
significant additional construction costs.
EMPLOYEES
As of December 31, 1999, we had approximately 280 full-time employees that
perform all of our property management, accounting, finance and acquisition
activities and a majority of our leasing transactions.
LEGAL PROCEEDINGS
We are not presently subject to any material litigation nor, to our
knowledge, is any litigation threatened against us, other than routine
litigation arising in the ordinary course of business, some of which is expected
to be covered by liability insurance and all of which collectively is not
expected to have a material adverse effect on our consolidated financial
statements.
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<PAGE> 45
MARKET INFORMATION
Source: CB Richard Ellis 4th Quarter 1999 Market Index Briefs for Los Angeles
County, Orange County and San Diego County
LOS ANGELES COUNTY OFFICE MARKET OVERVIEW
At year end 1999, the Los Angeles County office market totaled
approximately 161 million square feet. The market absorbed approximately 1.8
million square feet during the fourth quarter of 1999, pushing annual absorption
to 4.5 million square feet, the highest level achieved in the last decade.
Demand for office space has continued to grow over the past five years with
nearly 14 million square feet absorbed during this period. Construction activity
totaled 2.9 million square feet for the fourth quarter of 1999. Excluding the
downtown Los Angeles submarket, in which we do not own property, the vacancy
rate declined to 10.0% and average rental rates climbed 6.6% to $2.01 per square
foot per month.
Over the last five years, the Los Angeles Metropolitan Statistical Area, or
MSA, economy created 319,000 new jobs. During 1999, approximately 75,100 new
jobs were created. At year end 1999, Los Angeles MSA employment totaled over
four million, a 1.9% increase from 1998. The Los Angeles MSA unemployment rate
ended the year at 6.2%, down from 7.9% five years ago.
ORANGE COUNTY OFFICE MARKET OVERVIEW
The Orange County office market totals approximately 57 million square
feet. The average asking full service gross lease rate for the fourth quarter
was $2.12 per square foot per month. Net absorption totaled approximately
500,000 square feet in the fourth quarter 1999. The vacancy rate dropped 2.6% to
11.4% in the fourth quarter of 1999, from 11.7% in the third quarter of 1999.
Construction activity totaled 341,505 square feet during the fourth quarter of
1999.
Approximately 200,000 new jobs were created by the Orange County economy
over the last five years. During 1999, approximately 42,000 new jobs were
created in Orange County. At year end 1999, the unemployment rate was 2.7%, a
historic low.
SAN DIEGO OFFICE MARKET OVERVIEW
The San Diego County office market totals approximately 41 million square
feet. During 1999, vacancy decreased, lease rates increased and over a million
square feet was absorbed. The fourth quarter 1999 average office vacancy rate in
San Diego declined to 8.2%, down from 8.7% in the third quarter of 1999.
Positive quarterly net absorption of approximately 341,261 square feet pushed
the annual total to over 1.1 million square feet. The average asking full
service gross lease rate increased to $1.62 per square foot per month in the
fourth quarter of 1999, a 4.5% increase over the fourth quarter 1998 rate of
$1.55.
Over the last five years, the San Diego economy generated approximately
168,000 new jobs. The unemployment rate at the end of the year was 3.2%, a
historic low for the San Diego area. This is down from a 6.4% unemployment rate
five years ago. During 1999, approximately 23,100 new jobs were created in San
Diego County. Area employment totaled over 1.15 million, a 3.4% annual increase
over the 1998 level.
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<PAGE> 46
PROPERTIES
EXISTING PORTFOLIO
Our portfolio consists of 142 primarily office properties, containing
approximately 18.5 million net rentable square feet, that individually range
from approximately 12,000 -- 600,000 net rentable square feet. Our portfolio
consists of primarily suburban office properties located in Los Angeles, Orange,
San Diego, Ventura, Riverside, San Bernardino and Kern Counties. We believe that
our properties are located within desirable and established business communities
and are well maintained. Our properties offer an array of amenities, including
security, parking, conference facilities, on-site management, food services and
health clubs.
<TABLE>
<CAPTION>
APPROXIMATE NET
NUMBER OF PROPERTIES RENTABLE SQUARE FEET
---------------------------------------- ------------------------------------------------------
INDUSTRIAL INDUSTRIAL
AND AND
LOCATION OFFICE RETAIL TOTAL % OF TOTAL OFFICE RETAIL TOTAL % OF TOTAL
-------- ------ ---------- ----- ---------- ---------- ---------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Los Angeles County:
West........................ 28 1 29 20.4% 4,683,615 36,959 4,720,574 25.5%
North....................... 31 -- 31 21.8 2,767,592 -- 2,767,592 15.0
South....................... 16 -- 16 11.3 2,201,823 -- 2,201,823 11.9
Central..................... 3 -- 3 2.1 608,789 -- 608,789 3.3
Orange County................. 21 -- 21 14.8 3,317,302 -- 3,317,302 17.9
San Diego County.............. 21 -- 21 14.8 2,486,777 -- 2,486,777 13.5
Ventura County................ 4 -- 4 2.8 561,841 -- 561,841 3.0
Riverside/San Bernardino
Counties.................... 8 4 12 8.5 553,896 414,674 968,570 5.2
Kern County................... 2 -- 2 1.4 216,522 -- 216,522 1.2
--- --- --- ---- ---------- ------- ---------- -----
Subtotal.................. 134 5 139 97.9% 17,398,157 451,633 17,849,790 96.5%
Renovation properties......... 3 -- 3 2.1% 642,178 -- 642,178 3.5%
--- --- --- ---- ---------- ------- ---------- -----
Total................... 137 5 142 100% 18,040,335 451,633 18,491,968 100.0%
=== === === ==== ========== ======= ========== =====
</TABLE>
<TABLE>
<CAPTION>
PERCENT OCCUPIED PERCENT LEASED ANNUALIZED BASE RENT
AT DECEMBER 31, 1999 AT DECEMBER 31, 1999 PER LEASED RENTABLE SQUARE FOOT(1)
--------------------------- --------------------------- ----------------------------------------
FULL
SERVICE
INDUSTRIAL INDUSTRIAL INDUSTRIAL GROSS
LOCATION OFFICE AND RETAIL TOTAL OFFICE AND RETAIL TOTAL OFFICE AND RETAIL TOTAL LEASES(2)
-------- ------ ---------- ----- ------ ---------- ----- ------ ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Los Angeles County:
West..................... 93.6% 100.0% 93.7% 94.7% 100.0% 94.8% $22.67 $24.60 $22.69 $22.67
North.................... 93.6 -- 93.6 94.0 -- 94.0 19.50 -- 19.50 21.04
South.................... 91.1 -- 91.1 94.6 -- 94.6 17.34 -- 17.34 18.90
Central.................. 91.8 -- 91.8 96.1 -- 96.1 19.74 -- 19.74 19.74
Orange County.............. 96.2 -- 96.2 96.4 -- 96.4 16.01 -- 16.01 18.54
San Diego County........... 95.8 -- 95.8 97.6 -- 97.6 15.74 -- 15.74 18.51
Ventura County............. 97.6 -- 97.6 97.6 -- 97.6 17.16 -- 17.16 17.16
Riverside/San Bernardino
Counties................. 80.2 94.1 86.1 80.2 94.1 86.1 14.19 8.42 11.49 17.23
Kern County................ 99.1 -- 99.1 99.1 -- 99.1 21.82 -- 21.82 --
---- ----- ---- ---- ----- ---- ------ ------ ------ ------
Subtotal/Weighted
Average.............. 93.8% 94.6% 93.8% 95.1% 94.6% 95.1% $18.67 $ 9.82 $18.45 $20.40
Renovation Properties...... 22.0% -- 22.0% 28.4% -- 28.4% $21.69 -- $21.69 $21.69
---- ----- ---- ---- ----- ---- ------ ------ ------ ------
Total/Weighted
Average............ 91.3% 94.6% 91.3% 92.7% 94.6% 92.7% $18.70 $ 9.82 $18.48 $20.42
==== ===== ==== ==== ===== ==== ====== ====== ====== ======
</TABLE>
- -------------------------
(1) Based on monthly contractual base rent under existing leases as of December
31, 1999, multiplied by 12 and divided by leased net rentable square feet;
for those leases where rent has not yet commenced or which are in a free
rent period, the first month in which rent is to be received is used to
determine annualized base rent.
(2) Excludes 48 properties and 4,722,281 net rentable square feet under triple
net and modified gross leases.
44
<PAGE> 47
DEVELOPMENT PROPERTIES
In addition to the properties listed above, we currently have three
properties under development containing approximately 700,000 net rentable
square feet. We estimate the total costs of developing these three properties
will be approximately $177.7 million, of which $34.3 million had been incurred
as of December 31, 1999. Total estimated costs include purchase and closing
costs and anticipated construction costs, tenant improvements, leasing
commissions and carrying costs during development. One of the properties, 6060
Center Drive, is an approximately 241,000 net rentable square foot multi-tenant
building. The second property is an approximately 159,000 net rentable square
foot build-to-suit office building developed for Univision Communications, Inc.
The third property, 6080 Center Drive, is an approximately 300,000 net rentable
square foot multi-tenant building. Construction on 6080 Center Drive is
scheduled to begin in the first quarter of 2000 and is estimated to be completed
by the end of the third quarter of 2001.
These properties are located in the Howard Hughes Center, a 70-acre
commercial development located two miles north of Los Angeles International
Airport and immediately adjacent to the San Diego Freeway (I-405), with on- and
off-ramps that directly serve the site. We have entitlements to construct an
additional approximately 600,000 net rentable square feet of office space at the
Howard Hughes Center.
The following table summarizes information about our properties under
development. It does not include information about 6080 Center Drive because we
have not formally begun construction.
<TABLE>
<CAPTION>
PERCENT ESTIMATED
NET LEASED CONSTRUCTION ESTIMATED
RENTABLE COSTS INCURRED ESTIMATED AT COMPLETION STABILIZATION
PROPERTY SQUARE FEET TO DATE TOTAL COST(1) 12/31/99 DATE DATE(2)
-------- ----------- -------------- -------------- -------- ------------ -------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Howard Hughes Center
Acquisition Cost...................... -- $15,133(3) $ 15,133
Master Plan(4)........................ -- 13,458 15,000
6060 Center Drive..................... 240,724 30,895 56,000 20% 2nd Qtr 2000 4th Qtr 2001
Univision building(5)................. 158,473 3,438 51,700 100% 3rd Qtr 2001 3rd Qtr 2001
------- ------- --------
Total development properties........ 399,197 $62,924 $137,833
======= ======= ========
</TABLE>
- -------------------------
(1) Estimated total cost includes purchase and closing costs and anticipated
construction costs, tenant improvements, leasing commissions and carrying
costs during development.
(2) Estimated quarter when property is anticipated to be at least 85% leased.
(3) We acquired the undeveloped commercial property portions of the Howard
Hughes Center for $28.5 million. In August 1999, subject to a sales
agreement entered into upon our initial acquisition, we sold approximately
5.4 acres for $7.5 million to a third party who is expected to develop a
250,000 square foot retail and entertainment complex. This amount also
excludes approximately $4.3 million allocated to 6060 Center Drive,
currently under construction, and approximately $1.6 million allocated to
the Univision building (see note 5 below).
(4) Master Plan costs include the costs of road and bridge construction and
other Howard Hughes Center infrastructure and master planning costs. We have
entitlements to construct an additional approximately 900,000 net rentable
square feet of office space at the Howard Hughes Center.
(5) In December 1999, we signed an agreement with Univision Communications, Inc.
for development of approximately 159,000 net rentable square foot
build-to-suit office building at the Howard Hughes Center scheduled to be
completed in the third quarter of 2001.
45
<PAGE> 48
ACQUISITIONS
We acquired four properties totaling approximately 524,000 net rentable
square feet during 1999 for a total cost of approximately $89.8 million. We have
not acquired any additional properties since December 31, 1999.
<TABLE>
<CAPTION>
APPROXIMATE TOTAL
NET ACQUISITION
RENTABLE MONTH OF COST
PROPERTY NAME LOCATION SQUARE FEET ACQUISITION (IN THOUSANDS)(1)
------------- ------------ ----------- -------------- -----------------
<S> <C> <C> <C> <C>
Hillside Corporate Center...... Westlake 59,876 February 1999 $ 9,600
Westlake Gardens II............ Westlake 48,874 April 1999 7,300
Howard Hughes Tower............ Los Angeles 313,833 May 1999 53,000
2001 Wilshire Boulevard........ Santa Monica 101,125 September 1999 19,900
------- -------
Total........................ 523,708 $89,800
======= =======
</TABLE>
- -------------------------
(1) Total acquisition cost includes purchase and closing costs.
46
<PAGE> 49
The following table presents information regarding our 142 properties as of
December 31, 1999.
<TABLE>
<CAPTION>
YEAR(S) APPROXIMATE
BUILT/ NET RENTABLE
PROPERTY NAME SUBMARKET LOCATION RENOVATED SQUARE FEET
------------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C>
OFFICE
LOS ANGELES COUNTY
Los Angeles West
9665 Wilshire.................. Beverly Hills/Century City Beverly Hills 1972/92 - 93 158,684
Beverly Atrium................. Beverly Hills/Century City Beverly Hills 1989 59,650
8383 Wilshire.................. Beverly Hills/Century City Beverly Hills 1971/93 417,463
120 South Spalding............. Beverly Hills/Century City Beverly Hills 1984 60,656
9100 Wilshire Blvd............. Beverly Hills/Century City Beverly Hills 1971/90 326,227
Century Park Center............ Beverly Hills/Century City Los Angeles 1972/94 243,404
10350 Santa Monica............. Beverly Hills/Century City Los Angeles 1979 42,292
10351 Santa Monica............. Beverly Hills/Century City Los Angeles 1984 96,251
Westwood Terrace............... Westwood/West Los Angeles Los Angeles 1988 135,943
1950 Sawtelle.................. Westwood/West Los Angeles Los Angeles 1988/95 103,106
10780 Santa Monica............. Westwood/West Los Angeles Los Angeles 1984 92,486
Wilshire Pacific Plaza......... Westwood/West Los Angeles Los Angeles 1976/87 100,122
World Savings Center(2)........ Westwood/West Los Angeles Los Angeles 1983 469,115
11075 Santa Monica............. Westwood/West Los Angeles Los Angeles 1983 35,696
2730 Wilshire(3)............... Westwood/West Los Angeles Santa Monica 1985 55,080
2800 28th Street............... Westwood/West Los Angeles Santa Monica 1979 103,506
1919 Santa Monica.............. Westwood/West Los Angeles Santa Monica 1991 43,796
2001 Wilshire.................. Westwood/West Los Angeles Santa Monica 1980 101,125
400 Corporate Pointe........... Marina Area/Culver City/LAX Culver City 1987 164,598
600 Corporate Pointe........... Marina Area/Culver City/LAX Culver City 1989 273,339
Bristol Plaza.................. Marina Area/Culver City/LAX Culver City 1982 84,014
5200 West Century.............. Marina Area/Culver City/LAX Culver City 1982/98 - 99 310,910
Skyview Center................. Marina Area/Culver City/LAX Los Angeles 1981/87/95 391,675
Northpoint..................... Marina Area/Culver City/LAX Los Angeles 1991 104,235
Howard Hughes Tower............ Marina Area/Culver City/LAX Los Angeles 1987 313,833
6100 Wilshire.................. Park Mile/West Hollywood Los Angeles 1986 202,704
145 South Fairfax.............. Park Mile/West Hollywood Los Angeles 1984 53,994
Beverly Sunset Medical Plaza... Park Mile/West Hollywood Los Angeles 1963/92 - 95 139,711
----------
Subtotal/Weighted Average --
Los Angeles West........... 4,683,615
<CAPTION>
ANNUALIZED
PERCENTAGE OF BASE RENT
TOTAL PER LEASED
PORTFOLIO NET ANNUALIZED NET RENTABLE
RENTABLE PERCENT BASE RENT NUMBER SQUARE
PROPERTY NAME SQUARE FEET LEASED ($000S) OF LEASES FOOT(1)
------------- ------------- ------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
OFFICE
LOS ANGELES COUNTY
Los Angeles West
9665 Wilshire.................. 0.9% 98.6% $ 4,708 22 $30.09
Beverly Atrium................. 0.3 90.0 1,359 11 25.32
8383 Wilshire.................. 2.3 92.7 8,216 131 21.23
120 South Spalding............. 0.3 100.0 2,105 17 34.70
9100 Wilshire Blvd............. 1.8 91.4 6,816 76 22.86
Century Park Center............ 1.3 97.0 5,221 114 22.25
10350 Santa Monica............. 0.2 96.7 812 17 19.86
10351 Santa Monica............. 0.5 95.1 1,829 17 19.98
Westwood Terrace............... 0.7 100.0 3,276 29 24.10
1950 Sawtelle.................. 0.6 100.0 2,098 36 20.35
10780 Santa Monica............. 0.5 97.7 1,865 33 20.64
Wilshire Pacific Plaza......... 0.5 95.5 2,272 38 23.76
World Savings Center(2)........ 2.5 98.4 13,922 57 30.16
11075 Santa Monica............. 0.2 100.0 718 7 20.11
2730 Wilshire(3)............... 0.3 98.2 1,221 31 22.58
2800 28th Street............... 0.6 100.0 2,331 44 22.52
1919 Santa Monica.............. 0.2 92.3 1,012 4 25.03
2001 Wilshire.................. 0.5 98.9 2,372 21 23.72
400 Corporate Pointe........... 0.9 99.7 3,384 20 20.62
600 Corporate Pointe........... 1.5 97.6 5,720 24 21.44
Bristol Plaza.................. 0.5 100.0 1,527 29 18.18
5200 West Century.............. 1.7 98.3 4,936 41 16.15
Skyview Center................. 2.1 83.1 5,156 52 15.84
Northpoint..................... 0.6 96.9 2,359 9 23.36
Howard Hughes Tower............ 1.7 90.4 6,440 32 22.70
6100 Wilshire.................. 1.1 97.8 4,387 54 22.13
145 South Fairfax.............. 0.3 98.5 1,062 12 19.96
Beverly Sunset Medical Plaza... 0.7 76.0 3,330 59 31.36
----- ----- -------- ----- ------
Subtotal/Weighted Average --
Los Angeles West........... 25.3% 94.8% $100,454 1,037 $22.67
</TABLE>
47
<PAGE> 50
<TABLE>
<CAPTION>
YEAR(S) APPROXIMATE
BUILT/ NET RENTABLE
PROPERTY NAME SUBMARKET LOCATION RENOVATED SQUARE FEET
------------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Los Angeles North
Calabasas Commerce Center...... Simi/Conejo Valley Calabasas 1990 126,771
Calabasas Tech Center.......... Simi/Conejo Valley Calabasas 1990 273,526
Thousand Oaks Plaza............ Simi/Conejo Valley Thousand Oaks 1988 13,434
Rancho Plaza................... Simi/Conejo Valley Thousand Oaks 1987 24,057
Pennsfield Plaza............... Simi/Conejo Valley Thousand Oaks 1989 21,202
Conejo Business Center......... Simi/Conejo Valley Thousand Oaks 1991 69,017
Marin Corporate Center......... Simi/Conejo Valley Thousand Oaks 1986 51,360
Evergreen Plaza................ Simi/Conejo Valley Thousand Oaks 1979/96 75,722
Hillside Corporate Center...... Simi/Conejo Valley Westlake 1998 59,876
5601 Lindero Canyon............ Simi/Conejo Valley Westlake 1989 105,830
Renaissance Court.............. Simi/Conejo Valley Westlake 1981/92 61,245
Westlake Gardens I............. Simi/Conejo Valley Westlake 1998 49,639
Westlake Gardens II............ Simi/Conejo Valley Westlake 1999 48,874
6800 Owensmouth(2)............. West San Fernando Valley Canoga Park 1986 80,014
Woodland Hills Financial
Center....................... West San Fernando Valley Woodland Hills 1972/95 224,955
Clarendon Crest................ West San Fernando Valley Woodland Hills 1990 43,063
Lyons Plaza.................... Santa Clarita Valley Santa Clarita 1990 61,203
16000 Ventura.................. Central San Fernando Valley Encino 1980/96 174,841
15250 Ventura.................. Central San Fernando Valley Sherman Oaks 1970/90 - 91 110,641
Noble Professional Center...... Central San Fernando Valley Sherman Oaks 1985/93 51,828
Sunset Pointe Plaza............ Valencia Newhall 1988 58,105
303 Glenoaks Blvd.............. East San Fernando Valley/Tri-Cities Burbank 1983/96 175,289
601 South Glenoaks............. East San Fernando Valley/Tri-Cities Burbank 1990 72,524
Burbank Executive Plaza........ East San Fernando Valley/Tri-Cities Burbank 1983 60,395
California Federal Building.... East San Fernando Valley/Tri-Cities Burbank 1978 81,243
425 West Broadway.............. East San Fernando Valley/Tri-Cities Glendale 1984 71,589
Glendale Corporate Center...... East San Fernando Valley/Tri-Cities Glendale 1985 108,209
70 South Lake.................. East San Fernando Valley/Tri-Cities Pasadena 1982/94 100,133
150 East Colorado.............. East San Fernando Valley/Tri-Cities Pasadena 1979/97 61,168
299 North Euclid............... East San Fernando Valley/Tri-Cities Pasadena 1983 73,522
5161 Lankershim................ East San Fernando Valley/Tri-Cities North Hollywood 1985/97 178,317
----------
Subtotal/Weighted Average --
Los Angeles North.......... 2,767,592
<CAPTION>
ANNUALIZED
PERCENTAGE OF BASE RENT
TOTAL PER LEASED
PORTFOLIO NET ANNUALIZED NET RENTABLE
RENTABLE PERCENT BASE RENT NUMBER SQUARE
PROPERTY NAME SQUARE FEET LEASED ($000S) OF LEASES FOOT(1)
------------- ------------- ------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Los Angeles North
Calabasas Commerce Center...... 0.7% 100.0% $ 2,093 13 $16.51
Calabasas Tech Center.......... 1.5 99.9 3,763 12 13.77
Thousand Oaks Plaza............ 0.1 100.0 218 6 16.21
Rancho Plaza................... 0.1 89.9 349 18 16.13
Pennsfield Plaza............... 0.1 91.9 336 11 17.22
Conejo Business Center......... 0.4 96.5 1,245 29 18.69
Marin Corporate Center......... 0.3 98.2 1,017 31 20.17
Evergreen Plaza................ 0.4 98.2 1,353 39 18.20
Hillside Corporate Center...... 0.3 100.0 1,369 9 22.86
5601 Lindero Canyon............ 0.6 100.0 1,270 2 12.00
Renaissance Court.............. 0.3 97.8 1,184 17 19.76
Westlake Gardens I............. 0.3 89.8 1,111 16 24.93
Westlake Gardens II............ 0.3 100.0 1,026 4 21.00
6800 Owensmouth(2)............. 0.4 75.6 1,135 14 18.76
Woodland Hills Financial
Center....................... 1.2 93.2 4,621 69 22.04
Clarendon Crest................ 0.2 93.4 749 11 18.62
Lyons Plaza.................... 0.3 89.0 1,259 23 23.11
16000 Ventura.................. 1.0 95.9 3,390 46 20.22
15250 Ventura.................. 0.6 96.9 2,102 47 19.61
Noble Professional Center...... 0.3 99.9 1,074 20 20.74
Sunset Pointe Plaza............ 0.3 99.9 1,301 30 22.41
303 Glenoaks Blvd.............. 1.0 81.6 3,037 23 21.23
601 South Glenoaks............. 0.4 100.0 1,435 16 19.79
Burbank Executive Plaza........ 0.3 73.2 991 13 22.41
California Federal Building.... 0.4 100.0 1,780 11 21.86
425 West Broadway.............. 0.4 76.2 1,136 8 20.82
Glendale Corporate Center...... 0.5 94.9 2,043 24 19.89
70 South Lake.................. 0.6 100.0 2,250 19 22.47
150 East Colorado.............. 0.3 100.0 1,184 21 19.35
299 North Euclid............... 0.4 100.0 1,473 4 20.03
5161 Lankershim................ 1.0 86.6 3,441 8 22.28
----- ----- -------- ----- ------
Subtotal/Weighted Average --
Los Angeles North.......... 15.0% 94.0% $ 50,735 614 $19.50
</TABLE>
48
<PAGE> 51
<TABLE>
<CAPTION>
YEAR(S) APPROXIMATE
BUILT/ NET RENTABLE
PROPERTY NAME SUBMARKET LOCATION RENOVATED SQUARE FEET
------------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Los Angeles South
4811 Airport Plaza(2).......... Long Beach Long Beach 1987/95 121,610
4900/10 Airport Plaza(2)....... Long Beach Long Beach 1987/95 150,403
5000 East Spring(2)............ Long Beach Long Beach 1989/95 163,358
100 West Broadway.............. Long Beach Long Beach 1987/96 191,727
1501 Hughes Way................ Long Beach Long Beach 1983/97 77,060
3901 Via Oro................... Long Beach Long Beach 1986/97 53,195
Oceangate Tower................ Long Beach Long Beach 1971/93 - 94 210,907
Norwalk........................ Long Beach Norwalk 1978/94 122,175
91 Freeway Business Center..... Mid-Cities Artesia 1986/97 93,277
Continental Grand.............. El Segundo El Segundo 1986 235,926
Grand Avenue Plaza............. El Segundo El Segundo 1979 - 80 81,448
South Bay Centre............... Torrance Gardena 1984 202,830
Harbor Corporate Center........ Torrance Gardena 1985 63,925
Pacific Gateway II............. Torrance Torrance 1982/90 223,731
Mariner Court.................. Torrance Torrance 1989 105,436
South Bay Technology Center.... Torrance Torrance 1984 104,815
----------
Subtotal/Weighted Average --
Los Angeles South.......... 2,201,823
Los Angeles Central
Los Angeles Corporate Center... San Gabriel Valley Monterey Park 1984/86 389,293
Whittier Financial Center...... San Gabriel Valley Whittier 1967/82 135,415
Gateway Center................. San Gabriel Valley Diamond Bar 1988 84,081
----------
Subtotal/Weighted Average --
Los Angeles Central........ 608,789
<CAPTION>
ANNUALIZED
PERCENTAGE OF BASE RENT
TOTAL PER LEASED
PORTFOLIO NET ANNUALIZED NET RENTABLE
RENTABLE PERCENT BASE RENT NUMBER SQUARE
PROPERTY NAME SQUARE FEET LEASED ($000S) OF LEASES FOOT(1)
------------- ------------- ------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Los Angeles South
4811 Airport Plaza(2).......... 0.7% 100.0% $ 1,051 1 $ 8.64
4900/10 Airport Plaza(2)....... 0.8 100.0 1,173 1 7.80
5000 East Spring(2)............ 0.9 95.4 3,215 30 20.63
100 West Broadway.............. 1.0 96.9 4,013 31 21.60
1501 Hughes Way................ 0.4 99.1 1,250 5 16.37
3901 Via Oro................... 0.3 96.8 841 4 16.34
Oceangate Tower................ 1.1 91.0 3,190 44 16.62
Norwalk........................ 0.7 95.9 1,950 7 16.64
91 Freeway Business Center..... 0.5 86.8 1,484 23 18.33
Continental Grand.............. 1.3 89.7 5,115 36 24.17
Grand Avenue Plaza............. 0.4 100.0 1,303 6 16.00
South Bay Centre............... 1.1 96.0 3,427 42 17.60
Harbor Corporate Center........ 0.3 80.4 747 17 14.54
Pacific Gateway II............. 1.2 97.5 4,221 41 19.35
Mariner Court.................. 0.6 97.5 1,782 38 17.33
South Bay Technology Center.... 0.6 87.1 1,363 10 14.93
----- ----- -------- ----- ------
Subtotal/Weighted Average --
Los Angeles South.......... 11.9% 94.6% $ 36,125 336 $17.34
Los Angeles Central
Los Angeles Corporate Center... 2.1 95.4 7,071 39 19.04
Whittier Financial Center...... 0.7 95.7 2,788 38 21.51
Gateway Center................. 0.5 99.7 1,685 17 20.10
----- ----- -------- ----- ------
Subtotal/Weighted Average --
Los Angeles Central........ 3.3% 96.1% $ 11,544 94 $19.74
</TABLE>
49
<PAGE> 52
<TABLE>
<CAPTION>
YEAR(S) APPROXIMATE
BUILT/ NET RENTABLE
PROPERTY NAME SUBMARKET LOCATION RENOVATED SQUARE FEET
------------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C>
ORANGE COUNTY
5832 Bolsa..................... West County Huntington Beach 1985 49,355
Huntington Beach Plaza I &
II........................... West County Huntington Beach 1984/96 52,186
5702 Bolsa..................... West County Huntington Beach 1987/97 27,731
5672 Bolsa..................... West County Huntington Beach 1987 11,968
5632 Bolsa..................... West County Huntington Beach 1987 21,568
Huntington Commerce Center..... West County Huntington Beach 1987 67,551
City Centre.................... West County Fountain Valley 1982 302,519
Fountain Valley Plaza.......... West County Fountain Valley 1982 107,252
3300 Irvine Avenue............. Greater Airport Area Newport Beach 1981/97 74,224
1821 East Dyer Boulevard....... Greater Airport Area Irvine 1980/88 115,061
Von Karman Corporate Center.... Greater Airport Area Irvine 1981/84 451,477
South Coast Executive Plaza.... Greater Airport Area Costa Mesa 1979/97 60,605
Anaheim City Centre(2)......... Tri-Freeway Area Anaheim 1986/91 175,391
Crown Cabot Financial.......... South County Laguna Niguel 1989 172,900
625 The City................... Tri-Freeway Area Orange 1985/97 139,806
One Venture.................... South County Irvine 1990/97 43,324
Orange Financial Center........ Central County Orange 1985/95 305,439
Centerpointe La Palma.......... North County La Palma 1986/88/90 597,550
Lambert Office Plaza........... North County Brea 1986/97 32,807
Savi Tech Center............... North County Yorba Linda 1989 341,446
Yorba Linda Business Park...... North County Yorba Linda 1988 167,142
----------
Subtotal/Weighted Average --
Orange County.............. 3,317,302
<CAPTION>
ANNUALIZED
PERCENTAGE OF BASE RENT
TOTAL PER LEASED
PORTFOLIO NET ANNUALIZED NET RENTABLE
RENTABLE PERCENT BASE RENT NUMBER SQUARE
PROPERTY NAME SQUARE FEET LEASED ($000S) OF LEASES FOOT(1)
------------- ------------- ------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
ORANGE COUNTY
5832 Bolsa..................... 0.3% 100.0% $ 720 1 $14.59
Huntington Beach Plaza I &
II........................... 0.3 95.9 729 16 14.57
5702 Bolsa..................... 0.1 100.0 199 2 7.19
5672 Bolsa..................... 0.1 100.0 89 1 7.44
5632 Bolsa..................... 0.1 100.0 168 1 7.80
Huntington Commerce Center..... 0.4 100.0 496 21 7.35
City Centre.................... 1.6 99.7 4,726 29 15.67
Fountain Valley Plaza.......... 0.6 99.9 1,794 4 16.74
3300 Irvine Avenue............. 0.4 97.8 1,461 30 20.13
1821 East Dyer Boulevard....... 0.6 89.2 1,148 3 11.19
Von Karman Corporate Center.... 2.4 94.7 7,640 34 17.87
South Coast Executive Plaza.... 0.3 100.0 981 26 16.19
Anaheim City Centre(2)......... 0.9 88.1 2,916 15 18.87
Crown Cabot Financial.......... 0.9 99.9 4,123 38 23.87
625 The City................... 0.8 92.4 2,414 29 18.69
One Venture.................... 0.2 100.0 916 9 21.14
Orange Financial Center........ 1.7 95.3 5,860 38 20.13
Centerpointe La Palma.......... 3.2 95.8 10,018 84 17.50
Lambert Office Plaza........... 0.2 91.3 557 9 18.58
Savi Tech Center............... 1.9 100.0 2,950 4 8.64
Yorba Linda Business Park...... 0.9 96.6 1,264 61 7.83
----- ----- -------- ----- ------
Subtotal/Weighted Average --
Orange County.............. 17.9% 96.4% $ 51,169 455 $16.01
</TABLE>
50
<PAGE> 53
<TABLE>
<CAPTION>
YEAR(S) APPROXIMATE
BUILT/ NET RENTABLE
PROPERTY NAME SUBMARKET LOCATION RENOVATED SQUARE FEET
------------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C>
SAN DIEGO COUNTY
Imperial Bank Tower(2)......... Downtown San Diego 1982/96 540,413
Foremost Professional Plaza.... I-15 Corridor San Diego 1992 60,534
Activity Business Center....... I-15 Corridor San Diego 1987 167,045
Bernardo Regency............... I-15 Corridor San Diego 1986 47,916
Carlsbad Corporate Center...... North Coast Carlsbad 1996 125,000
10180 Scripps Ranch............ I-15 Corridor San Diego 1978/96 43,560
Rancho
Cymer Technology Center........ I-15 Corridor Bernardino 1986 155,612
Rancho
10965 - 93 Via Frontera........ I-15 Corridor Bernardino 1982/97 77,920
Poway Industrial............... I-15 Corridor Poway 1991/96 112,000
Balboa Corporate Center........ Mission Valley/Kearny Mesa San Diego 1990 69,890
Panorama Corporate Center...... Mission Valley/Kearny Mesa San Diego 1991 133,149
Ruffin Corporate Center........ Mission Valley/Kearny Mesa San Diego 1990 45,059
Skypark Office Plaza........... Mission Valley/Kearny Mesa San Diego 1986 202,164
Governor Park Plaza............ North City San Diego 1986 104,065
Westridge...................... North City San Diego 1984/96 48,955
5120 Shoreham.................. North City San Diego 1984 37,759
Sorrento Valley Science Park... North City San Diego 1984 181,207
Torreyanna Science Park........ North City La Jolla 1980/97 81,204
Waples Tech Center............. North City San Diego 1990 28,119
Genesee Executive Plaza........ North City San Diego 1984 155,820
10251 Vista Sorrento........... North City San Diego 1981/95 69,386
----------
Subtotal/Weighted Average --
San Diego County........... 2,486,777
<CAPTION>
ANNUALIZED
PERCENTAGE OF BASE RENT
TOTAL PER LEASED
PORTFOLIO NET ANNUALIZED NET RENTABLE
RENTABLE PERCENT BASE RENT NUMBER SQUARE
PROPERTY NAME SQUARE FEET LEASED ($000S) OF LEASES FOOT(1)
------------- ------------- ------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
SAN DIEGO COUNTY
Imperial Bank Tower(2)......... 2.9% 97.6% $ 9,858 94 $18.69
Foremost Professional Plaza.... 0.3 99.8 1,311 33 21.70
Activity Business Center....... 0.9 91.3 1,792 38 11.75
Bernardo Regency............... 0.3 94.3 848 19 18.76
Carlsbad Corporate Center...... 0.7 100.0 1,725 1 13.80
10180 Scripps Ranch............ 0.2 100.0 396 1 9.09
Cymer Technology Center........ 0.8 100.0 1,659 2 10.66
10965 - 93 Via Frontera........ 0.4 93.4 660 4 9.07
Poway Industrial............... 0.6 100.0 605 1 5.40
Balboa Corporate Center........ 0.4 100.0 765 1 10.94
Panorama Corporate Center...... 0.7 100.0 2,317 1 17.40
Ruffin Corporate Center........ 0.2 100.0 427 1 9.48
Skypark Office Plaza........... 1.1 97.5 3,396 15 17.23
Governor Park Plaza............ 0.6 100.0 1,944 21 18.68
Westridge...................... 0.3 82.8 508 3 12.54
5120 Shoreham.................. 0.3 100.0 658 1 17.43
Sorrento Valley Science Park... 1.0 94.9 2,652 11 15.42
Torreyanna Science Park........ 0.4 100.0 1,733 1 21.34
Waples Tech Center............. 0.2 100.0 294 3 10.46
Genesee Executive Plaza........ 0.8 99.4 3,572 18 23.06
10251 Vista Sorrento........... 0.4 100.0 1,091 1 15.73
----- ----- -------- ----- ------
Subtotal/Weighted Average --
San Diego County........... 13.5% 97.6% $ 38,211 270 $15.74
</TABLE>
51
<PAGE> 54
<TABLE>
<CAPTION>
YEAR(S) APPROXIMATE
BUILT/ NET RENTABLE
PROPERTY NAME SUBMARKET LOCATION RENOVATED SQUARE FEET
------------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C>
VENTURA COUNTY
Center Promenade............... West County Ventura 1982 174,837
1000 Town Center............... West County Oxnard 1989 107,656
Solar Drive Business Park...... West County Oxnard 1982 125,132
Camarillo Business Center...... West County Camarillo 1984/1997 154,216
----------
Subtotal/Weighted Average --
Ventura County............. 561,841
RIVERSIDE AND SAN BERNARDINO
COUNTIES
Centrelake Plaza............... Inland Empire West Ontario 1989 110,763
Tower Plaza I.................. Temecula Temecula 1988 72,350
Tower Plaza II................. Temecula Temecula 1983 19,301
Tower Plaza II................. Temecula Temecula 1983 12,483
Chicago Avenue Business Park... Inland Empire East Riverside 1986 47,482
Hunter Business Park........... Inland Empire East Riverside 1990 106,782
Havengate Center............... Inland Empire East Rancho Cucamonga 1985 80,557
HDS Plaza...................... Inland Empire East San Bernardino 1987 104,178
----------
Subtotal/Weighted Average --
Riverside and San
Bernardino Counties........ 553,896
KERN COUNTY
Parkway Center................. Bakersfield Bakersfield 1992/95 61,333
California Twin Center......... Bakersfield Bakersfield 1983 155,189
----------
Subtotal/Weighted Average --
Kern County................ 216,522
----------
Total/Weighted
Average -- Office
(excluding renovations).... 17,398,157
<CAPTION>
ANNUALIZED
PERCENTAGE OF BASE RENT
TOTAL PER LEASED
PORTFOLIO NET ANNUALIZED NET RENTABLE
RENTABLE PERCENT BASE RENT NUMBER SQUARE
PROPERTY NAME SQUARE FEET LEASED ($000S) OF LEASES FOOT(1)
------------- ------------- ------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
VENTURA COUNTY
Center Promenade............... 0.9% 91.3% $ 2,551 57 $15.98
1000 Town Center............... 0.6 100.0 2,236 11 20.77
Solar Drive Business Park...... 0.7 100.0 2,025 39 16.18
Camarillo Business Center...... 0.8 95.7 2,462 20 16.68
----- ----- -------- ----- ------
Subtotal/Weighted Average --
Ventura County............. 3.0% 97.6% $ 9,274 127 $17.16
RIVERSIDE AND SAN BERNARDINO
COUNTIES
Centrelake Plaza............... 0.6% 62.2% $ 1,364 15 $19.80
Tower Plaza I.................. 0.4 94.2 1,102 19 16.17
Tower Plaza II................. 0.1 100.0 243 23 12.60
Tower Plaza II................. 0.1 100.0 160 22 12.82
Chicago Avenue Business Park... 0.2 86.4 577 6 14.07
Hunter Business Park........... 0.6 90.7 592 15 6.11
Havengate Center............... 0.4 62.0 776 9 15.54
HDS Plaza...................... 0.6 83.9 1,487 11 17.01
----- ----- -------- ----- ------
Subtotal/Weighted Average --
Riverside and San
Bernardino Counties........ 3.0% 80.2% $ 6,301 120 $14.19
KERN COUNTY
Parkway Center................. 0.4% 94.3% $ 1,040 10 $17.99
California Twin Center......... 0.8 100.0 3,605 13 23.23
----- ----- -------- ----- ------
Subtotal/Weighted Average --
Kern County................ 1.2% 99.1% $ 4,645 23 $21.82
----- ----- -------- ----- ------
Total/Weighted
Average -- Office
(excluding renovations).... 94.1% 95.1% $308,458 3,076 $18.67
</TABLE>
52
<PAGE> 55
<TABLE>
<CAPTION>
YEAR(S) APPROXIMATE
BUILT/ NET RENTABLE
PROPERTY NAME SUBMARKET LOCATION RENOVATED SQUARE FEET
------------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C>
INDUSTRIAL
RIVERSIDE AND SAN BERNARDINO
COUNTIES
Ontario Airport Commerce
Center....................... Inland Empire West Ontario 1987/97 213,127
Highlands I.................... Temecula Temecula 1988 26,856
Highlands II................... Temecula Temecula 1990 41,210
----------
Total/Weighted Average --
Industrial................. 281,193
RETAIL
RIVERSIDE AND SAN BERNARDINO
COUNTIES
Tower Plaza Retail............. Temecula Temecula 1970/97 133,481
Los Angeles West
Howard Hughes -- Spectrum...... Marina Area/Culver City/LAX Los Angeles 1993 36,959
----------
Total/Weighted
Average -- Retail.......... 170,440
----------
PORTFOLIO TOTAL/WEIGHTED
AVERAGE (EXCLUDING
RENOVATIONS)............... 17,849,790
RENOVATIONS
Westwood Center(4)............. Westwood/West Los Angeles Los Angeles 1965 313,000
535 Brand Boulevard............ East San Fernando Valley/Tri-Cities Glendale 1973/92 109,187
Tourney Pointe................. Santa Clarita Valley Valencia 1985/98 219,991
----------
Total/Weighted Average --
Renovations................ 642,178
----------
PORTFOLIO TOTAL/WEIGHTED
AVERAGE.................... 18,491,968
==========
<CAPTION>
ANNUALIZED
PERCENTAGE OF BASE RENT
TOTAL PER LEASED
PORTFOLIO NET ANNUALIZED NET RENTABLE
RENTABLE PERCENT BASE RENT NUMBER SQUARE
PROPERTY NAME SQUARE FEET LEASED ($000S) OF LEASES FOOT(1)
------------- ------------- ------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
INDUSTRIAL
RIVERSIDE AND SAN BERNARDINO
COUNTIES
Ontario Airport Commerce
Center....................... 1.2% 98.0% $ 1,374 42 $ 6.58
Highlands I.................... 0.1 100.0 279 9 10.38
Highlands II................... 0.2 99.9 384 12 9.32
----- ----- -------- ----- ------
Total/Weighted Average --
Industrial................. 1.5% 98.4% $ 2,037 63 $ 7.35
RETAIL
RIVERSIDE AND SAN BERNARDINO
COUNTIES
Tower Plaza Retail............. 0.7% 84.9% $ 1,250 19 $11.03
Los Angeles West
Howard Hughes -- Spectrum...... 0.2 100.0 909 1 24.60
----- ----- -------- ----- ------
Total/Weighted
Average -- Retail.......... 0.9% 88.2% $ 2,159 20 $14.37
----- ----- -------- ----- ------
PORTFOLIO TOTAL/WEIGHTED
AVERAGE (EXCLUDING
RENOVATIONS)............... 96.5% 95.1% $312,654 3,159 $18.45
RENOVATIONS
Westwood Center(4)............. 1.7% 13.7% $ N/A 11 $28.56
535 Brand Boulevard............ 0.6 65.5 1,438 22 20.11
Tourney Pointe................. 1.2 30.9 266 8 19.03
----- ----- -------- ----- ------
Total/Weighted Average --
Renovations................ 3.5% 28.4% $ 1,704 41 $21.69
----- ----- -------- ----- ------
PORTFOLIO TOTAL/WEIGHTED
AVERAGE.................... 100.0% 92.7% $314,358 3,200 $18.48
===== ===== ======== ===== ======
</TABLE>
- -------------------------
(1) Calculated as monthly contractual base rent under existing leases as of
December 31, 1999, multiplied by 12 and divided by leased net rentable
square feet; for those leases where rent has not yet commenced or which are
in a free rent period, the first month in which rent is to be received is
used to determine annualized base rent.
(2) We lease the land underlying these properties or their parking structures
pursuant to long term ground leases.
(3) Amounts for 2730 Wilshire exclude the 100%-occupied 12,740 square foot,
16-unit apartment complex we also own.
(4) We own a 97.5% interest in this property.
53
<PAGE> 56
TENANT INFORMATION
As of December 31, 1999, we had over 3,000 tenants, with no one tenant
representing more than 2.0% of the aggregate annualized base rent of our
properties, and only three tenants individually representing more than 1.0% of
our aggregate annualized base rent. Our properties are leased to local, national
and foreign companies engaged in a variety of businesses including financial
services, entertainment, health care services, accounting, law, computer
technology, education and publishing.
Our leases are typically structured for terms of three, five or ten years.
Leases typically contain provisions permitting tenants to renew expiring leases
at prevailing market rates. A majority of our leases are full service gross
leases under which tenants typically pay for all real property taxes and
operating expenses above those for an established base year or expense stop.
Tenants generally pay directly, without regard to a base year or expense stop,
for overtime use of heating and air conditioning and for on-site monthly
employee and visitor parking. We are generally responsible for structural
repairs.
The following table presents information as of December 31, 1999 derived
from the twenty largest tenants at our properties, based on a percentage of
aggregate portfolio annualized base rent:
<TABLE>
<CAPTION>
WEIGHTED PERCENTAGE OF PERCENTAGE OF
AVERAGE AGGREGATE AGGREGATE
REMAINING PORTFOLIO PORTFOLIO
NUMBER LEASE TERM LEASED ANNUALIZED
TENANT OF LEASES IN MONTHS SQUARE FEET BASE RENT(1)
------ --------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
State of California......................... 32 65 1.93% 1.94%
University of Phoenix....................... 14 53 1.27 1.20
Walt Disney Pictures & Television........... 2 40 0.88 1.04
Sony (Consolidated Entities)................ 6 48 0.71 0.79
U.S. Government............................. 16 45 0.60 0.77
Atlantic Richfield.......................... 2 80 0.74 0.76
GTE (Consolidated Entities)................. 5 36 0.87 0.74
Community Healthcare Alliance............... 1 44 0.78 0.73
McDonnell Douglas Aerospace................. 1 70 1.59 0.70
State Compensation.......................... 1 38 0.68 0.67
Salomon Smith Barney........................ 8 74 0.42 0.66
Omnicom Group............................... 1 46 0.30 0.64
Maritz...................................... 4 21 0.57 0.61
Ceridian Tax Service........................ 3 33 0.61 0.57
Wells Fargo Bank............................ 4 81 0.62 0.58
Aurora Biosciences Corp..................... 1 105 0.47 0.55
Pacific Southwest Bank...................... 1 96 0.73 0.54
Cymer, Inc.................................. 1 120 0.91 0.52
Latham & Watkins............................ 1 50 0.40 0.52
Earth Technology............................ 5 44 0.34 0.49
--- --- ----- -----
Total/Weighted Average(2)................. 109 61 15.42% 15.02%
=== === ===== =====
</TABLE>
- -------------------------
(1) Annualized base rent is calculated as monthly contractual base rent under
existing leases as of December 31, 1999, multiplied by 12; for those leases
where rent has not yet commenced or which are in a free rent period, the
first month in which rent is to be received is used to determine annualized
base rent.
(2) The weighted average calculation is based on net rentable square footage
leased by each tenant.
54
<PAGE> 57
LEASE DISTRIBUTIONS
The following table presents information relating to the distribution of
the leases for our 142 properties, based on leased net rentable square feet, as
of December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE
PERCENTAGE PERCENTAGE BASE RENT
OF AGGREGATE ANNUALIZED OF AGGREGATE PER NET
PERCENTAGE SQUARE PORTFOLIO BASE RENT OF PORTFOLIO RENTABLE
NUMBER OF ALL FOOTAGE LEASED LEASES(1) ANNUALIZED SQUARE FOOT
SQUARE FEET UNDER LEASE OF LEASES LEASES OF LEASES SQUARE FEET ($000S) BASE RENT OF LEASES
----------------------- --------- ---------- ---------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
2,500 or less................... 1,690 52.81% 2,295,416 13.39% $ 47,448 14.04% $20.67
2,501 - 5,000.................. 696 21.75 2,420,624 14.12 51,023 15.09 21.08
5,001 - 7,500.................. 259 8.09 1,585,533 9.24 32,083 9.49 20.23
7,501 - 10,000.................. 177 5.53 1,538,300 8.97 29,834 8.83 19.39
10,001 - 20,000.................. 245 7.66 3,423,561 19.96 70,361 20.82 20.55
20,001 - 40,000.................. 80 2.50 2,198,801 12.82 43,380 12.83 19.73
40,001 and over.................. 53 1.66 3,686,709 21.50 63,896 18.90 17.33
----- ------ ---------- ------ -------- ------ ------
Total/Weighted Average......... 3,200 100.00% 17,148,944 100.00% $338,025 100.00% $19.71
===== ====== ========== ====== ======== ====== ======
</TABLE>
- -------------------------
(1) Base rent is determined as of the date of lease expiration, including all
fixed contractual base rent increases; increases tied to indices such as the
Consumer Price Index are not included.
LEASE EXPIRATIONS
The following table presents a summary schedule of the total lease
expirations for our 142 properties for leases in place at December 31, 1999.
This table assumes that none of the tenants exercise renewal options or
termination rights, if any, at or prior to the scheduled expirations:
<TABLE>
<CAPTION>
AVERAGE
SQUARE PERCENTAGE PERCENTAGE BASE RENT
FOOTAGE OF AGGREGATE ANNUALIZED OF AGGREGATE PER NET
NUMBER OF PORTFOLIO BASE RENT OF PORTFOLIO RENTABLE
OF LEASES EXPIRING LEASED LEASES(1) ANNUALIZED SQUARE FOOT
YEAR OF LEASE EXPIRATION EXPIRING LEASES SQUARE FEET ($000S) BASE RENT OF LEASES
------------------------ --------- ---------- ------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Month-to-Month............................... 185 350,640 2.04% $ 6,386 1.89% $18.21
2000......................................... 649 2,319,508 13.53 43,079 12.74 18.57
2001......................................... 598 2,313,471 13.49 42,609 12.61 18.42
2002......................................... 602 2,770,686 16.16 52,459 15.52 18.93
2003......................................... 415 2,841,267 16.57 59,021 17.46 20.77
2004......................................... 388 2,675,837 15.60 54,739 16.19 20.46
2005......................................... 133 1,463,759 8.54 26,815 7.93 18.32
2006......................................... 56 658,358 3.84 13,276 3.93 20.17
2007......................................... 44 520,525 3.03 10,776 3.19 20.70
2008......................................... 27 333,866 1.95 9,489 2.81 28.42
2009......................................... 35 485,597 2.83 11,114 3.29 22.89
2010......................................... 16 233,048 1.36 4,532 1.34 19.45
2011......................................... 52 182,382 1.06 3,730 1.10 20.45
----- ---------- ------ -------- ------ ------
Total/Weighted Average..................... 3,200 17,148,944 100.00% $338,025 100.00% $19.71
===== ========== ====== ======== ====== ======
</TABLE>
- -------------------------
(1) Base rent is determined as of the date of lease expiration, including all
fixed contractual base rent increases; increases tied to indices such as the
Consumer Price Index are not included.
55
<PAGE> 58
DESCRIPTION OF OTHER DEBT
The following is a summary of the material terms of our credit lines and
mortgage debt obligations. This description is not complete and is subject to,
and qualified in its entirety by reference to, all provisions of the agreements
evidencing the debt.
LINES OF CREDIT
We have a $300 million unsecured line of credit from a group of banks led
by Wells Fargo. This line of credit bears interest at a rate ranging between
LIBOR plus 1.2% and LIBOR plus 1.45% depending on our leverage ratio. The
agreement governing this line of credit provides for the rate to be lowered to
between LIBOR plus 0.9% and LIBOR plus 1.15% depending on our unsecured debt
rating. Under specified circumstances, we have the option to convert the
interest rate to the prime rate plus 0.5%. This line of credit has a commitment
fee ranging from 0.125% to 0.25% on the unused balance. As of December 31, 1999,
the effective interest rate of this line of credit was 7.52%, the aggregate
outstanding balance on this line of credit was $280.9 million, and $19.1 million
was available for additional borrowing. This line of credit matures on June 1,
2000.
We also have an unsecured line of credit with a total commitment of $10
million from City National Bank. This line of credit accrues interest at the
City National Bank Prime Rate less 0.875% and is scheduled to mature on August
1, 2000. As of December 31, 1999, the effective interest rate of this line of
credit was 7.625%, there was an outstanding balance of $8.0 million, and $2.0
million was available for additional borrowing.
PREPAYABLE TERM LOANS FROM AN AFFILIATE OF LEHMAN BROTHERS
We have two prepayable term loans with an affiliate of Lehman Brothers
totaling $120.5 million as of December 31, 1999. The two loans are secured by
nine of our properties, bear interest at LIBOR plus 2.25% per year, have an
effective interest rate of 8.07% at December 31, 1999, require monthly payments
of interest only and mature on November 1, 2000. On January 25, 2000, we
expanded one of the loans by $25 million, resulting in a combined outstanding
balance of $145.5 million for both loans.
MORTGAGE FINANCINGS
We have a $175 million loan that originated with an affiliate of Lehman
Brothers, as conduit lender. This loan was subsequently sold to other investors,
is secured by eighteen of our properties, has a 7-year term maturing in June
2004, bears interest at a fixed rate of 7.52% and requires monthly payments of
interest only.
We have a $136.1 million loan that originated with an affiliate of Lehman
Brothers, as conduit lender. This loan was subsequently sold to other investors,
is secured by twenty-two of our properties, has a 10-year term maturing in April
2008, bears interest at a fixed rate of 6.74% and requires monthly payments of
interest only for five years and monthly payments of principal and interest
thereafter, based upon amortization over a 25-year period.
We have a $111.2 million loan that originated with an affiliate of Lehman
Brothers, as conduit lender. This loan was subsequently sold to other investors,
is secured by twelve of our properties, has a 10-year term maturing in April
2008, bears interest at a fixed rate of 6.61% and requires monthly payments of
interest only for five years and monthly payments of principal and interest
thereafter, based upon amortization over a 25-year period.
We have a $115 million loan with Mass Mutual Life Insurance Company that is
secured by 12 of our properties, has a 10-year term maturing in April 2009,
bears interest at a fixed rate of 6.94% and requires
56
<PAGE> 59
monthly payments of principal and interest based upon amortization over a
25-year period. As of December 31, 1999, the outstanding principal balance on
the loan was $114 million.
We have a $22.5 million loan that originated with an affiliate of Lehman
Brothers, as conduit lender. This loan was subsequently sold to other investors,
is secured by three of our properties, has a 10-year term maturing in April
2009, bears interest at a fixed rate of 7.54% and requires monthly payments of
principal and interest based upon amortization over a 30-year period. As of
December 31, 1999, the outstanding principal balance on the loan was $22.4
million.
The above mortgage financings require us to maintain cash deposits
aggregating $13.7 million to comply with specified operational restrictions and
cash management procedures.
In connection with two of our mortgage loans payable to an affiliate of
Lehman Brothers, we entered into a treasury rate lock agreement, or swap
agreement, with a notional amount of $100 million. The swap agreement fixed the
United States 10-year treasury rate at 6.174%. On April 16, 1998, we settled the
swap agreement for $4.5 million and are amortizing the cost of settling the swap
agreement over the term of the two related mortgage loans.
We have seven mortgage notes payable totaling $39.6 million as of December
31, 1999. The notes are secured by six properties, mature at various dates from
2002 through 2027, and bear interest at fixed rates ranging from 7.0% to 9.0%.
Six of the notes, with an aggregate balance of $34.6 million, require monthly
payments of principal and interest and one note, with a balance of $5.0 million,
requires monthly payments of interest only.
CONSTRUCTION LOAN
We have a construction loan with a total commitment of $50 million related
to our development of the approximately 241,000 net rentable square foot 6060
Center Drive office building in the Howard Hughes Center. The construction loan
is secured by specific property and construction improvements, bears interest at
LIBOR plus 2.0%, requires monthly payments of interest only and matures December
30, 2000, with two one-year extension options. If we meet specific construction
completion and leasing benchmarks, the interest rate on the construction loan
may be reduced to LIBOR plus 1.75%, then to LIBOR plus 1.5%. As of December 31,
1999, the effective interest rate of this construction loan was 8.23%, the
outstanding principal balance was $22.0 million and $28.0 million was available
for additional borrowing.
57
<PAGE> 60
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We sold the unregistered notes on March 14, 2000 to the initial purchasers
pursuant to the purchase agreement. The initial purchasers subsequently sold the
unregistered notes to qualified institutional buyers, or QIBs, as defined in
Rule 144A under the Securities Act, in reliance on Rule 144A. As a condition to
the sale of the unregistered notes, we and the initial purchasers entered into
the registration rights agreement dated as of March 17, 2000. Pursuant to the
registration rights agreement, we agreed that, unless the exchange offer is not
permitted by applicable law or Securities and Exchange Commission policy, we
would use our best efforts to:
(1) file with the Securities and Exchange Commission a registration
statement under the Securities Act with respect to the exchange notes
within 90 days after March 17, 2000;
(2) cause the registration statement to become effective under the
Securities Act within 180 days after March 17, 2000; and
(3) commence the exchange offer and issue, on or prior to 30 days
after the date on which the registration statement was declared effective
by the Securities and Exchange Commission, exchange notes in exchange for
all properly tendered unregistered notes.
A copy of the registration rights agreement has been filed as an exhibit to the
registration statement. The registration statement is intended to satisfy our
obligations under the registration rights agreement and the purchase agreement.
RESALE OF THE EXCHANGE NOTES
Based on interpretations by the staff of the Securities and Exchange
Commission in no-action letters issued to third parties, we believe that the
exchange notes issued under the exchange offer may be offered for resale, resold
or otherwise transferred by each holder of exchange notes, without compliance
with the registration and prospectus delivery provisions of the Securities Act,
so long as this holder:
- is acquiring the exchange notes in the ordinary course of its business;
- is not participating in, and does not intend to participate in, a
distribution of the exchange notes within the meaning of the Securities
Act and has no arrangement or understanding with any person to
participate in a distribution of the exchange notes within the meaning of
the Securities Act;
- is not a broker-dealer who acquires the unregistered notes directly from
us for resale under Rule 144A under the Securities Act or any other
available exemption under the Securities Act; and
- is not a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with us.
By tendering the unregistered notes in exchange for exchange notes, each
holder will be required to represent to us that each of the above statements
applies to that holder. If a holder of unregistered notes is participating in or
intends to participate in, a distribution of the exchange notes, or has any
arrangement or understanding with any person to participate in a distribution of
the exchange notes to be acquired in this exchange offer, that holder may be
deemed to have received restricted securities and may not rely on the applicable
interpretations of the staff of the Securities and Exchange Commission. Any
holder so deemed will have to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transaction.
Each broker-dealer that receives exchange notes for its own account in
exchange for unregistered notes may be deemed to be an underwriter within the
meaning of the Securities Act and must
58
<PAGE> 61
acknowledge that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of those exchange notes. The letter
of transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an underwriter within the
meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with offers to resell, resales and other transfers of exchange notes received in
exchange for outstanding notes which were acquired by that broker-dealer as a
result of market making or other trading activities. We have agreed that we will
make this prospectus available to any broker-dealer for a period of time not to
exceed 180 days after the completion of the exchange offer for use in connection
with any offer to resell, resale or other transfer. Please refer to the section
in this prospectus entitled "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all unregistered notes
validly tendered and not withdrawn prior to the expiration date. We will issue
$1,000 principal amount of exchange notes in exchange for each $1,000 principal
amount of unregistered notes surrendered pursuant to the exchange offer.
Unregistered notes may be tendered only in integral multiples of $1,000.
The form and terms of the exchange notes are the same as the form and terms
of the unregistered notes except that:
(1) the issuance of the exchange notes will be registered under the
Securities Act and, therefore, the exchange notes will not bear legends
restricting their transfer; and
(2) holders of the exchange notes will not be entitled to any of the
rights of holders of unregistered notes under the registration rights
agreement, which rights will terminate upon the consummation of the
exchange offer.
The exchange notes will evidence the same indebtedness as the unregistered notes
they replace and will be issued under, and be entitled to the benefits of, the
indenture. Both unregistered and exchange notes will be treated as a single
class of debt securities under the indenture.
As of the date of this prospectus, $200,000,000 in aggregate principal
amount of the unregistered 8.875% senior notes due 2005 and $50,000,000 in
aggregate principal amount of the unregistered 9.150% senior notes due 2010 are
outstanding. Only a registered holder of the unregistered notes, or such
holder's legal representative or attorney-in-fact, as reflected on the records
of the trustee under the indenture, may participate in the exchange offer. There
will be no fixed record date for determining registered holders of the
unregistered notes entitled to participate in the exchange offer.
Holders of the unregistered notes do not have any appraisal or dissenters'
rights under the indenture in connection with the exchange offer. We intend to
conduct the exchange offer in accordance with the provisions of the registration
rights agreement and the applicable requirements of the Securities Act, the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission thereunder.
We shall be deemed to have accepted validly tendered unregistered notes
when, as and if we have given oral or written notice thereof to the exchange
agent. The exchange agent will act as agent for the tendering holders of
unregistered notes for the purposes of receiving the exchange notes from us.
Holders who tender unregistered notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
unregistered notes pursuant to the exchange offer. We will pay all charges and
expenses, other than applicable taxes described below, in connection with the
exchange offer. See "-- Fees and Expenses."
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" shall mean 5:00 p.m., New York City time on May
, 2000, unless we, in our sole discretion, extend the exchange offer, in which
case the term "expiration date" shall mean the latest date and time to which the
exchange offer is extended.
In order to extend the exchange offer, we will:
(1) notify the exchange agent of any extension by oral or written
notice; and
(2) mail to the registered holders an announcement thereof which shall
include disclosure of the approximate number of unregistered notes
deposited to date;
each prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
We reserve the right, in our reasonable discretion:
(1) to delay accepting any unregistered notes;
(2) to extend or amend the exchange offer; or
(3) if any conditions set forth below under "-- Conditions" shall not
have been satisfied, to terminate the exchange offer by giving oral or
written notice of such delay, extension or termination to the exchange
agent.
Any delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by oral or written notice to the registered holders. If
the exchange offer is amended in a manner determined by us to constitute a
material change, we will promptly disclose the amendment by means of a
prospectus supplement or post-effective amendment to the registration statement
that will be distributed to the registered holders, and we will extend the
exchange offer for a period of five to ten business days, depending upon the
significance of the amendment and the manner of disclosure to the registered
holders, if the exchange offer would otherwise expire during that period.
INTEREST ON THE EXCHANGE NOTES
The exchange notes due 2005 will bear interest at a rate equal to 8.875%
per year and the exchange notes due 2010 will bear interest at a rate equal to
9.150% per year. Interest on the exchange notes will be payable semi-annually in
arrears on each March 1 and September 1, commencing September 1, 2000. Holders
of exchange notes will receive interest on September 1, 2000 from the date of
initial issuance of the exchange notes, plus an amount equal to the accrued
interest on the unregistered notes from the date of issuance to the day
preceding the date of exchange for exchange notes. Holders of unregistered notes
that are accepted for exchange will be deemed to have waived the right to
receive any interest accrued on the unregistered notes.
PROCEDURES FOR TENDERING
To tender your unregistered notes in the exchange offer, you must complete,
sign and date the letter of transmittal, or a facsimile, have the signatures
thereon guaranteed if required by the letter of transmittal, and mail or
otherwise deliver the letter of transmittal or facsimile, or an agent's message,
together with the certificates representing the unregistered notes being
tendered and any other required documents, to the exchange agent for receipt
prior to the expiration date. Alternatively, you may either:
(1) send a timely confirmation of a book-entry transfer of your
unregistered notes, if this procedure is available, into the exchange
agent's account at The Depository Trust Company, or DTC, pursuant to the
procedure for book-entry transfer described below, prior to the expiration
date; or
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(2) comply with the guaranteed delivery procedures described below.
The term "agent's message" means a message, transmitted by DTC to, and
received, by, the exchange agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgement from
its participant tendering outstanding notes which are the subject of this
book-entry confirmation that this participant has received and agrees to be
bound by the terms of the letter of transmittal, and that we may enforce this
agreement against this participant.
Unless withdrawn prior to the expiration date, your tender will constitute
an agreement between you and us in accordance with the terms and subject to the
conditions provided in this prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF UNREGISTERED NOTES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IF YOU CHOOSE DELIVERY BY MAIL, WE RECOMMEND REGISTERED MAIL,
RETURN RECEIPT REQUESTED, AND PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. YOU SHOULD NOT SEND ANY LETTER OF TRANSMITTAL OR UNREGISTERED NOTES TO US.
YOU MAY REQUEST YOUR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS ON YOUR BEHALF.
If you are the beneficial owner of the unregistered notes that are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and you wish to tender your registered notes, you should contact
the registered holder promptly and instruct the registered holder to tender on
your behalf. If you wish to tender on your own behalf, you must, prior to
completing and executing the letter of transmittal and delivering your
unregistered notes, either make appropriate arrangements to register ownership
of the unregistered notes in your name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take
considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an eligible institution, as defined below,
unless the unregistered notes are tendered:
- by a registered holder, or by a participant in DTC whose name appears on
a security position listing as the owner, who has not completed the box
titled "Special Issuance Instructions" or "Special Delivery Instructions"
on the letter of transmittal; or
- for the account of an eligible institution.
An eligible institution is:
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank or trust company having an office or correspondent in
the United States; or
- an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act which is a member of one of the recognized
signature guarantee programs identified in the letter of transmittal.
If the letter of transmittal is signed by the registeredholder(s) of the
outstanding notes tendered, the signature must correspond with the name(s)
written on the face of the outstanding notes without alteration, enlargement or
any change whatsoever. If the letter of transmittal is signed by a participant
in DTC, the signature must correspond with the name as it appears on the
security position listing as the holder of the outstanding notes.
If the letter of transmittal is signed by a person other than the
registered holder of any outstanding notes listed, the outstanding notes must be
endorsed or accompanied by bond powers and a proxy that authorizes that person
to tender the outstanding notes on behalf of the registered holder in
satisfactory
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form to us as determined in our sole discretion, in each case as the name of the
registered holder or holders appears on the outstanding notes.
If the letter of transmittal or any unregistered notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless waived by us,
evidence satisfactory to us of their authority to so act must be submitted with
the letter of transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed letter of transmittal accompanied by the
outstanding notes tendered, or a timely confirmation received by a book-entry
transfer of outstanding notes into the exchange agent's account at DTC with an
agent's message, or a notice of guaranteed delivery from an eligible institution
is received by the exchange agent. Issuances of exchange notes in exchange for
outstanding notes tendered under a notice of guaranteed delivery by an eligible
institution will be made only against delivery of the letter of transmittal, and
any other required documents, and the tendered outstanding notes, or a timely
confirmation received of a book-entry transfer of outstanding notes into the
exchange agent's account at DTC with an agent's message, to the exchange agent.
All questions as to the validity, form, eligibility, time of receipt,
acceptance and withdrawal of tendered unregistered notes will be determined by
us in our sole discretion. Our determination will be final and binding. We
reserve the absolute right to reject any and all unregistered notes not properly
tendered or any unregistered notes which, if accepted by us would, in the
opinion of our counsel, be unlawful. We also reserve the right to waive any
defects, irregularities or conditions of tender as to particular unregistered
notes. Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of unregistered notes must be cured within the time we
determine. Although we intend to notify holders of defects or irregularities
with respect to tenders of unregistered notes, neither we, the exchange agent
nor any other person shall incur any liability for failure to give that notice.
Tenders of unregistered notes will not be deemed to have been made until such
defects or irregularities have been cured or waived.
While we have no present plan to do so, we reserve the right in our sole
discretion to:
- purchase or make offers for any unregistered notes that remain
outstanding subsequent to the expiration date or, as described under
"-- Conditions," to terminate the exchange offer; and
- purchase unregistered notes in the open market, to the extent permitted
by applicable law, in privately negotiated transactions or otherwise. The
terms of any purchases or offers could differ from the terms of the
exchange offer.
By tendering, you will be making several representations to us including
that:
(1) the exchange notes to be acquired by you are being acquired by you
in the ordinary course of your business;
(2) you are not participating in, and do not intend to participate in,
a distribution of the exchange notes;
(3) you have no arrangement or understanding with any person to
participate in the distribution of the exchange notes;
(4) you satisfy specific requirements of your state's securities
regulations;
(5) if you are a broker-dealer or are participating in the exchange
offer for the purposes of distributing the exchange notes, you will comply
with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction of the
exchange
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notes acquired by you and cannot rely on the position of the staff of the
Securities and Exchange Commission set forth in no-action letters issued to
third parties;
(6) if you are a broker-dealer, you understand that a secondary resale
transaction described in clause (4) above and any resales of exchange notes
obtained by you in exchange for unregistered notes acquired by you directly
from us should be covered by an effective registration statement containing
the selling securityholder information required by Item 507 or Item 508, as
applicable, of Regulation S-K under the Securities Act; and
(7) you are not our affiliate as defined in Rule 405 under the
Securities Act.
If you are a broker-dealer that will receive exchange notes for your own
account in exchange for unregistered notes that were acquired as a result of
market-making activities or other trading activities, you will also be required
to acknowledge in the letter of transmittal that you will deliver a prospectus
in connection with any resale of those exchange notes; however, by so
acknowledging and by delivering a prospectus, you will not be deemed to admit
that you are an underwriter within the meaning of the Securities Act.
RETURN OF UNREGISTERED NOTES
If any tendered unregistered notes are not accepted by us or the exchange
agent for any reason, or if unregistered notes are withdrawn or are submitted
for a greater principal amount than you desire to exchange, the unaccepted,
withdrawn or non-exchanged unregistered notes will be returned to you without
expense to you. In the case of unregistered notes tendered by book-entry
transfer into the exchange agent's account at DTC pursuant to the book-entry
transfer procedures described below, those unregistered notes will be credited
to the appropriate account maintained with DTC.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the unregistered notes at The Depository Trust Company for purposes of the
exchange offer within two business days after the date of this prospectus. Any
financial institution that is a participant in DTC's systems may make book-
entry delivery of unregistered notes by causing DTC to transfer the unregistered
notes into the exchange agent's account in accordance with DTC's procedures for
transfer.
However, although delivery of unregistered notes may be effected through
book-entry transfer, an agent's message or the letter of transmittal or
facsimile, with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received by the exchange
agent at the address set forth below under "-- Exchange Agent" on or prior to
the expiration date or pursuant to the guaranteed delivery procedures described
below. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
GUARANTEED DELIVERY PROCEDURES
If you are a registered holder and wish to tender your unregistered notes
and (a) your unregistered notes are not immediately available or (b) you cannot
deliver your unregistered notes, the letter of transmittal or any other required
documents to the exchange agent prior to the expiration date, or (c) the
procedures for book-entry transfer cannot be completed on a timely basis and an
agent's message delivered, you may effect a tender if:
(1) you tender through an eligible institution;
(2) prior to the expiration date, the exchange agent receives from the
eligible institution a properly completed and duly executed notice of
guaranteed delivery substantially in the form provided by us, by facsimile
transmission, mail or hand delivery, containing your name and address, the
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certificate numbers of your unregistered notes and the principal amount of
unregistered notes tendered, stating that the tender is being made thereby
and guaranteeing that, within five business days after the expiration date,
the letter of transmittal or a facsimile, together with the certificates
representing the unregistered notes in proper form for transfer or a
book-entry confirmation, as the case may be, and any other documents
required by the letter of transmittal, will be deposited by the eligible
institution with the exchange agent; and
(3) a properly executed letter of transmittal or facsimile thereof, as
well as the certificates representing all tendered unregistered notes in
proper form for transfer and all other documents required by the letter of
transmittal are received by the exchange agent within five business days
after the expiration date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, you may withdraw tenders of
unregistered notes at any time prior to 5:00 p.m. on the expiration date.
To withdraw a tender of unregistered notes in the exchange offer, you must
send a written or facsimile transmission notice of withdrawal to the exchange
agent at its proper address prior to the expiration date. Any notice of
withdrawal must:
(1) specify the name of the person having tendered the unregistered
notes to be withdrawn;
(2) identify the unregistered notes to be withdrawn, including the
certificate number or numbers and principal amount of the unregistered
notes;
(3) be signed by the person having tendered the unregistered notes to
be withdrawn in the same manner as the original signature on the letter of
transmittal by which these unregistered notes were tendered, including any
required signature guarantees, or be accompanied by documents of transfer
sufficient to permit the trustee with respect to the unregistered notes to
register the transfer of these unregistered notes into the name of the
person having made the original tender and withdrawing the tender;
(4) specify the name in which these unregistered notes are to be
registered, if different from that of the person having tendered the
unregistered notes to be withdrawn; and
(5) if applicable because the unregistered notes have been tendered
under the book-entry procedures, specify the name and number of the
participant's account at DTC to be credited, if different than that of the
person having tendered the unregistered notes to be withdrawn.
All questions as to the validity, form and eligibility, including time of
receipt, of withdrawal notices will be determined by us in our sole discretion.
Our determination will be final and binding on all parties. Any unregistered
notes so withdrawn will be deemed not to have been validly tendered for purposes
of the exchange offer and no exchange notes will be issued unless the
unregistered notes so withdrawn are validly retendered. Properly withdrawn
unregistered notes may be retendered by following one of the procedures
described above under "Procedures for Tendering" at any time prior to the
expiration date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we shall not be
required to accept for exchange, or exchange the exchange notes for, any
unregistered notes, and may terminate or amend the exchange offer as provided in
this prospectus before the acceptance of such unregistered notes, if the
exchange offer violates applicable law, rules or regulations or an applicable
interpretation of the staff of the Securities and Exchange Commission.
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If we determine in our reasonable discretion that any of these conditions
are not satisfied, we may:
(1) refuse to accept any unregistered notes and return all tendered
unregistered notes to the tendering holders;
(2) extend the exchange offer and retain all unregistered notes
tendered prior to the expiration of the exchange offer, subject, however,
to the rights of holders to withdraw such unregistered notes; or
(3) waive such unsatisfied conditions with respect to the exchange
offer and accept all properly tendered unregistered notes that have not
been withdrawn.
If our waiver constitutes a material change to the exchange offer, we will
promptly disclose our waiver by means of a prospectus supplement or
post-effective amendment that will be distributed to the registered holders of
the unregistered notes, and we will extend the exchange offer for a period of
five to ten business days, depending upon the significance of the waiver and the
manner of disclosure to the registered holders, if the exchange offer would
otherwise expire during that period.
TERMINATION OF SPECIFIC RIGHTS
All rights under the registration rights agreement, including registration
rights, of holders of the unregistered notes eligible to participate in the
exchange offer will terminate upon consummation of the exchange offer except
with respect to our continuing obligations to:
(1) indemnify holders and specific parties related to the holders
against specific liabilities, including liabilities under the Securities
Act;
(2) provide, upon the request of any holder of a transfer-restricted
unregistered note, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of the holder's unregistered
notes pursuant to Rule 144A;
(3) provide copies of the latest version of the prospectus to
broker-dealers upon their request for a period of up to one year after the
expiration date; and
(4) use our best efforts, under specific circumstances, to keep the
registration statement effective to the extent necessary to ensure that it
is available for resales of transfer-restricted unregistered notes by
broker-dealers for a period of up to one year after the expiration date.
LIQUIDATED DAMAGES
In the event of a registration default, as defined in the registration
rights agreement, we will pay liquidated damages to each holder of transfer
restricted securities, as defined below, with respect to the first 90-day period
immediately following the occurrence of such registration default in an amount
equal to $0.05 per week per $1,000 principal amount of unregistered notes
constituting transfer restricted securities held by such holder. Transfer
restricted securities shall mean each unregistered note until:
(1) the date on which such unregistered note has been exchanged for an
exchange note in the exchange offer;
(2) following the exchange by a broker-dealer in the exchange offer of
such unregistered note for one or more exchange notes, the date on which
the exchange notes are sold to a purchaser who receives a copy of this
prospectus from that broker-dealer on or prior to the date of sale;
(3) the date on which the unregistered note has been effectively
registered under the Securities Act and disposed of in accordance with the
shelf registration statement as defined in the registration rights
agreement; or
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(4) the date on which the unregistered note is distributed to the
public pursuant to Rule 144(k) under the Securities Act.
The amount of liquidated damages will increase by an additional $0.05 per week
per $1,000 principal amount of unregistered notes constituting transfer
restricted securities with respect to each subsequent 90-day period until all
registration defaults have been cured, up to a maximum amount of liquidated
damages of $0.25 per week per $1,000 principal amount of unregistered notes
constituting transfer restricted securities. Following the cure of all
registration defaults, the accrual of all liquidated damages will cease. The
filing and effectiveness of the registration statement of which this prospectus
is a part and the consummation of the exchange offer will eliminate all rights
of the holders of unregistered notes eligible to participate in the exchange
offer to receive damages that would have been payable if such actions had not
occurred.
Holders of transfer restricted securities will be required to make specific
representations to us, as described in the registration rights agreement, in
order to participate in the exchange offer and will be required to deliver
information to be used in connection with the shelf registration statement and
to provide comments on the shelf registration statement within the time periods
set forth in the registration rights agreement in order to have their transfer
restricted securities included in the shelf registration agreement and benefit
from the provisions regarding liquidated damages set forth above.
EXCHANGE AGENT
We have appointed The Bank of New York as exchange agent for the exchange
offer. You should direct all questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for notice of guaranteed delivery to the exchange agent as follows:
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand Delivery:
The Bank of New York The Bank of New York
101 Barclay Street, Floor 7 East 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attn: Kin Lau New York, New York 10286
Reorganization Section Attn: Kin Lau
Reorganization Section
By Overnight Delivery: By Facsimile:
(for eligible institutions only)
The Bank of New York (212) 815-6339
101 Barclay Street Attn: Kin Lau
Corporate Trust Services Window
New York, New York 10286
Attn: Kin Lau Confirm by Telephone:
Reorganization Section (212) 815-3750
</TABLE>
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, telephone or in person by our and our affiliates' officers and
regular employees.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We will pay the exchange agent reasonable and
customary fees for its services and will reimburse it for its reasonable out-
of-pocket expenses in connection with the exchange offer.
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We will pay the cash expenses to be incurred in connection with the
exchange offer which we estimate in the aggregate to be approximately $150,000.
Such expenses include registration fees, fees and expenses of the exchange agent
and the trustee, accounting and legal fees and printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of
unregistered notes pursuant to the exchange offer. If, however, transfer taxes
are imposed for any reason other than the exchange of the unregistered notes
pursuant to the exchange offer, then the amount of any such transfer taxes,
whether imposed on the registered holder or any other persons, will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the letter of transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE CONSEQUENCES
The unregistered notes that are not exchanged for the exchange notes
pursuant to the exchange offer will remain restricted securities. Accordingly,
such unregistered notes may be resold by you only:
(1) to a person whom you reasonably believes is a QIB in a transaction
meeting the requirements of Rule 144A;
(2) in a transaction meeting the requirements of Rule 144 under the
Securities Act;
(3) outside the United States to a foreign person in a transaction
meeting the requirements of Rule 904 under the Securities Act;
(4) in accordance with another exemption from the registration
requirements of the Securities Act, and based upon an opinion of counsel if
we so request;
(5) to us; or
(6) pursuant to an effective registration statement and, in each case,
in accordance with any applicable securities laws of any state of the
United States or any other applicable jurisdiction.
In addition, you will no longer be able to obligate us to register the
unregistered notes under the Securities Act except in the limited circumstances
provided under our registration rights agreement. The restrictions on transfer
of your unregistered notes arise because we issued the unregistered notes under
exemptions from, or in transactions outside the registration requirements of the
Securities Act and applicable state securities laws. In addition, if you want to
exchange your unregistered notes in the exchange offer for the purpose of
participating in a distribution of the exchange notes, you may be deemed to have
received registered securities, and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. To the extent the unregistered notes are
tendered and accepted in the exchange offer, the trading market, if any, for the
unregistered notes would be adversely affected. Please refer to the section in
this prospectus entitled "Risk Factors."
You are urged to consult your financial and tax advisors in making your own
decisions on whether to participate in the exchange offer.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. The expenses of the exchange offer will be amortized over
the term of the exchange notes.
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DESCRIPTION OF EXCHANGE NOTES
GENERAL
The following is a description of the terms of the 8.875% senior notes due
2005 and the 9.150% senior notes due 2010 offered in exchange for our
unregistered notes of the same maturities and interest rates. The form and terms
of the exchange notes are the same as the form and terms of the unregistered
notes, except that the exchange notes have been registered under the Securities
Act, will not bear legends restricting the transfer of the notes and will not be
entitled to registration rights under our registration rights agreement. As used
herein this section, the terms "note" and "notes," "2005 notes" and "2010 notes"
refer to the exchange notes.
The 2005 notes and the 2010 notes constitute separate series of debt
securities to be issued pursuant to an indenture dated as of March 14, 2000 (the
"Indenture") as amended or supplemented, by and between us and The Bank of New
York, as trustee (the "Trustee"). The terms of the notes include those
provisions contained in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939. The notes are subject to all those
terms, and holders of notes are referred to the Indenture and the Trust
Indenture Act for a statement of the terms. The following summary of specified
provisions of the Indenture does not purport to be complete and is subject to
and qualified in its entirety by reference to the Indenture, including the
definitions therein of some of the terms used below. Except as otherwise
indicated, section references are to sections of the Indenture. Capitalized
terms not defined where first used are defined below under the heading
"Definitions."
The notes will be our direct, unsecured recourse obligations and will rank
equally with all our other unsecured and unsubordinated indebtedness from time
to time outstanding, including $192.8 million outstanding, on an as adjusted
basis, as of December 31, 1999 under our $300 million unsecured line of credit.
The notes will be effectively subordinated to the claims of mortgage lenders
holding our secured indebtedness, as to the specific property securing each
lender's mortgage. As of December 31, 1999, on an as adjusted basis, the
aggregate principal amount of secured indebtedness was approximately $590.3
million. The notes will be recourse to all of our assets, but will be
non-recourse with respect to Arden Realty and the stockholders and directors of
Arden Realty. Subject to specified limitations in the Indenture, and as
described below under "Covenants," the Indenture will permit us to incur
additional secured and unsecured indebtedness.
The 2005 notes will mature on March 1, 2005 and the 2010 notes will mature
on March 1, 2010 (each, a "Maturity Date"). The notes will not be subject to any
sinking fund provisions and will not be convertible into or exchangeable for any
of our equity interests. The notes will be issued only in fully registered
book-entry form without coupons, in denominations of $1,000 and integral
multiples of $1,000, except under the limited circumstances described below
under "Form and Registration."
Except as described below under "Covenants -- Limitations on Incurrence of
Debt" and "-- Merger, Consolidation or Sale," the Indenture does not contain any
provisions that would limit our ability to incur indebtedness or that would
afford holders of the notes protection in the event of:
(1) a highly leveraged or similar transaction involving us or any of
our affiliates;
(2) a change of control; or
(3) a reorganization, restructuring, merger or similar transaction
involving us that may adversely affect the holders of the notes.
Restrictions on the ownership and transfer of the shares of common stock of
Arden Realty designed to preserve its status as a REIT, however, may act to
prevent or hinder a change of control. Arden Realty and its management have no
present intention of engaging in a transaction which would result in Arden
Realty or us being highly leveraged or that would result in a change of control.
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PRINCIPAL AND INTEREST
The 2005 notes will bear interest at 8.875% per year and the 2010 notes
will bear interest at 9.150% per year from March 17, 2000 or from the
immediately preceding Interest Payment Date to which interest has been paid,
payable semi-annually in arrears on each March 1 and September 1, commencing
September 1, 2000 (each, an "Interest Payment Date"), and on the applicable
Maturity Date, to the persons (the "Holders") in whose names the applicable
notes are registered in the Security Register applicable to the notes at the
close of business 15 calendar days prior to the payment date (each, a "Regular
Record Date"), regardless of whether that day is a Business Day. Interest on the
notes will be computed on the basis of a 360-day year of twelve 30-day months.
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a note ("Defaulted Interest") will forthwith cease
to be payable to the Holder on the applicable regular record date and may either
be paid to the person in whose name that note is registered at the close of
business on a special record date (the "Special Record Date") for the payment of
the Defaulted Interest to be fixed by the Trustee, notice whereof shall be given
to the Holder of that note not less than ten days prior to the Special Record
Date, or may be paid at any time in any other lawful manner, all as more
completely described in the Indenture (Section 307).
The principal of each note payable on its Maturity Date will be paid
against presentation and surrender of the note at the corporate trust office of
the Trustee, located initially at The Bank of New York, 101 Barclay Street,
Floor 21 West, New York, New York 10286, Re: Arden Realty Limited Partnership in
the coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts.
If any Interest Payment Date or a Maturity Date falls on a day that is not
a Business Day, the required payment will be made on the next Business Day as if
it were made on the date the payment was due and no interest will accrue on the
amount so payable for the period from and after that Interest Payment Date or
Maturity Date, as the case may be. "Business Day" means any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York City are authorized or required by law, regulation or
executive order to close.
COVENANTS
The Indenture contains various covenants, including the following:
LIMITATIONS ON INCURRENCE OF DEBT
We will not, and will not permit any Subsidiary to, incur any Debt, other
than Intercompany Debt, if, immediately after giving effect to the incurrence of
that Debt and the application of the net proceeds therefrom, the aggregate
principal amount of all of our and our Subsidiaries' outstanding Debt on a
consolidated basis determined in accordance with GAAP is greater than 60% of the
sum of:
(1) our Total Assets as of the end of the fiscal quarter covered in
our most recent quarterly or annual financial statements, as the case may
be, most recently required to be delivered to Holders pursuant to the
Indenture, prior to the incurrence of the additional Debt; and
(2) the increase or decrease in Total Assets from the end of that
quarter, including, without limitation, any increase in Total Assets
resulting from the incurrence of the additional Debt (the increase or
decrease together with our Total Assets is referred to as the "Adjusted
Total Assets") (Section 1004(a)).
In addition to the foregoing limitation on the incurrence of Debt, we will
not, and will not permit any Subsidiary to, incur any Debt, other than
Intercompany Debt, if the ratio of Consolidated Income Available for Debt
Service to Annual Debt Service Charge for the period consisting of the four
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consecutive fiscal quarters most recently ended prior to the date on which the
additional Debt is to be incurred would have been less than 1.5 to 1.0 on a pro
forma basis, after giving effect to the incurrence of the Debt and to the
application of the net proceeds therefrom, and calculated on the assumption
that:
(1) the Debt and any other Debt incurred by us and our Subsidiaries
since the first day of the four-quarter period, which was outstanding at
the end of that period, had been incurred at the beginning of that period
and continued to be outstanding throughout that period, and the application
of the proceeds of that Debt, including to refinance other Debt, had
occurred at the beginning of that period;
(2) the repayment or retirement of any other Debt by us or our
Subsidiaries since the first day of the four-quarter period had been repaid
or retired at the beginning of that period, except that, in determining the
amount of Debt so repaid or retired, the amount of Debt under any revolving
credit facility will be computed based upon the average daily balance of
that Debt during that period;
(3) in the case of Acquired Indebtedness or Debt incurred in
connection with any acquisition since the first day of the four-quarter
period, the related acquisition had occurred as of the first day of the
period with the appropriate adjustments with respect to the acquisition
being included in the pro forma calculation; and
(4) in the case of any increase or decrease in Total Assets, or any
other acquisition or disposition by us or any Subsidiary of any asset or
group of assets since the first day of that four-quarter period, including,
without limitation, by merger, stock purchase or sale, or asset purchase or
sale, that increase, decrease or other acquisition or disposition or any
related repayment of Debt had occurred as of the first day of that period
with the appropriate adjustments to revenues, expenses and Debt levels with
respect to that increase, decrease or other acquisition or disposition
being included in that pro forma calculation (Section 1004(c)).
Further, we will not, and will not permit any Subsidiary to, incur any
Secured Debt if, immediately after giving effect to the incurrence of the
additional Secured Debt, and the application of the net proceeds thereof, the
aggregate principal amount of all of our and our Subsidiaries' outstanding
Secured Debt determined on a consolidated basis in accordance with GAAP is
greater than 40% of Adjusted Total Assets (Section 1004(b)).
For purposes of the foregoing provisions regarding the limitation on the
incurrence of Debt, Debt shall be deemed to be "incurred" by us or a Subsidiary
whenever we or our Subsidiary creates, assumes, guarantees or otherwise becomes
liable in respect of that Debt.
MAINTENANCE OF TOTAL UNENCUMBERED ASSETS
We will at all times maintain Total Unencumbered Assets of not less than
150% of the aggregate outstanding principal amount of all of our and our
Subsidiaries' outstanding Unsecured Debt determined on a consolidated basis in
accordance with GAAP (Section 1004(d)).
MERGER, CONSOLIDATION OR SALE
We may consolidate with, or sell, lease or convey all or substantially all
of our assets to, or merge with or into any other entity, provided that in any
case:
(1) either we will be the continuing entity, or the successor entity
will be an entity organized and existing under the laws of the United
States or a State thereof and the successor entity will expressly assume
the due and punctual payment of the principal of, and premium or Make-Whole
Amount, if any, and any interest on all of the notes, according to their
tenor, and the due and punctual performance and observance of all of the
covenants and conditions of the Indenture to be performed by us by
supplemental indenture, complying with the provisions of the Indenture
relating to
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supplemental indentures, satisfactory to the Trustee, executed and
delivered to the Trustee by that entity;
(2) immediately after giving effect to the transaction and treating
any indebtedness which becomes an obligation of ours or any Subsidiary of
ours as a result thereof as having been incurred by us or one of our
Subsidiaries at the time of the transaction, no Event of Default, and no
event which, after notice or the lapse of time, or both, would become an
Event of Default, will have occurred and be continuing; and
(3) an officer's certificate and legal opinion covering these
conditions will be delivered to the Trustee (Sections 801 and 803).
EXISTENCE
Except as described under "Merger, Consolidation or Sale," above, we will
do or cause to be done all things necessary to preserve and keep in full force
and effect our existence, rights, by partnership agreement and statute, and
franchises; provided, however, that we will not be required to preserve any
right or franchise if we determine that the preservation thereof is no longer
desirable in the conduct of our business and that the loss thereof is not
disadvantageous in any material respect to the Holders of the notes (Section
1006).
MAINTENANCE OF PROPERTIES
We will cause all of our material properties used or useful in the conduct
of our business or the business of any Subsidiary to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in our judgment may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that we
and our Subsidiaries will not be prevented from selling or otherwise disposing
of our properties for value in the ordinary course of business (Section 1007).
INSURANCE
We will, and will cause each of our Subsidiaries to, keep in force upon all
of our properties and operations insurance policies carried with responsible
companies in customary amounts and covering customary risks in accordance with
prevailing market conditions and availability (Section 1008).
PAYMENT OF TAXES AND OTHER CLAIMS
We will pay or discharge or cause to be paid or discharged, before the same
become delinquent:
(1) all taxes, assessments and governmental charges levied or imposed
upon us or any Subsidiary or upon our income, profits or property or upon
any Subsidiary's income, profits or property; and
(2) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien upon our property or the property of any
Subsidiary;
provided, however, that we will not be required to pay or discharge or cause to
be paid or discharged any tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings or for which we have set apart and maintain an adequate reserve in
accordance with GAAP (Section 1009).
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PROVISION OF FINANCIAL INFORMATION
Whether or not we are subject to Section 13 or 15(d) of the Exchange Act,
we will, to the extent permitted under the Exchange Act, file with the SEC the
annual reports, quarterly reports and other documents which we would have been
required to file with the SEC pursuant to Sections 13 or 15(d) if we were so
subject (the "Financial Information"), these documents to be filed with the SEC
on or prior to the respective dates (the "Required Filing Dates") by which we
would have been required to file these documents if we were so subject. We also
will in any event
(1) within 15 days of each Required Filing Date:
(x) transmit by mail to all Holders of notes, as their names and
addresses appear in the Security Register, without cost to the Holders,
copies of the Financial Information; and
(y) file with the Trustee copies of the Financial Information; and
(2) if filing these documents by us with the SEC is not permitted
under the Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of the documents
to any prospective Holder (Section 1010).
DEFINITIONS
As used in the Indenture and the description of the Indenture in this
prospectus:
"Acquired Indebtedness" means Debt of a person (a) existing at the time the
person becomes a Subsidiary or (b) assumed in connection with the acquisition of
assets from the person, in each case, other than Debt incurred in connection
with, or in contemplation of, the person becoming a Subsidiary or that
acquisition. Acquired Indebtedness will be deemed to be incurred on the date of
the related acquisition of assets from any person or the date the acquired
person becomes a Subsidiary.
"Annual Debt Service Charge" as of any date means the amount which is
expensed in any 12-month period for Consolidated Interest Expense of us and our
Subsidiaries.
"Consolidated Income Available for Debt Service" as of any date means our
and our Subsidiaries' Consolidated Net Income plus amounts that have been
deducted in determining Consolidated Net Income during that period for:
(a) Consolidated Interest Expense;
(b) provision for taxes of us and our Subsidiaries based on income;
(c) depreciation and amortization, other than amortization of debt
discount;
(d) provisions for losses from sales or joint ventures;
(e) increases in deferred taxes and other non-cash items;
(f) charges resulting from a change in accounting principles; and
(g) charges for early extinguishment of debt;
less amounts which have been added in determining Consolidated Net Income
during that period for:
(1) provisions for gains from sales or joint ventures; and
(2) decreases in deferred taxes and other non-cash items.
"Consolidated Interest Expense" means, for any period, and without
duplication, all interest, including the interest component of rentals on leases
reflected in accordance with GAAP as capitalized leases on our
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consolidated balance sheet, letter of credit fees, commitment fees and other
like financial charges, and all amortization of debt discount on all Debt,
including, without limitation, payment-in-kind, zero coupon and other
securities, of us and our Subsidiaries, but excluding legal fees, title
insurance charges and other out-of-pocket fees and expenses incurred in
connection with the issuance of Debt, all determined in accordance with GAAP.
"Consolidated Net Income" for any period means the amount of net income, or
loss, of us and our Subsidiaries for the period determined on a consolidated
basis in accordance with GAAP.
"Debt" means, without duplication, any indebtedness of us or any
Subsidiary, whether or not contingent, in respect of:
(1) borrowed money evidenced by bonds, notes, debentures or similar
instruments;
(2) indebtedness secured by any mortgage, pledge, lien, charge,
encumbrance or any security interest existing on property owned by us or
any Subsidiary;
(3) reimbursement obligations, contingent or otherwise, in connection
with any letters of credit actually issued or amounts representing the
balance deferred and unpaid of the purchase price of any property except
any balance that constitutes an accrued expense or trade payable; or
(4) any lease of property by us or any Subsidiary as lessee which is
reflected on our consolidated balance sheet as a capitalized lease in
accordance with GAAP;
but in the case of items of indebtedness incurred under (1) through (3) above
only to the extent that any items, other than letters of credit, would appear as
a liability on our consolidated balance sheet in accordance with GAAP; and also
includes, to the extent not otherwise included, any obligation of us or any
Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise,
other than for purposes of collection in the ordinary course of business,
indebtedness of another person, other than us or any Subsidiary, it being
understood that "Debt" will be deemed to be incurred by us and our Subsidiaries
on a consolidated basis whenever we and our Subsidiaries on a consolidated basis
create, assume, guarantee or otherwise become liable in respect thereof; Debt of
a Subsidiary existing prior to the time it became our Subsidiary will be deemed
to be incurred upon that Subsidiary's becoming our Subsidiary, and Debt of a
person existing prior to a merger or consolidation of that person with us or any
of our Subsidiaries in which that person is our successor or successor of that
Subsidiary will be deemed to be incurred upon the consummation of that merger or
consolidation; provided, however, that the term Debt will not include any
indebtedness that has been the subject of an "in substance" defeasance in
accordance with GAAP.
"Intercompany Debt" means Debt to which the only parties are us, Arden
Realty and any of our and Arden Realty's Subsidiaries, but only so long as that
Debt is held solely by any of us, Arden Realty and any Subsidiary and, provided
that, in the case of Debt owed by us to any Subsidiary, the Debt is subordinated
in right of payment to the holders of the notes.
"Secured Debt" means, without duplication, Debt secured by any mortgage,
trust deed, deed of trust, deed to secure Debt, security agreement, pledge,
conditional sale or other title retention agreement, capitalized lease, or other
like agreement granting or conveying security title to or a security interest in
real property or other tangible assets. Secured Debt will be deemed to be
incurred (a) on the date we or any Subsidiary create, assume, guarantee or
otherwise become liable in respect thereof if it is secured in the manner
described in the preceding sentence on that date or (b) on the date we or any
Subsidiary first secure the Debt in the manner described in the preceding
sentence if such Debt was not so secured on the date it was incurred.
"Security Register" means a register maintained at a place of payment for
the registration and transfer of the notes.
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"Subsidiary" means a corporation, real estate investment trust, trust,
partnership, limited liability company or other entity, a majority of the
outstanding voting stock, beneficial interests, partnership interests or
membership interests, as the case may be, of which is owned or controlled,
directly or indirectly, by us or by one or more of our Subsidiaries. For the
purposes of this definition, "voting stock" means stock having the voting power
for the election of directors, general partners, managers or trustees, as the
case may be, whether at all times or only so long as no senior class of stock
has the voting power by reason of any contingency.
"Total Assets" as of any date means the sum of:
(1) Undepreciated Real Estate Assets; and
(2) all of our other assets and assets of our Subsidiaries on a
consolidated basis determined in accordance with GAAP, but excluding
intangibles and accounts receivable.
"Total Unencumbered Assets" as of any date means the sum of:
(1) those Undepreciated Real Estate Assets not securing any portion of
Secured Debt; and
(2) all our other assets and those of our Subsidiaries on a
consolidated basis not securing any portion of Secured Debt determined in
accordance with GAAP, but excluding accounts receivable and intangibles.
"Undepreciated Real Estate Assets" as of any date means the cost, original
cost plus capital improvements, of our and our Subsidiaries' real estate assets
on that date, before depreciation and amortization, determined on a consolidated
basis in accordance with GAAP.
"Unsecured Debt" means our Debt or Debt of any of our Subsidiaries that is
not Secured Debt.
Compliance with the covenants described in this prospectus and with respect
to the notes generally may not be waived by us, or by the Trustee unless the
Holders of at least a majority in principal amount of all outstanding notes
consent to the waiver; provided, however, that the defeasance and covenant
defeasance provisions of the Indenture described under "Discharge, Defeasance
and Covenant Defeasance" below, will apply to the notes, including with respect
to the covenants described in this prospectus.
OPTIONAL REDEMPTION
The notes of either or both series may be redeemed at any time at our
option, in whole or from time to time in part, at a redemption price equal to
the sum of:
(1) the principal amount of the notes being redeemed plus accrued
interest thereon to the redemption date; and
(2) the Make-Whole Amount, as defined below, if any, with respect to
the notes (the "Redemption Price").
If notice of redemption has been given as provided in the Indenture and
funds for the redemption of any notes called for redemption have been made
available on the redemption date referred to in the notice, the notes will cease
to bear interest on the date fixed for the redemption specified in the notice
and the only right of the Holders of the notes from and after the redemption
date will be to receive payment of the Redemption Price upon surrender of the
notes in accordance with the notice.
Notice of any optional redemption of any notes will be given to Holders at
their addresses, as shown in the security register for the notes, not more than
60 nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the Redemption Price and principal
amount of the notes held by the Holder to be redeemed.
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If all or less than all of the notes of any series are to be redeemed at
our option, we will notify the Trustee at least 45 days prior to giving notice
of redemption, or a shorter period as may be satisfactory to the Trustee, of the
aggregate principal amount of notes to be redeemed, if less than all of the
notes of any series are to be redeemed, and their redemption date. The Trustee
will select, in the manner it deems fair and appropriate, no less than 60 days
prior to the date of redemption, the notes to be redeemed in whole or in part.
Neither we nor the Trustee will be required to:
(1) issue, register the transfer of or exchange notes during a period
beginning at the opening of business 15 days before any selection of notes
to be redeemed and ending at the close of business on the day of mailing of
the relevant notice of redemption;
(2) register the transfer of or exchange any note, or portion thereof,
called for redemption, except the unredeemed portion of any note being
redeemed in part; or
(3) issue, register the transfer of or exchange any note that has been
surrendered for repayment at the option of the Holder, except the portion,
if any, of the note not to be so repaid (Section 305).
As used herein:
"Make-Whole Amount" means, in connection with any optional redemption of
any notes, the excess, if any, of:
(1) the aggregate present value as of the date of redemption of each
dollar of principal being redeemed and the amount of interest, exclusive of
interest accrued to the date of redemption, that would have been payable in
respect of each dollar if the redemption had not been made, determined by
discounting, on a semi-annual basis, the principal and interest at the
Reinvestment Rate, determined on the third Business Day preceding the date
notice of the redemption is given, from the respective dates on which the
principal and interest would have been payable if the redemption had not
been made, to the date of redemption; over
(2) the aggregate principal amount of the notes being redeemed.
"Reinvestment Rate" means the yield on Treasury securities at a constant
maturity corresponding to the remaining life (as of the date of redemption, and
rounded to the nearest month) to stated maturity of the principal being redeemed
(the "Treasury Yield"), plus 0.25%. For purposes hereof, the Treasury Yield will
be equal to the arithmetic mean of the yields published in the Statistical
Release under the heading "Week Ending" for "U.S. Government
Securities -- Treasury Constant Maturities" with a maturity equal to the
remaining life; provided, that if no published maturity exactly corresponds to
the remaining life, then the Treasury Yield will be interpolated or extrapolated
on a straight-line basis from the arithmetic means of the yields for the next
shortest and next longest published maturities. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount will be used. If the format or
content of the Statistical Release changes in a manner that precludes
determination of the Treasury Yield in the above manner, then the Treasury Yield
will be determined in the manner that most closely approximates the above
manner, as we reasonably determine.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication that is published weekly by the Federal Reserve
System and that reports yields on actively traded United States government
securities adjusted to constant maturities, or, if that statistical release is
not published at the time of any determination under the Indenture, then another
reasonably comparable index which we will designate.
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DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
We will be permitted under the Indenture to discharge specific obligations
to the Holders of either or both series of the notes that have not already been
delivered to the Trustee for cancellation by irrevocably depositing with the
Trustee, in trust, funds in the currency in which the notes are payable in an
amount sufficient to pay the entire indebtedness on the notes in respect of
principal, and premium or Make-Whole Amount, if any, and interest to the date of
the deposit, if the notes have become due and payable, or to the stated Maturity
Date or redemption date, as the case may be.
The Indenture will also provide that we may elect either:
(a) to defease and be discharged from any and all obligations with
respect to the notes other than the obligations to register the transfer or
exchange of the notes, to replace temporary or mutilated, destroyed, lost
or stolen notes, to maintain an office or agency in respect of the notes
and to hold moneys for payment in trust ("defeasance") (Section 1402); or
(b) to be released from our obligations with respect to the notes
under specified sections of Article Ten of the Indenture relating to
limitations on the incurrence of Debt, maintenance of Total Unencumbered
Assets, our existence, maintenance of our properties, insurance, payment of
taxes and other claims and provision of financial information, and any
omission to comply with these obligations shall not constitute an Event of
Default with respect to the notes ("covenant defeasance") (Section 1403);
in either case upon the irrevocable deposit by us with the Trustee, in trust, of
an amount, in the currency in which the notes are payable at stated maturity, or
Government Obligations, or both, applicable to the notes which through the
scheduled payment of principal and interest in accordance with their terms will
provide money in an amount sufficient without reinvestment to pay the principal
of, and premium or Make-Whole Amount, if any, and interest on the notes or
analogous payments thereon, on the scheduled due dates therefor.
A trust may only be established if, among other things, we have delivered
to the Trustee an opinion of counsel, as specified in the Indenture, to the
effect that the Holders of the notes will not recognize income, gain or loss for
federal income tax purposes as a result of the defeasance or covenant defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if the defeasance or
covenant defeasance had not occurred, and the opinion of counsel, in the case of
defeasance, will be required to refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable federal income tax law
occurring after the date of the Indenture (Section 1404).
"Government Obligations" means securities that are:
(1) direct obligations of the United States of America for the payment
of which its full faith and credit is pledged; or
(2) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America, the payment
of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America;
which, in either case, are not callable or redeemable at the option of the
issuer thereof, and will also include a depositary receipt issued by a bank or
trust company as custodian with respect to any Government Obligation or a
specific payment of interest on or principal of any Government Obligation held
by the custodian for the account of the holder of a depositary receipt, provided
that, except as required by law, the custodian is not authorized to make any
deduction from the amount payable to the holder of the depositary receipt from
any amount received by the custodian in respect of the Government Obligation or
the specific payment of interest on or principal of the Government Obligation
evidenced by the depositary receipt.
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If we effect covenant defeasance with respect to any notes and these notes
are declared due and payable because of the occurrence of any Event of Default
other than the Event of Default described in clause (3) under "Events of
Default, Notice and Waiver" with respect to specified sections of Article Ten of
the Indenture, which sections would no longer be applicable to the notes as a
result of the covenant defeasance, the amount in the currency in which the notes
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on the notes at the time of their stated maturity
but may not be sufficient to pay amounts due on the notes at the time of the
acceleration resulting from the Default. We would remain liable, however, to
make payment of the amounts due at the time of acceleration.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The term "Event of Default," when used in the Indenture, means any one of
the following events, whatever the reason for the Event of Default and whether
or not it is voluntary or involuntary or is effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body:
(1) default in the payment of any interest upon the notes when the
interest becomes due and payable, and continuance of the default for a
period of 30 days;
(2) default in the payment of the principal of, or premium or
Make-Whole Amount, if any, on, any note when it becomes due and payable at
its Maturity Date or by declaration of acceleration, notice of redemption
or otherwise;
(3) default in the performance, or breach, of any of our covenants or
warranties in the Indenture with respect to any note, other than a covenant
or warranty a default in whose performance or whose breach is elsewhere in
the relevant section of the Indenture specifically dealt with, and
continuance of the default or breach for a period of 60 days after there
has been given, by registered or certified mail, to us by the Trustee, or
to us and the Trustee by the Holders of at least 25% in principal amount of
the notes, a written notice specifying the default or breach and requiring
it to be remedied and stating that the notice is a "Notice of Default"
under the Indenture;
(4) a default under any bond, debenture, note or other evidence of
indebtedness of ours, or under any mortgage, indenture or other instrument
of ours under which there may be issued or by which there may be secured
any of our or our Subsidiaries' indebtedness, the repayment of which we
have guaranteed or for which we are directly responsible or liable as
obligor or guarantor on a full recourse basis, whether the indebtedness now
exists or is hereafter created, which default constitutes a failure to pay
an aggregate principal amount exceeding $15 million of the indebtedness
when due and payable after the expiration of any applicable grace period
with respect thereto and has resulted in the indebtedness in an aggregate
principal amount exceeding $15 million becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable, without the indebtedness having been discharged, or the
acceleration having been rescinded or annulled, within a period of 10 days
after there has been given, by registered or certified mail, to us by the
Trustee, or to us and the Trustee by the Holders of at least 10% in
principal amount of the outstanding notes, a written notice specifying the
default and requiring us to cause the indebtedness to be discharged or
cause the acceleration to be rescinded or annulled and stating that the
notice is a "Notice of Default" under the Indenture; or
(5) specific events of bankruptcy, insolvency or reorganization
(Section 501).
If an Event of Default under the Indenture with respect to the notes at the
time outstanding occurs and is continuing, other than Events of Default arising
in connection with specific events of bankruptcy, insolvency or reorganization,
then in every such case the Trustee or the Holders of not less than 25% of the
principal amount of the outstanding notes may declare the principal amount and
premium or Make-Whole Amount, if any, and accrued interest on all the notes to
be due and payable immediately by written
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notice thereof to us, and to the Trustee if given by the Holders. However, at
any time after a declaration of acceleration with respect to the notes has been
made, but before a judgment or decree for payment of the money due has been
obtained by the Trustee, the Holders of not less than a majority in principal
amount of the outstanding notes may, by written notice to us and the Trustee,
rescind and annul the declaration and its consequences if:
(a) we have deposited with the Trustee all required payments of the
principal of, and premium or Make-Whole Amount, if any, and interest on the
notes, plus specified fees, expenses, disbursements and advances of the
Trustee; and
(b) all Events of Default with respect to the notes, other than the
non-payment of principal of, or premium or Make-Whole Amount, if any, or
interest on the notes which has become due solely by the declaration of
acceleration, have been cured or waived as provided in the Indenture
(Section 502).
The Holders of not less than a majority in principal amount of the notes of any
series may waive any past default with respect to such series and its
consequences, except a default:
(1) in the payment of the principal of, or premium or Make-Whole
Amount, if any, or interest payable on any note of that series; or
(2) in respect of a covenant or provision contained in the Indenture
that cannot be modified or amended without the consent of the Holder of
each note of the affected series (Section 513).
The Trustee will be required to give notice to the Holders of the notes
within 90 days of the occurrence of a default under the Indenture unless the
default has been cured or waived; provided, however, that the Trustee may
withhold notice to the Holders of the notes of any default, except a default in
the payment of the principal of, or premium or Make-Whole Amount, if any, or
interest on the notes, if and so long as specified responsible officers of the
Trustee determine in good faith that the withholding of the notice is in the
interest of the Holders; provided, that in the case of any default or breach of
a covenant or warranty under the Indenture as described in clause (3) of the
first paragraph of this section "Events of Default, Notice and Waiver," no
notice to Holders will be given until at least 60 days after the occurrence
thereof. For purposes of this paragraph, the term "default" means any event
which is, or after notice or lapse of time or both, would become, an Event of
Default under the Indenture with respect to the notes (Section 601).
The Indenture provides that no Holder of notes of either series may
institute any proceedings, judicial or otherwise, with respect to the Indenture,
or for the appointment of a receiver or trustee, or for any remedy thereunder,
except in the case of failure of the Trustee, for 60 days, to act after it has
received a written request to institute proceedings in respect of an Event of
Default from the Holders of not less than 25% in principal amount of the
outstanding notes of either series, as well as an offer of indemnity reasonably
satisfactory to it (Section 507). This provision will not prevent, however, any
Holder of notes from instituting suit for the payment of the principal of, and
premium or Make-Whole Amount, if any, and interest on the notes on the
respective due dates thereof (Section 508).
Defaults, except a default in the payment of principal of, or premium or
Make-Whole Amount, if any, or interest on the notes or default with respect to a
covenant or provision which cannot be modified under the terms of the Indenture
without the consent of each Holder affected, may be waived by the Holders of not
less than a majority of principal amount of the then outstanding notes, upon the
conditions provided in the Indenture (Section 513).
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of either
series of notes then outstanding under the Indenture, unless the Holders have
offered to the Trustee reasonable security or indemnity (Section 602). The
Holders of not less than a majority in principal amount of the outstanding notes
of either series have the right to direct the time, method and
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place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee. However, the Trustee
may refuse to follow any direction which is in conflict with any law or the
Indenture, which may involve the Trustee in personal liability or which may be
unduly prejudicial to the Holders of notes of the series not joining therein and
the Trustee may take any other action it deems proper not inconsistent with the
direction given (Section 512).
Within 120 days after the close of each fiscal year, we will be required to
deliver to the Trustee a certificate, signed by one of several of our specified
officers, stating whether or not the officer has knowledge of any default under
the Indenture and, if so, specifying each default and the nature and status
thereof (Section 1011).
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of each
series affected by the modification or amendment; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
note affected thereby:
(a) change the stated maturity of the principal of, or premium or
Make-Whole Amount, if any, on, or any installment of interest on, any note;
(b) reduce the principal amount of, or the rate or amount of interest
on, or any premium payable on redemption of the notes, or adversely affect
any right of repayment of the Holder of any notes;
(c) change the place of payment, or the coin or currency, for payment
of principal or premium, if any, or interest on the notes;
(d) impair the right to institute suit for the enforcement of any
payment on or with respect to the notes on or after the stated maturity of
any note;
(e) reduce the above-stated percentage in principal amount of
outstanding notes the consent of whose Holders is necessary to modify or
amend the Indenture, for any waiver with respect to the notes, or to waive
compliance with specified provisions of the Indenture or specified defaults
and consequences thereunder or to reduce the quorum or voting requirements
set forth in the Indenture; or
(f) modify any of the foregoing provisions or any of the provisions
relating to the waiver of specified past defaults or specified covenants,
except to increase the required percentage to effect the action or to
provide that specified other provisions of the Indenture may not be
modified or waived without the consent of the Holder of each note (Section
902).
The Holders of not less than a majority in principal amount of the notes
have the right to waive compliance by us with specific covenants in the
Indenture (Section 1013).
Modifications and amendments of the Indenture may be permitted to be made
by us and the Trustee without the consent of any Holder for any of the following
purposes:
(1) to evidence the succession of another person to us as obligor
under the Indenture;
(2) to add to our covenants for the benefit of the Holders of the
notes or to surrender any right or power conferred upon us in the
Indenture;
(3) to add Events of Default for the benefit of the Holders of the
notes;
(4) to add or change any provisions of the Indenture to facilitate the
issuance of, or to liberalize specific terms of, notes in bearer form, or
to permit or facilitate the issuance of notes in uncertificated
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form, provided that the action shall not adversely affect the interests of
the Holders of the notes in any material respect;
(5) to change or eliminate any provisions of the Indenture, provided
that any change or elimination shall become effective only when the
outstanding notes are not entitled to the benefit of that provision;
(6) to secure the notes;
(7) to establish the form or terms of the notes and any related
coupons as permitted by the Indenture;
(8) to evidence and provide for the acceptance of appointment under
the Indenture by a successor Trustee with respect to the notes or
facilitate the administration of the trust under the Indenture by more than
one Trustee;
(9) to cure any ambiguity, defect or inconsistency in the Indenture,
provided that the action is not inconsistent with the provisions of the
Indenture and will not adversely affect the interests of Holders of notes
in any material respect; or
(10) to supplement any of the provisions of the Indenture to the
extent necessary to permit or facilitate defeasance and discharge of the
notes, provided that the action will not adversely affect the interests of
the Holders of the notes in any material respect (Section 901).
The Indenture contains provisions for convening meetings of the Holders of
the notes of either series (Section 1501). A meeting may be called at any time
by the Trustee, and also will be called, upon request, by us or the Holders of
at least 25% in principal amount of the outstanding notes of the series, in any
case upon notice given as provided in the Indenture. Except for any consent that
must be given by the Holder of each note affected by specific modifications and
amendments of the Indenture, any resolution presented at a meeting or adjourned
meeting duly reconvened at which a quorum is present may be adopted by the
affirmative vote of the Holders of a majority in principal amount of the
outstanding notes of that series; provided, however, that, except as referred to
above, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the Holders of a specific percentage, which is less than a majority, in
principal amount of the outstanding notes of a series may be adopted at a
meeting or adjourned meeting duly reconvened and at which a quorum is present by
the affirmative vote of the Holders of the specified percentage in principal
amount of the outstanding notes of that series. Any resolution passed or
decision taken at any meeting of Holders of the notes of either series duly held
in accordance with the Indenture will be binding on all Holders of notes of that
series. The quorum at any meeting called to adopt a resolution, and at any
reconvened meeting, will be persons entitled to vote a majority in principal
amount of the outstanding notes of a series; provided, however, that if any
action is to be taken at the meeting with respect to a consent or waiver that
may be given by the Holders of not less than a specified percentage in principal
amount of the outstanding notes of a series, the persons entitled to vote the
specified percentage in principal amount of the outstanding notes of that series
will constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, the Indenture provides that if
any action is to be taken at a meeting of Holders of notes of either series with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that the Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage in principal amount of all
outstanding notes affected thereby, or the Holders of that series and the other
series:
(1) there will be no minimum quorum requirement for the meeting; and
(2) the principal amount of the outstanding notes of the series that
votes in favor of the request, demand, authorization, direction, notice,
consent, waiver or other action will be taken into account in
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determining whether the request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under the
Indenture.
THE TRUSTEE
The Bank of New York will be the Trustee under the Indenture. All payments
of principal of, and interest on, and all registration, transfer, exchange,
authentication, and delivery, including authentication and delivery on original
issuance of the notes, of, the notes will be effected by the Trustee in New
York, New York.
The Indenture will contain specific limitations on the right of the
Trustee, should it become a creditor of ours, to obtain payment of claims in
specified cases or to realize on specific property received in respect of any
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
the conflict or resign.
The Holders of not less than a majority in principal amount of the then
outstanding notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the notes, provided
that:
(1) the direction is not in conflict with any rule of law or with the
Indenture;
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with the direction;
(3) the direction would not be unduly prejudicial to the rights of
another Holder not joining therein; and
(4) the direction would not involve the Trustee in personal liability
(Section 512).
If an Event of Default with respect to the notes occurs and is continuing,
the Trustee will exercise with respect to the notes the rights and powers vested
in it by the Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs. Subject to those provisions, the Trustee will be
under no obligation to exercise any of its rights or powers vested in it by the
Indenture at the request of any of the Holders, unless the Holders have offered
to the Trustee security or indemnity reasonably satisfactory to the Trustee
against the costs, expenses and liabilities which might be incurred by it in
compliance with the request or direction (Section 602).
FORM AND REGISTRATION
The notes sold will be book-entry notes represented by one or more Global
notes.
Each United States Global note will be deposited with, or on behalf of, the
depositary, which initially will be DTC, and registered in the name of the
depositary or its nominee, Cede & Co.
The following are summaries of specified rules and operating procedures of
DTC that affect the payment of principal and interest and transfers in the
Global Notes.
Ownership of beneficial interests in the Global Notes will be limited to
persons that have accounts with DTC for the Global Notes ("participants") or
persons that may hold interests through participants. Upon the issuance of the
Global Notes, DTC will credit, on its book-entry registration and transfer
system, the participants' accounts with the respective principal amounts of the
notes represented by the Global Note beneficially owned by the participants.
Ownership of beneficial interests in the Global Notes will be shown on, and the
transfer of the ownership interests will be effected only through, records
maintained by DTC, with respect to interests of participants, and on the records
of participants, with respect to interests
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of persons holding through participants. The laws of some states may require
that specified purchasers of securities take physical delivery of the securities
in definitive form. These laws may limit or impair the ability to own, transfer
or pledge beneficial interests in the Global Notes.
So long as DTC or its nominee is the registered owner of the Global Notes,
DTC or its nominee, as the case may be, will be considered the sole owner or
Holder of the notes represented by the Global Notes for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in the
Global Notes will not be entitled to have notes represented by the Global Notes
registered in their names, will not receive or be entitled to receive physical
delivery of the notes in certificated form and will not be considered the
registered owners or Holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in the Global Notes must rely on the
procedures of DTC and, if the person is not a participant, on the procedures of
the participant through which the person owns its interest, to exercise any
rights of a Holder under the Indenture. We understand that under existing
industry practices, if we request any action of Holders or if an owner of a
beneficial interest in the Global Notes desires to give or take any action that
a Holder is entitled to give or take under the Indenture, DTC would authorize
the participants holding the relevant beneficial interests to give or take the
action, and the participants would authorize beneficial owners owning through
the participants to give or take the action or would otherwise act upon the
instructions of beneficial owners holding through them.
Principal and interest payments on interests represented by the Global
Notes will be made to DTC or its nominee, as the case may be, as the registered
owner of the Global Notes. None of us, the Trustee or any agent of the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payment made on account of beneficial ownership interests in the Global
Notes or for maintaining, supervising or reviewing any records relating to the
beneficial ownership interests. We expect that DTC, upon receipt of any payment
of principal or interest in respect of the Global Notes, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the Global Notes as shown on the records of
DTC. We also expect that payments by participants to owners of beneficial
interests in the Global Notes held through the participants will be governed by
standing customer instructions and customary practice, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of the participants.
If DTC is at any time unwilling or unable to continue as depository for the
notes and we fail to appoint a successor depository registered as a clearing
agency under the Exchange Act within 90 days, we will issue the notes in
definitive form in exchange for the Global Notes. Any notes issued in definitive
form in exchange for the Global Notes will be registered in the name or names,
and will be issued in denominations of $1,000 and integral multiples thereof, as
DTC shall instruct the Trustee. It is expected that the instructions will be
based upon directions received by DTC from participants with respect to
ownership of beneficial interests in the Global Notes.
Notes sold to investors that are not qualified institutional buyers will be
issued in definitive registered form and may not be represented by a Global
Note. Qualified institutional buyers may request that any certificated notes
they hold in definitive registered form be exchanged for interests in the
applicable Global Note. Certificated notes will be issued in exchange for
interests in the relevant Global Note under the limited circumstances described
above.
DTC has advised us of the following information regarding DTC. DTC is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC was created to hold securities of its participants and to facilitate
the clearance and settlement of transactions among its participants in the
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations and specific other organizations, some of
which, and/or their representatives, own DTC. Access to the DTC
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book-entry system is also available to others, such as banks, brokers and
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
GOVERNING LAW
The Indenture and the notes will be governed by, and construed in
accordance with, the laws of the State of New York.
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DESCRIPTION OF SPECIFIC PROVISIONS OF OUR PARTNERSHIP AGREEMENT
The following summarizes our Second Amended and Restated Agreement of
Limited Partnership, generally referred to as our partnership agreement. This
summary is not complete and is qualified in its entirety by reference to our
partnership agreement.
MANAGEMENT
We are organized as a Maryland limited partnership pursuant to the terms of
our partnership agreement. Arden Realty, as our sole general partner, has full,
exclusive and complete responsibility and discretion in our management and
control, subject to specified limited exceptions. Our limited partners have no
authority to transact business for us or participate in our management
activities or decisions.
UNITS
Each of our partners owns partnership units, generally referred to as OP
Units. We currently have two types of OP Units outstanding: common OP Units and
Series B Preferred Units. At December 31, 1999, there were 65,509,347 common OP
Units outstanding, of which Arden Realty owned 63,358,977 common OP Units, all
of which correspond to the issued and outstanding common stock of Arden Realty.
There are 2,000,000 Series B Preferred Units outstanding, all of which are owned
by Salomon Smith Barney Tax Advantage Exchange Fund II, LLC. A partner's
percentage ownership is determined by dividing the number of common OP Units
held by the partner by the total number of common OP Units outstanding.
DISTRIBUTIONS; ALLOCATIONS OF INCOME AND LOSS
Our partnership agreement provides for preferred distributions of cash and
preferred allocations of income to the holders of Series B Preferred Units,
including Arden Realty to the extent it acquires any Series B Preferred Units
upon a holder's exchange of these units for Arden Realty stock. As a
consequence, Arden Realty will receive distributions from us that it will use to
pay dividends on any issued shares of Series B Preferred Stock before any other
partner receives a distribution, other than a holder of Series B Preferred
Units, or any parity preferred units, not then held by Arden Realty. In
addition, if necessary, income will be specially allocated to holders of Series
B Preferred Units, and losses will be allocated to the other partners, in
amounts necessary to ensure that, to the extent possible, the balance in the
holder's capital account will at all times be equal to or in excess of the
liquidation preference of their Series B Preferred Units. In general, all
remaining distributions will be made, and all remaining items of our income and
loss will be allocated, to the holders of common OP Units in proportion to the
number of common OP Units held by each unit holder. Some limited partners have
agreed to guarantee some of our debt, either directly or indirectly through an
agreement to make capital contributions to us under limited circumstances. As a
result, and notwithstanding the above discussion of allocations of income and
loss to holders of common OP Units, these limited partners could, under limited
circumstances, be allocated a disproportionate amount of net loss, which net
loss would have otherwise been allocable to Arden Realty.
TRANSFERABILITY OF INTERESTS
Except for a transaction described in the following two paragraphs, Arden
Realty may not voluntarily withdraw from us, or transfer its interest in us,
without the consent of all the holders of the common OP Units.
Arden Realty may not merge or combine with another entity, sell all or
substantially all of its assets or reclassify, recapitalize or change its
outstanding equity interests unless the proposed transaction has been approved
by holders of at least 66 2/3% of the common OP Units, including the common OP
Units held by Arden Realty. In connection with that proposed transaction, all
limited partners must receive, or have the option to receive, cash, securities
or other property equal to the product of the number of shares
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of Arden Realty common stock into which each common OP Unit is then exchangeable
times the greatest amount of cash, securities or other property proposed to be
paid to the holder of each share of common stock in the proposed transaction.
If, in connection with the proposed transaction, a purchase, tender offer or
exchange offer was accepted by the holders of more than 50% of the outstanding
shares of common stock, each holder of common OP Units will receive, or will
have the option to receive, the greatest amount of cash, securities or other
property which that holder would have received had it exercised its right to
redemption and received shares of common stock in exchange for its common OP
Units immediately prior to the expiration of the purchase, tender or exchange
offer and had accepted the purchase, tender offer or exchange offer.
Notwithstanding the foregoing paragraph, Arden Realty may merge or combine
its assets with another entity if, immediately after the merger or combination,
substantially all of the assets of the surviving entity, other than common OP
Units held by Arden Realty, are contributed to us as a capital contribution in
exchange for common OP Units with a fair market value, as reasonably determined
by Arden Realty, equal to the agreed value of the assets contributed.
Arden Realty is required to use its commercially reasonable efforts to
structure any proposed transaction to avoid causing the limited partners to
recognize gain for federal income tax purposes. A partner's sole remedy for a
breach by Arden Realty of this obligation is a claim for money damages.
CAPITAL CONTRIBUTIONS
If we require additional funds at any time or from time to time in excess
of the funds available to us from borrowing or contributed capital, and Arden
Realty borrows funds, then Arden Realty will lend those funds to us on
comparable terms and conditions. Arden Realty may contribute the amount of any
required funds not loaned to us as an additional capital contribution to us. If
Arden Realty contributes additional capital to us, Arden Realty's partnership
interest in us will be increased on a proportionate basis based upon the amount
of that additional capital contribution and our value at the time of the
contributions. Conversely, the partnership interests of the limited partners
will be decreased on a proportionate basis in the event of additional capital
contributions by Arden Realty. Arden Realty's rights to make loans or additional
capital contributions to us are generally subject to Mr. Ziman's right to fund
the loan or capital contribution on a pro rata basis so long as Mr. Ziman is
Arden Realty's Chief Executive Officer. See "Issuance of Additional Common OP
Units, Common Stock or Convertible Securities."
REDEMPTION/EXCHANGE RIGHTS
Limited partners may require us to redeem part or all of their common OP
Units for an amount of cash equal to the fair market value of an equivalent
number of shares of Arden Realty's common stock at the time of the redemption.
Arden Realty may, however, elect in its sole and absolute discretion to exchange
those common OP Units for shares of Arden Realty's common stock on a one-for-one
basis, subject to adjustment in the event of stock splits, stock dividends,
issuance of specified rights, specified extraordinary distributions and similar
events. Arden Realty presently anticipates that it would elect to issue its
common stock in exchange for common OP Units rather than pay cash for the common
OP Units, subject to the ownership and transfer limitations established to
maintain its status as a REIT. With each redemption or exchange, Arden Realty's
percentage ownership interest in us would increase.
ISSUANCE OF ADDITIONAL COMMON OP UNITS, COMMON STOCK OR CONVERTIBLE SECURITIES
As our general partner, Arden Realty has the ability to cause us to issue
additional common OP Units. In addition, Arden Realty may, from time to time,
issue additional shares of its common stock or convertible securities. In each
event, Mr. Ziman, the Chairman of the Board and Chief Executive Officer of Arden
Realty, will have proportional purchase rights which will enable him to maintain
his overall percentage ownership of the combined equity of Arden Realty and us,
assuming the exchange of all
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common OP Units for common stock. Mr. Ziman's proportional purchase rights may
be exercised, in his sole discretion, at a price per share or other trading unit
of the common OP Units, common stock or convertible securities, as the case may
be, to be received by Arden Realty or us in the issuance, less any underwriting
discounts and commissions, and otherwise on the same terms as may be applicable
to those issuances. These proportional purchase rights require that Mr. Ziman be
the Chief Executive Officer of Arden Realty at the time of the exercise and do
not apply to:
- transactions under Arden Realty's stock incentive plans;
- shares issued pursuant to an exchange of common OP Units for shares of
Arden Realty's common stock; or
- in connection with any issuance of Arden Realty's common stock or common
OP Units incident to an acquisition of properties, assets or a business.
TAX MATTERS PARTNER
Arden Realty is our tax matters partner. It has authority, in its sole and
absolute discretion, to make tax elections under the Internal Revenue Code on
our behalf.
OPERATIONS
Our partnership agreement requires that we operate in a manner that will
enable Arden Realty to satisfy the requirements for being classified as a REIT
and to avoid any federal income tax liability. Our partnership agreement
provides that our net operating cash revenue, as well as the net sales and
refinancing proceeds, will be distributed from time to time, but at least
quarterly, as determined by Arden Realty pro rata in accordance with the
partners' percentage interests. Subject to specific exceptions, we will pay or
reimburse Arden Realty for all costs and expenses relating to the operations of
Arden Realty.
DUTIES AND CONFLICTS
Our partnership agreement provides that all business activities of Arden
Realty, including all activities pertaining to the acquisition and operation of
office properties, must be conducted through us.
TERM
We will continue in full force and effect until December 31, 2096, or until
sooner dissolved:
- upon the bankruptcy, dissolution, withdrawal, termination or incapacity
of Arden Realty as general partner, unless the limited partners other
than Arden Realty elect to continue our existence;
- by election of Arden Realty and the limited partners;
- pursuant to an entry of decree of judicial dissolution;
- upon the sale or other disposition of all or substantially all of our
assets or redemption of all OP Units; or
- as otherwise provided by law.
INDEMNIFICATION
To the extent permitted by law, our partnership agreement provides for
indemnification and advance of expenses of Arden Realty and its officers and
directors similar to indemnification and advance of expenses provided to
officers and directors of Arden Realty in its charter and bylaws and provides
that
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Arden Realty shall not be liable to us and our partners if it acted in good
faith. See "Management -- Limitation of Liability and Indemnification."
SERIES B PREFERRED UNITS
General. Our Series B Preferred Units have rights with respect to ordinary
distributions and distributions on liquidation, winding up or dissolution that
are:
- senior to the common OP Units and to all OP Units that provide that they
rank junior to the Series B Preferred Units;
- junior to all OP Units which rank senior to the Series B Preferred Units;
and
- equal to all OP Units expressly designated to be on parity with the
Series B Preferred Units.
Subject to these seniority rights, holders of the Series B Preferred Units
are entitled to receive cumulative preferential cash distributions in an amount
equal to 8 5/8% per year on an amount equal to $25.00 per Series B Preferred
Unit then outstanding, or $2.16 per year. These distributions are payable on or
before March 31, June 30, September 30 and December 31 of each year.
Exchange Rights. Upon the satisfaction of any of the following conditions,
and with the approval of 51% of the holders of the then outstanding Series B
Preferred Units, the Series B Preferred Units may be exchanged on a one-for-one
basis, for shares of Arden Realty's 8 5/8% Series B Cumulative Redeemable
Preferred Stock:
- at any time on or after September 7, 2009;
- at any time after September 7, 2002 and prior to September 7, 2009, if
the holders of Series B Preferred Units deliver to Arden Realty a private
letter ruling or an opinion of counsel to the effect that an exchange of
the Series B Preferred Units at that time would not cause the Series B
Preferred Units to be considered "stock and securities" within the
meaning of the Internal Revenue Code for purposes of determining whether
the holder is an "investment company" under the Internal Revenue Code;
- full distributions have not been paid on the Series B Preferred Units for
six or more quarters, whether or not the quarters were consecutive; or
- we or one of our subsidiaries take the position, and any holders of
Series B Preferred Units receive an opinion of counsel that, we are or
after completing a proposed transaction will become a "publicly traded
partnership" within the meaning of the Internal Revenue Code.
In addition, the Series B Preferred Units may be exchanged for shares of
Arden Realty's Series B Preferred Stock if the holder of the Series B Preferred
Units concludes that the Series B Preferred Units represent more than 19.5% of
our total profits or capital interests for a taxable year.
Instead of exchanging the Series B Preferred Units for Series B Preferred
Stock, we may elect to redeem the Series B Preferred Units for cash in an amount
equal to the original capital account balance of the Series B Preferred Units
plus all accrued and unpaid distributions to the date of redemption. A holder of
Series B Preferred Units will not be entitled to exchange the Series B Preferred
Units for Series B Preferred Stock if the exchange would violate the
restrictions on ownership and transfer of Arden Realty's equity interests
established by Arden Realty to maintain Arden Realty's qualification as a REIT.
Redemption. On or after September 7, 2004, we may redeem the Series B
Preferred Units, in whole or in part from time to time, at a redemption price
payable in cash equal to the capital account balance of the holder, provided
that the amount shall not be less than the original capital account balance of
the Series B Preferred Units, plus all accrued and unpaid distributions to the
date of redemption. We may only pay the redemption price out of the proceeds
from sales of Arden Realty's capital stock or our
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partnership units. We must redeem all of the Series B Preferred Units at the
same time unless we have paid all accumulated and unpaid distributions on all
Series B Preferred Units for all quarterly distribution periods terminating on
or prior to the date of redemption.
Limited Approval Rights. For so long as any Series B Preferred Units are
outstanding, without the affirmative vote of the holders of at least two-thirds
of the Series B Preferred Units outstanding at the time, we may not:
- create or increase the amount of, or reclassify, any class or series of
partnership interests, or create or issue any obligations or security
convertible into or evidencing the right to purchase any partnership
interests, ranking senior to the Series B Preferred Units;
- create or increase the amount of, or reclassify, any class or series of
partnership interests, or create or issue any obligations or security
convertible into or evidencing the right to purchase any partnership
interests, ranking equal to the Series B Preferred Units, but only if
they are issued to an affiliate of ours other than Arden Realty to allow
Arden Realty to issue corresponding shares of Series B Preferred Stock to
persons who are not our affiliates; or
- consolidate, merge, transfer or lease all or substantially all of our
assets to any entity, or amend the provisions of our partnership
agreement, in a manner that would materially and adversely affect the
powers, special rights, preferences, privileges or voting power of the
Series B Preferred Units.
Other than as discussed in this prospectus, the holders of Series B
Preferred Units have no voting rights other than with respect to other matters
that would adversely affect them or as otherwise provided by applicable law.
Liquidation Preference. The distribution and income allocation provisions
of our partnership agreement provide each Series B Preferred Unit with a
liquidation preference to each holder of those Units equal to the holder's
capital contributions, plus any accrued but unpaid distributions, in preference
to any other class or series of partnership interest of us, other than preferred
OP Units senior to or on parity with Series B Preferred Units.
Registration Rights. Arden Realty has agreed to file with the SEC a shelf
registration statement registering the resale of the shares of Series B
Preferred Stock issuable to the holders of Series B Preferred Units as soon as
practicable but not later than 60 days after the date the Series B Preferred
Units are exchanged for shares of Series B Preferred Stock. Arden Realty has
also agreed to use its best efforts to cause the registration statement to be
declared effective within 120 days after the date of the exchange.
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MANAGEMENT
As a limited partnership, our business and affairs are managed by our
general partner, Arden Realty. The following table presents the names, ages and
positions of Arden Realty's directors and executive and senior officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard S. Ziman....................... 57 Chairman of the Board and Chief Executive Officer
Victor J. Coleman...................... 38 President, Chief Operating Officer and Director
Diana M. Laing......................... 45 Executive Vice President and Chief Financial Officer
Jeffery A. Berger...................... 37 Senior Vice President -- Acquisitions and
Development
Daniel S. Bothe........................ 34 Senior Vice President -- Finance
Richard S. Davis....................... 41 Senior Vice President -- Chief Accounting Officer
Randy J. Noblitt....................... 43 Senior Vice President -- Property Management
Robert C. Peddicord.................... 38 Senior Vice President -- Leasing
Herbert L. Porter...................... 61 Senior Vice President -- Construction
David A. Swartz........................ 34 General Counsel and Secretary
Brigitta B. Troy....................... 59 Senior Vice President -- Acquisitions
Carl D. Covitz......................... 60 Director
Larry S. Flax.......................... 57 Director
Peter S. Gold.......................... 75 Director
Steven C. Good......................... 57 Director
Kenneth B. Roath....................... 65 Director
</TABLE>
The following is a biographical summary of the experience of Arden Realty's
executive and senior officers and directors.
RICHARD S. ZIMAN. Mr. Ziman is a founder of Arden Realty and has served as
Arden Realty's Chairman of the Board and Chief Executive Officer and as a
Director since its formation. Mr. Ziman has been involved in the real estate
industry for over 25 years. In 1990, Mr. Ziman formed Arden Realty Group, Inc.,
a California corporation, subsequently known as "Namiz," and served as its
Chairman of the Board and Chief Executive Officer from its inception until the
formation of Arden Realty. In 1979, he co-founded Pacific Financial Group, a
diversified real estate investment and development firm headquartered in Beverly
Hills, of which he was the Managing General Partner. Mr. Ziman received his
Bachelor's Degree and his Juris Doctor Degree from the University of Southern
California and practiced law as a partner of the law firm of Loeb & Loeb from
1971 to 1980, specializing in transactional and financing aspects of real
estate. Mr. Ziman's term as Director will expire at the 2002 annual meeting of
stockholders.
VICTOR J. COLEMAN. Mr. Coleman is a founder of Arden Realty and has served
as President and Chief Operating Officer and as a Director since its formation.
Mr. Coleman was a co-founder of Namiz and was its President and Chief Operating
Officer from 1990 to 1996. From 1987 to 1989, Mr. Coleman was Vice President of
Los Angeles Realty Services, Inc. and earlier in his career from 1985 to 1987,
was Director of Marketing/Investment Advisor of Development Systems
International and an associate at Drexel Burnham Lambert specializing in private
placements with institutional and individual investors. Mr. Coleman received his
Bachelor's Degree from the University of California at Berkeley and received his
Master of Business Administration Degree from Golden Gate University. Mr.
Coleman's term as Director will expire at the 2002 annual meeting of
stockholders.
DIANA M. LAING. Ms. Laing has served as Arden Realty's Executive Vice
President and Chief Financial Officer since August 1996. Prior to joining Arden
Realty, Ms. Laing served, from 1985 to 1996, as Executive Vice President and
Chief Financial Officer of South West Property Trust, Inc., a publicly traded
apartment properties real estate investment trust, and its predecessor Southwest
Realty, Ltd. Ms. Laing also served from 1982 to 1985, as Controller, Treasurer
and Vice President -- Finance of Southwest Realty, Ltd. From 1981 to 1982, Ms.
Laing was Controller of Crawford Energy, Inc. and she
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served as a member of the audit staff of Arthur Andersen & Company from 1978 to
1981. Ms. Laing is a Certified Public Accountant and a member of the American
Institute of CPAs and the Texas Society of Public Accountants. Ms. Laing
received her Bachelor of Science Degree in Accounting from Oklahoma State
University.
JEFFREY A. BERGER. Mr. Berger has served as Arden Realty's Senior Vice
President -- Acquisitions and Development since October 1997. Prior to joining
Arden Realty, Mr. Berger served as Vice President and Director of Berger Realty
Group, a privately held real estate company in Chicago, Illinois. Berger Realty
Group managed and leased approximately 1,000 apartments, and over two million
net rentable square feet of office, retail, and R&D/industrial properties. Mr.
Berger was responsible for all acquisitions and finance and for managing a staff
of 75 people. Prior to joining Berger Realty Group, Mr. Berger served as
Assistant Vice President of Real Estate Acquisitions for Heitman Financial. Mr.
Berger received his Bachelor of Science Degree in Communication Studies from
Northwestern University.
DANIEL S. BOTHE. Mr. Bothe served as Arden Realty's Vice
President -- Finance from December 1996 to December 1998, and has served as
Senior Vice President -- Finance since January 1998. From 1993 to 1996, Mr.
Bothe was a management consultant with the E&Y Kenneth Leventhal Real Estate
Group of Ernst & Young LLP. From 1988 to 1991, Mr. Bothe served as a member of
the audit staff of KPMG Peat Marwick LLP specializing in real estate. Mr. Bothe
is a Certified Public Accountant in the State of California and a member of the
America Institute of CPAs. Mr. Bothe received his Bachelor of Science Degree in
Accounting from San Diego State University and his Master of Business
Administration Degree from the University of Southern California.
RICHARD S. DAVIS. Mr. Davis served as Arden Realty's Chief Accounting
Officer since January 1998, and was promoted to Senior Vice President -- Chief
Accounting Officer in December 1998. From 1996 to 1997, Mr. Davis was with
Catellus Development Corporation where he was responsible for accounting and
finance for the asset management and development divisions. From 1985 to 1996,
Mr. Davis served as a member of the audit staff of both KPMG Peat Marwick LLP
and Price Waterhouse LLP, specializing in real estate. Mr. Davis is a Certified
Public Accountant in the states of California and Missouri and a member of the
American Institute of CPAs. Mr. Davis received his Bachelor of Science Degree in
Accounting from the University of Missouri at Kansas City.
RANDY J. NOBLITT. Mr. Noblitt has served as Arden Realty's Senior Vice
President -- Property Management since November 1997. From 1995 to 1997, Mr.
Noblitt established a management consulting practice serving the real estate
industry. From 1993 to 1995, Mr. Noblitt served as Senior Vice President of
Tishman West in charge of the Southern California operation. In 1992 and 1993,
Mr. Noblitt served as Senior Portfolio Manager and Director of Management
Services for Cushman & Wakefield in Southern California. Mr. Noblitt's career
includes extensive experience in asset management, leasing and development of
all commercial property types. Mr. Noblitt received his Bachelor of Science
Degree in Business Administration from California State University, Northridge.
ROBERT C. PEDDICORD. Mr. Peddicord served as Arden Realty's Vice
President -- Leasing from December 1996 to September 1997, and has served as
Senior Vice President -- Leasing since October 1997. From 1987 to 1996, Mr.
Peddicord was a Managing Director in the West Los Angeles office of Julien J.
Studley, representing landlords and tenants in the leasing of office space. From
1984 to 1986, Mr. Peddicord served as a branch Vice President for Great Western
Financial Corporation. Mr. Peddicord received his Bachelor's Degree in Economics
from the University of California at Los Angeles.
HERBERT L. PORTER. Mr. Porter has served as Arden Realty's Senior Vice
President -- Construction since its formation. Mr. Porter served as Director of
Construction and Capital Improvements for Namiz from 1993 to 1996. From 1973 to
1992, Mr. Porter was a partner/owner in his own real estate development and
property management company specializing in medium to high-rise commercial
office buildings. Mr. Porter's over 25 years in commercial office development
include planning, financing, acquisition, entitlements and approvals, design,
construction, marketing, leasing, tenant improvements and outright sale. Mr.
Porter received his Bachelor's Degree from the University of Southern
California.
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DAVID A. SWARTZ. Mr. Swartz joined Arden Realty as Associate General
Counsel in May 1998, and he has served as General Counsel and Secretary since
August 1999. From September 1991, until his employment with Arden Realty, Mr.
Swartz was a real estate attorney with the law firm of Allen, Matkins, Leck,
Gamble & Mallory, LLP, where he managed and negotiated commercial real estate
transactions, handled litigation for major institutional clients and served as
legal advisor to property owners, building and asset managers, real estate
brokers and tenants. A graduate of The Wharton School of the University of
Pennsylvania with a Bachelor of Science in Economics, Mr. Swartz received his
juris doctorate from UCLA School of Law in 1991.
BRIGITTA B. TROY. Ms. Troy has served as Arden Realty's Senior Vice
President -- Acquisitions since its formation. Ms. Troy served as Director of
Acquisitions for Namiz from 1993 to 1996, and for Pacific Financial Group from
1982 to 1989. During the period from 1989 to 1993, she was principal of Esquire
Investment Partners, a real estate advisory firm. A graduate of Radcliffe
College, Ms. Troy received her Juris Doctor Degree from the University of
Southern California Law School and a Master of Business Administration from the
UCLA Graduate School of Management. Ms. Troy is also a member of the State Bar
of California.
CARL D. COVITZ. Mr. Covitz has served as a member of Arden Realty's Board
of Directors since its formation as a public company in October 1996. For the
past 19 years, Mr. Covitz has served as the owner and President of Landmark
Capital, Inc., a national real estate development and investment company
involved in the construction, financing, ownership and management of commercial,
residential and warehouse properties. Mr. Covitz has also previously served,
from 1990 to 1993, as Secretary of the Business, Transportation & Housing Agency
of the State of California as well as Under Secretary and Chief Operating
Officer of the U.S. Department of Housing and Urban Development from 1987 to
1989. Mr. Covitz is currently the Chairman of the Board of Directors of Century
Housing Corporation and is the past Chairman of the Board of several
organizations including the Federal Home Loan Bank of San Francisco and the Los
Angeles City Housing Authority. Mr. Covitz received his Bachelor's Degree from
the Wharton School at the University of Pennsylvania and his Master of Business
Administration from the Columbia University Graduate School of Business. Mr.
Covitz' term as Director will expire at this year's annual meeting of
stockholders.
LARRY S. FLAX. Mr. Flax has served as a member of Arden Realty's Board of
Directors since December 1996. Mr. Flax is Co-Founder and Co-Chairman of the
Board of California Pizza Kitchen. Prior to becoming a restaurateur in 1985, Mr.
Flax served in Los Angeles as Assistant U.S. Attorney from 1968 to 1972, Chief
of Civil Rights from 1970 to 1971, and Assistant Chief of the Criminal Division
for the United States Department of Justice from 1971 to 1972. Mr. Flax attended
the University of Washington as an undergraduate and received his Juris Doctor
Degree from the University of Southern California Law School in 1967. Mr. Flax's
term as a Director will expire at this year's annual meeting of stockholders.
PETER S. GOLD. Mr. Gold has served as a member of Arden Realty's Board of
Directors since July 1999. During a career that spanned more than 30 years at
Price Pfister, Inc., Mr. Gold served as owner, President, Chairman and Chief
Executive Officer. Price Pfister, Inc., is one of the largest faucet
manufacturers in the world. Mr. Gold executed a leveraged buyout of Price
Pfister, Inc. and eventually took that company public in 1987, before selling it
in 1988. Mr. Gold remained in his position as a Chairman and Chief Executive
Officer of Price Pfister, Inc. until his retirement in 1990. Mr. Gold is a
Director Emeritus of Home Depot, Inc. and is currently a chairman and a member
of the board of trustees of two private organizations. Mr. Gold attended the
University of Southern California, received his Juris Doctor Degree from
Southwestern University School of Law and received a Doctor of Humane Letters
from Pitzer College. Mr. Gold's term as Director will expire at the 2001 annual
meeting of stockholders.
STEVEN C. GOOD. Mr. Good has served as a member of Arden Realty's Board of
Directors since its formation as a public company in October 1996. Mr. Good is
the senior partner in the firm of Good
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Swartz & Berns, an accountancy firm founded in 1993, which evolved from the firm
of Block, Good and Gagerman, which he founded in 1976. Prior to 1976, Mr. Good
was a partner first at Laventhol & Horwath, a national accounting firm, and
later at Horowitz & Good. Mr. Good is a founder and past Chairman of CU Bancorp,
where he directed the bank's operations from 1982 through 1989. For the past
seven years he has been a member of the Board of Directors of Opto Sensors,
Incorporated. Mr. Good received his Bachelor of Science in Business
Administration from the University of California at Los Angeles and attended
UCLA's Graduate School of Business. Mr. Good's term as Director will expire at
the 2001 annual meeting of stockholders.
KENNETH B. ROATH. Mr. Roath has served as a member of Arden Realty's Board
of Directors since its formation as a public company in October 1996. Mr. Roath
is currently Chairman, President and Chief Executive Officer of Health Care
Property Investors, Inc., a leader in the health care REIT industry. Mr. Roath
is past Chairman of NAREIT and also serves as a member of the Board of Governors
and Executive Committee of NAREIT. He is a director of Franchise Finance
Corporation of America. Mr. Roath received his Bachelor's Degree in accounting
from San Diego State University. Mr. Roath's term as a Director will expire at
this year's annual meeting of stockholders.
ARDEN REALTY'S BOARD OF DIRECTORS
The business and affairs of Arden Realty are managed under the direction of
its Board of Directors, which currently has seven members, five of whom are not
employees or affiliates of Arden Realty.
Pursuant to Arden Realty's charter, the Board of Directors is divided into
three classes of directors. Directors of each class are chosen for three-year
terms upon the expiration of their current terms and each year one class of
directors is elected by the stockholders. Arden Realty believes that
classification of the Board of Directors will help to assure the continuity and
stability of Arden Realty's business strategies and policies as determined by
the Board of Directors. The stockholders do not have the right to cumulative
voting in the election of directors. Consequently, at each annual meeting of
stockholders, the holders of a majority of the shares of common stock will be
able to elect all of the successors of the class of directors whose terms expire
at that meeting.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of Arden Realty has an Audit Committee, an Executive
Committee, a Compensation Committee and an Acquisition Committee.
Audit Committee. The Audit Committee consists of Mr. Good, its Chairman,
Messrs. Flax and Covitz. The Audit Committee:
- makes recommendations concerning the engagement of independent public
accountants;
- reviews the independence of our independent public accountants;
- approves other professional services provided by the independent public
accountants;
- reviews the scope and results of the annual audit engagement with our
independent public accountants;
- considers the range of audit and non-audit fees; and
- reviews the adequacy of our internal accounting controls.
Executive Committee. The Executive Committee consists of Mr. Ziman, its
Chairman, and Mr. Coleman. Subject to Arden Realty's conflict of interest
policies, the Executive Committee has authority to dispose of our real property
and the power to authorize on behalf of the full Board of
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Directors the execution of specified contracts and agreements, including those
related to our debt financings.
Compensation Committee. The Compensation Committee consists of Mr. Roath,
its Chairman, and Messrs. Good and Gold. The function of the Compensation
Committee is to:
- establish, review, modify and adopt compensation plans and arrangements
for Arden Realty; and
- review, determine and establish the compensation, including bonuses, of
Arden Realty's officers.
Acquisitions Committee. The Acquisitions Committee consists of Mr. Ziman,
its Chairman, and Messrs. Coleman and Covitz. The Acquisition Committee has the
authority to approve the acquisition of real property with purchase prices up to
$20 million. Any acquisitions greater than $20 million require full Board
approval.
COMPENSATION OF DIRECTORS
Each Director received annual compensation of $18,000 in 1999 and will
receive $25,000 beginning in 2000 for his services, plus $1,000 for each Board
of Directors meeting attended and an additional $1,000 for each committee
meeting attended, unless the committee meeting is held on the day of a meeting
of the Board of Directors. Each director who is not an employee is also
reimbursed for reasonable expenses incurred to attend director and committee
meetings. Directors who are also officers are not paid any directors' fees.
In addition, under Arden Realty's stock incentive plan, upon his initial
appointment to the Board of Directors, each director who is not an employee is
automatically granted options to purchase 10,000 shares of common stock at the
then current market price. These options vest during the directors' continued
service at a rate of 2,500 shares per year.
On October 15, 1997, each non-employee director was granted options to
purchase an additional 10,000 common shares at the closing stock price per share
on that date ($32.25). On December 15, 1998, each non-employee director was
granted options to purchase an additional 40,000 common shares at the closing
stock price per share on that date ($22.50). On November 30, 1999, each
non-employee director was granted options to purchase an additional 10,000
common shares at the closing stock price per share on that date ($19.25). These
options vest during the directors' continued service over a three-year period,
with one third of the options vesting on each anniversary of the grant date.
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EXECUTIVE COMPENSATION
The following table presents information with respect to the compensation
Arden Realty paid for services rendered during the fiscal years ended December
31, 1999, 1998 and 1997, to its Chief Executive Officer and to its four other
most highly compensated executive officers, who are referred to in this
prospectus as the named executive officers.
SUMMARY COMPENSATION
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------------------------- COMPENSATION
OTHER ANNUAL OPTIONS RESTRICTED
NAME AND TITLE YEAR SALARY($) BONUS($) COMPENSATION($)(1) GRANTED(#) STOCK AWARD($)
-------------- ---- --------- -------- ------------------ ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Richard S. Ziman................. 1999 $390,000 $225,000 $47,100 125,600 --
Chairman of the Board, Chief 1998 330,000 247,500 9,600 422,000 --
Executive Officer and Director 1997 300,000 228,000 9,600 211,000 --
Victor J. Coleman................ 1999 $300,000 $165,000 $36,650 80,000 --
President, Chief Operating 1998 275,000 206,250 7,800 280,000 --
Officer and Director 1997 250,000 162,500 7,800 140,000 --
Diana M. Laing................... 1999 $225,000 $123,750 $ 6,000 60,000 --
Executive Vice President and 1998 214,500 160,875 6,000 200,000 --(2)
Chief Financial Officer 1997 195,000 114,500 6,000 60,000 --
Andrew J. Sobel(3)............... 1999 $205,000 $123,750 $ 2,600 60,000 --
Executive Vice President and 1998 187,500 140,625 -- 200,000 --(2)(3)
Director of Property Operations 1997 150,000 87,500 -- 45,000 --
Robert C. Peddicord.............. 1999 $196,000 $ 70,000 -- 50,000 --
Senior Vice
President -- Leasing 1998 112,300 127,600 -- 70,000 --
1997 106,250 68,750 -- -- --
</TABLE>
- -------------------------
(1) Represents an annual auto allowance and payments of $37,500 and $28,850 in
1999 to Messrs. Ziman and Coleman, respectively, for unused vacation time.
(2) In August 1998, Arden Realty issued 42,553 shares of common stock through
its 1996 Stock Option and Incentive Plan to this executive. These shares are
encumbered by a promissory note in the amount of $1.0 million. The
promissory note is recourse and secured by the shares of common stock
issued, bears interest at 6% per year with all accrued interest and
principal due on August 14, 2004. Provided that the executive is still
employed by Arden Realty, the outstanding principal amount of the note will
be forgiven as follows: (a) August 14, 2001, $100,000; (b) August 14, 2002,
$166,667; (c) August 14, 2003, $200,000; and (d) August 14, 2004, $200,000.
Additionally, provided that the executive is still employed by Arden Realty,
all accrued and unpaid interest and the outstanding principal amount of the
note will be forgiven upon a change in control, as defined, of Arden Realty
or upon the death or disability of the executive.
(3) Mr. Sobel resigned effective February 18, 2000. At the time of his
termination, Mr. Sobel surrendered the common stock underlying his
promissory note and executed a new promissory note in the amount of
$223,887, representing the difference between the value of the common stock
surrendered and the unpaid principal and interest on his original promissory
note. The new promissory note bears interest at 6.56%, with all accrued
interest and principal due on February 18, 2002. In addition, Arden Realty
and Mr. Sobel entered into a consulting and non-competition agreement for a
term of two years. Under this agreement, Mr. Sobel will receive compensation
of $6,000 per month which will be applied against the unpaid interest and
principal on the new promissory note. Mr. Sobel will also have until the
expiration of the consulting and non-competition period to exercise the
170,000 stock options that were vested on his termination date.
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<PAGE> 97
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table presents information concerning exercised and
unexercised options held by the named executive officers as of December 31,
1999.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
SHARES AT DECEMBER 31, 1999 DECEMBER 31, 1999(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard S. Ziman...... -- -- 618,334 406,333 $16,700 $117,200
Victor J. Coleman..... -- -- 483,333 266,667 15,700 75,000
Diana M. Laing........ -- -- 190,000 180,000 3,100 56,300
Andrew J. Sobel(2).... -- -- 170,000 175,000 2,500 56,300
Robert C. Peddicord... -- -- 33,333 96,667 -- 40,700
</TABLE>
- -------------------------
(1) Based on the December 31, 1999 closing price of $20.06 per share of Arden
Realty's common stock, as reported by the New York Stock Exchange.
(2) Mr. Sobel resigned effective February 18, 2000. Mr. Sobel has entered into a
consulting and non-competition agreement with us for a term of two years.
Under this agreement, Mr. Sobel will have until its expiration to exercise
the 170,000 exercisable options granted to him. The 175,000 unexerciseable
options granted to Mr. Sobel were forfeited.
OPTION GRANTS IN LAST FISCAL YEAR
The following table presents information relating to options granted to
purchase shares of Arden Realty common stock to the named executive officers
during 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-----------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE
SHARES OF PERCENT OF AT ASSUMED ANNUAL RATES OF
COMMON STOCK TOTAL OPTIONS SHARE PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------------
NAME GRANTED(#) FISCAL YEAR SHARE DATE 5% 10%
---- ------------ ------------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Richard S. Ziman....... 125,000 17.61% $19.125 12/3/09 $1,503,000 $3,810,000
Victor J. Coleman...... 80,000 11.27% 19.125 12/3/09 962,000 2,438,000
Diana M. Laing......... 60,000 8.45% 19.125 12/3/09 722,000 1,829,000
Andrew J. Sobel(3)..... 60,000 8.45% 19.125 12/3/09 722,000 1,829,000
Robert C. Peddicord.... 50,000 7.04% 19.250 11/30/09 605,000 1,534,000
</TABLE>
- -------------------------
(1) The options granted to Messrs. Ziman and Coleman and Ms. Laing become
exercisable in two equal installments beginning on the first anniversary of
the date of grant. The options granted to Mr. Peddicord become exercisable
in three equal installments beginning on the first anniversary of the date
of grant. All options granted in 1999 have a term of ten years subject to
earlier termination in specified events related to termination of
employment. The option exercise price for all options granted in 1999 is
equal to the fair market value of a share of Arden Realty's common stock on
the date of grant.
(2) Assumed annual rates of stock price appreciation for illustrative purposes
only. Actual stock prices will vary from time to time based upon market
factors and our financial performance. We cannot assure you that these
appreciation rates will be achieved.
(3) The options granted to Mr. Sobel were forfeited on February 18, 2000, the
effective date of his resignation.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no Compensation Committee interlocks and none of Arden Realty's
or our employees participate on the Compensation Committee.
EMPLOYMENT AGREEMENTS
Arden Realty has entered into employment agreements with Messrs. Ziman,
Coleman and Peddicord and Ms. Laing. Mr. Sobel also had an employment agreement
with Arden Realty that terminated at Mr. Sobel's request on February 18, 2000.
The employment agreements of Messrs. Ziman and Coleman had an original
expiration date of October 1999, and are subject to automatic one-year
extensions following the expiration of those terms. Ms. Laing's employment
agreement has a term which expires in January 2002, and is subject to automatic
one-year extensions following the expiration of its original term. The
employment agreements for Messrs. Ziman and Coleman and Ms. Laing provide for a
base compensation and bonus to be determined by Arden Realty's Compensation
Committee. The annual compensation and bonuses paid to these executives for 1999
are presented in the Summary Compensation table above.
In May 1999, Arden Realty entered into an employment agreement with Mr.
Peddicord which expires in December 2000. Mr. Peddicord's employment agreement
provides for annual base compensation in 1999 of $196,000 and a bonus to be
determined by Arden Realty's Compensation Committee.
The employment agreements of Messrs. Ziman, Coleman and Peddicord and Ms.
Laing entitle the executives to participate in the 1996 Stock Option and
Incentive Plan. Each executive has been allocated the number of stock options
presented in the Summary Compensation table above. Each executive will also
receive other insurance and pension benefits.
In the event of a termination of any of these executives by Arden Realty
without "cause," a termination by the executive for "good reason," or a
termination pursuant to a "change in control" of Arden Realty, as those terms
are defined in their respective employment agreements, the terminated executive
will be entitled to (1) a single severance payment and (2) continued receipt of
specified benefits including medical insurance, life and disability insurance
for a specified period of time following the date of termination. The single
severance payments for Messrs. Ziman and Coleman and Ms. Laing are equal to the
sum of three times the respective executive's average annual base compensation
for the preceding 36 months and three times the highest annual bonus received in
the preceding 36 month period. The single severance payment for Mr. Peddicord is
equal to the sum of two times his average annual base compensation for the
preceding 24-month period and an amount equal to two times his most recent
annual bonus. Messrs. Ziman and Coleman and Ms. Laing will continue to receive
the severance benefits described above for three years commencing on the date of
termination and Mr. Peddicord will continue to receive the severance benefits
for up to 18 months commencing on the date of termination. In the event of a
termination without cause, in addition to payment of the single severance
payment, for Messrs. Ziman, Coleman and Peddicord and Ms. Laing, any unvested
stock options will become fully vested as of the date of termination. In
addition, if any of Messrs. Ziman's, Coleman's or Peddicord's or Ms. Laing's
severance payments or benefits are deemed to be parachute payments under the
Internal Revenue Code, Arden Realty has agreed to make additional payments to
the executive to compensate him or her for the additional tax obligations.
As part of their employment agreements, each of Messrs. Ziman and Coleman
and Ms. Laing are bound by a non-competition covenant which prohibits them from
engaging in (1) the acquisition, renovation, management or leasing of any office
properties in the Los Angeles, Orange and San Diego counties of Southern
California and (2) any active or passive investment in or reasonably relating to
the acquisition, renovation, management or leasing of office properties in the
Los Angeles, Orange and San Diego counties of Southern California for a period
of one year following the date of that executive's termination, unless the
termination was without cause for Messrs. Ziman and Coleman and Ms. Laing.
96
<PAGE> 99
STOCK INCENTIVE PLAN
Arden Realty has adopted the 1996 Stock Incentive Plan for itself and us,
for the purpose of attracting and retaining executive officers, directors and
employees.
The Stock Incentive Plan is qualified under Rule 16b-3 under the Securities
Exchange Act of 1934. The Stock Incentive Plan is administered by the
Compensation Committee and provides for the granting of stock options, stock
appreciation rights or restricted stock with respect to up to 4.2 million shares
of common stock to executive or other key employees. Stock options may be
granted in the form of "incentive stock options," as defined in Section 422 of
the Code, or non-statutory stock options and are exercisable for up to 10 years
following the date of grant. The exercise price of each option will be set by
the Compensation Committee; provided, however, that the price per share must be
equal to or greater than the fair market value of Arden Realty's common stock on
the grant date.
The Stock Incentive Plan also provides for the issuance of stock
appreciation rights which will generally entitle a holder to receive cash or
stock, as determined by the Compensation Committee, at the time of exercise
equal to the difference between the exercise price and the fair market value of
the common stock. In addition, the Stock Incentive Plan permits Arden Realty to
issue shares of restricted stock to executives or other key employees upon terms
and conditions as determined by the Compensation Committee.
401(K) PLAN
The Arden Realty 401(k) Plan and Trust covers our eligible employees and
any designated affiliates.
The 401(k) Plan permits our eligible employees to defer up to 20% of their
annual compensation, subject to limitations imposed by the Internal Revenue
Code. The employees' elective deferrals are immediately vested and
non-forfeitable upon contribution to the 401(k) Plan. Employees are generally
eligible to participate in the 401(k) Plan after four months of service. We
currently make matching contributions to the 401(k) Plan equal to 50% of each
participating employee's contribution with a maximum match of 5% of annual
compensation. Employees vest 25% in our matching contributions for each full
year of service, vesting 100% after four full years of service.
The 401(k) Plan qualifies under Section 401 of the Internal Revenue Code so
that contributions by employees or by us to the 401(k) Plan, and income earned
on plan contributions, are not taxable to employees until withdrawn from the
401(k) Plan, and so that our contributions are deductible by us when made.
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<PAGE> 100
TRANSACTIONS WITH RELATED PARTIES
On April 28, 1999, Arden Realty acquired Namiz, Inc. in a tax-free,
stock-for-stock merger in which Arden Realty issued 775,196 shares of its common
stock to Namiz's stockholders. Prior to the acquisition, Namiz was wholly owned
by Richard S. Ziman, Arden Realty's Chairman of the Board and Chief Executive
Officer, and Victor J. Coleman, Arden Realty's President and Chief Operating
Officer.
At the time of the acquisition, Namiz's sole assets were our common OP
Units. In the merger, each share of Namiz common stock then issued and
outstanding was converted into 775,196 shares of Arden Realty's common stock,
with the exchange ratio calculated by dividing 775,196 (the number of common OP
Units owned by Namiz) by 1,000 (the number of shares of Namiz common stock
issued and outstanding immediately prior to the merger). As a result, Namiz's
stockholders converted their proportionate interest in the common OP Units held
by Namiz into an economically equivalent number of shares of Arden Realty's
common stock.
On August 14, 1998, Arden Realty issued 42,553 shares of common stock to
Ms. Laing in exchange for a promissory note in the amount of $1.0 million. The
promissory note to Ms. Laing is full recourse and is secured by the shares of
common stock issued to Ms. Laing, bears interest at 6% per year with all accrued
interest and principal due on August 14, 2004. Provided that Ms. Laing is still
employed by Arden Realty, the outstanding principal amount of her promissory
note will be forgiven as follows:
<TABLE>
<CAPTION>
AMOUNT
DATE FORGIVEN
---- --------
<S> <C>
August 14, 2001................................... $100,000
August 14, 2002................................... 166,667
August 14, 2003................................... 200,000
August 14, 2004................................... 200,000
--------
$666,667
========
</TABLE>
Additionally, provided that Ms. Laing is still employed by Arden Realty,
all accrued and unpaid interest and the outstanding principal amount of the
promissory note will be forgiven upon a change in control of Arden Realty or
upon the death or disability of Ms. Laing.
On August 14, 1998, Arden Realty issued 42,553 shares of common stock to
Mr. Sobel in exchange for a promissory note with terms identical to Ms. Laing's
promissory note. Mr. Sobel resigned as Executive Vice President and Director of
Property Operations effective February 18, 2000. At the time of his termination,
Mr. Sobel surrendered the common stock underlying his promissory note and
executed a new promissory note in the amount of $223,887, representing the
difference between the value of the common stock surrendered and the unpaid
principal and interest on his original promissory note. The new promissory note
bears interest at 6.56%, with all accrued interest and principal due on February
18, 2002. In addition, effective with his termination, Arden Realty and Mr.
Sobel entered into a consulting and non-competition agreement for a term of two
years. Under this agreement, Mr. Sobel will receive compensation of $6,000 per
month which will be applied against the unpaid interest and principal on the new
promissory note.
98
<PAGE> 101
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES
The following is a discussion of investment, financial and other policies
governing our operations. These policies have been determined by Arden Realty's
Board of Directors and may be amended or revised from time to time without
approval by the stockholders of Arden Realty or our partners, except that:
(1) Arden Realty cannot change its policy of holding its assets and
conducting its business only through us and our affiliates without the
consent of the holders of OP Units as provided in our partnership agreement
and the consent of a majority in principal amount of the outstanding notes
as provided in the indenture governing the notes;
(2) changes in our policies with respect to conflicts of interest must
be consistent with legal requirements; and
(3) Arden Realty cannot take any action intended to terminate its
qualification as a REIT without the approval of the holders of two-thirds
of its outstanding common stock.
INVESTMENT POLICIES
Investment in Real Estate or Interests in Real Estate. Our investment
objectives are to provide quarterly cash distributions and achieve long-term
appreciation in the value of our property portfolio. For a discussion of the
properties and our acquisition and other strategic objectives, see "Properties"
and "Business -- Growth Strategies."
We expect to pursue our investment objectives primarily through the direct
ownership of our office properties. Subject to capital availability and market
conditions, we intend to seek development, renovation and acquisition
opportunities in Southern California. Future investment or development
activities, however, will not be limited to any geographic area or product type
or to a specified percentage of our assets. While we intend to diversify our
property portfolio in terms of property locations, size and market, we do not
have any limit on the amount or percentage of our assets that may be invested in
any one property or any one geographic area. We intend to engage in future
investment or development activities in a manner which is consistent with the
maintenance of Arden Realty's status as a REIT for federal income tax purposes.
In addition, we may purchase or lease income-producing commercial and other
types of properties for long-term investment, expand and improve the real estate
we presently own or other properties we purchase, or sell our real estate
properties when circumstances warrant.
We may also participate with third parties in property ownership, through
joint ventures or other types of co-ownership. Investments of this kind may
permit us to own interests in larger assets without unduly restricting
diversification and, therefore, add flexibility in structuring our portfolio. We
will not enter into a joint venture or partnership to make an investment that
would not otherwise meet our investment policies.
Equity investments may be subject to existing mortgage financing and other
indebtedness or financing or indebtedness that may be incurred in connection
with acquiring or refinancing these investments. Debt service on financing or
indebtedness will have a priority over any distributions to our partners,
including Arden Realty. Investments are also subject to our policy not to be
treated as an investment company under the Investment Company Act of 1940, as
amended.
Investments in Real Estate Mortgages. While our current portfolio consists
of, and our business objectives emphasize, equity investments in commercial real
estate, we may invest, and in the past have invested, in mortgages and other
types of equity real estate interests consistent with Arden Realty's
qualification as a REIT. We do not presently intend to invest in mortgages or
deeds of trust, but may invest in participating or convertible mortgages if we
conclude that we may benefit from the cash flow or any appreciation in value of
the property. Investments in real estate mortgages run the risk that one or
99
<PAGE> 102
more borrowers may default under their mortgages and that the collateral
securing those mortgages may not be sufficient to enable us to recoup our full
investment.
Securities or Interests in Persons Primarily Engaged in Real Estate
Activities and Other Issuers. Subject to the ownership limitations and gross
income tests necessary for Arden Realty's REIT qualification, we also may invest
in securities of REITs other than Arden Realty, other entities engaged in real
estate activities or securities of other issuers, including investments for the
purpose of exercising control over those entities.
DISPOSITIONS
We do not currently intend to dispose of a significant number of our
properties, although we reserve the right to do so if, based upon management's
periodic review of our portfolio, Arden Realty's Board of Directors determines
that disposing of a significant number of our properties would be in our best
interests.
FINANCIAL POLICIES
Neither Arden Realty's charter and bylaws nor our partnership agreement
limit the amount or percentage of indebtedness that we may incur. We are
committed to financial policies based on controlled growth and the maintenance
of a strong balance sheet and consistent cash flow. We are committed to
conservative leverage and fixed charge coverage levels throughout the economic
and investment cycle. Our leverage will vary around target levels based on the
timing of equity issuances and relative debt and equity capital market
conditions. Our targeted debt coverage levels are: (1) total debt to total
market capitalization ratio between 30% and 45%; (2) EBITDA to interest expense
of at least 3.0 to 1; and (3) EBITDA to fixed charges of at least 2.5 to 1. In
addition, covenants contained in the Indenture will limit our ability to incur
debt in the future. Going forward, we plan to monitor and access private and
public capital markets to continue to issue equity and equity-related and
unsecured debt instruments on attractive terms. We intend to limit our floating
rate debt by using more long-term fixed rate debt. We are in the process of
expanding and extending our unsecured line of credit to provide added
flexibility during the economic and capital markets cycles.
We may from time to time modify our debt policy in light of current
economic conditions, relative costs of debt and equity capital, market values of
our properties, general conditions in the market for debt and equity securities,
fluctuations in the market price of Arden Realty's common stock, growth and
acquisition opportunities and other factors. Accordingly, we may increase or
decrease our debt to total market capitalization ratio beyond the limits
described above.
We have established our debt policy relative to the total market
capitalization of Arden Realty computed at the time the debt is incurred, rather
than relative to the book value of those assets, because we believe that the
book value of our assets, which is largely the depreciated value of our property
portfolio, does not accurately reflect our ability to borrow and meet debt
service requirements. Total market capitalization, however, is subject to
greater fluctuation than book value, and does not necessarily reflect the fair
market value of our assets at all times. Moreover, due to fluctuations in the
value of our portfolio of properties over time, and since any measurement of our
total consolidated indebtedness to total market capitalization is made only at
the time debt is incurred, our debt to total market capitalization ratio could
exceed the 45% level.
Although we will consider factors other than total market capitalization in
making decisions regarding the incurrence of debt, such as the purchase price of
properties to be acquired with debt financing, the estimated market value of
properties upon refinancing, and the ability of particular properties and our
ability as a whole to generate sufficient cash flow to cover expected debt
service, that the debt to total market capitalization ratio, and any other
measure of asset value, at the time the debt is incurred or at any other time,
may not be consistent with any particular level of debt service. See "Risk
Factors -- Financing
100
<PAGE> 103
Risks" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
CONFLICT OF INTEREST POLICIES
We have adopted policies designed to eliminate or minimize potential
conflicts of interest. In addition, Arden Realty's Board of Directors is subject
to specific provisions of Maryland law that are designed to eliminate or
minimize potential conflicts of interest. We cannot assure you that these
policies always will be successful in eliminating the influence of those
conflicts.
We have adopted a policy that, without the approval of a majority of Arden
Realty's non-employee directors, we will not (1) acquire from or sell to any
director, officer or employee of Arden Realty, or any entity in which a
director, officer or employee of Arden Realty beneficially owns more than a 1%
interest, or acquire from or sell to any affiliate of any of the foregoing, any
of our assets, (2) make any loan to or borrow from any of the foregoing persons,
or (3) engage in any other transaction with any of the foregoing persons.
Pursuant to Maryland law, each director will be subject to restrictions on
misappropriation of partnership opportunities. In addition, under Maryland law,
a contract or other transaction between us or Arden Realty and a director or
between us or Arden Realty and any other corporation or other entity in which a
director is a director or has a material financial interest is not void or
voidable solely on the grounds of the common directorship or interest, the
presence of the director at the meeting at which the contract or transaction is
authorized, approved or ratified or the counting of the director's vote in favor
of the transaction or contract if (a) the transaction or contract is authorized,
approved or ratified by the board of directors or a committee of the board,
after disclosure of the common directorship or interest, by the affirmative vote
of a majority of disinterested directors, even if the disinterested directors
constitute less than a quorum, or by a majority of the votes cast by
disinterested stockholders, or (b) the transaction or contract is fair and
reasonable to us.
POLICIES WITH RESPECT TO OTHER ACTIVITIES
As described under "Description of Specific Provisions of Our Partnership
Agreement -- Redemption/ Exchange Rights," Arden Realty expects, but is not
obligated, to issue its common stock to holders of our OP Units upon exercise of
their redemption and exchange rights. We have not engaged in trading,
underwriting or agency distribution or sale of securities of other issuers, nor
have we invested in the securities of other issuers for the purposes of
exercising control, and do not intend to do so. At all times, we intend to make
investments in the manner necessary for Arden Realty to qualify as a REIT,
unless because of circumstances or changes in the Internal Revenue Code or the
Treasury Regulations, the Board of Directors determines that it is no longer in
the best interest of Arden Realty to qualify as a REIT and that determination is
approved by a two-thirds vote of Arden Realty's stockholders as required by its
charter. We have not made any loans to third parties, although we may in the
future make loans to third parties, including, without limitation, to joint
ventures in which we participate. Our policies with respect to those activities
may be reviewed and modified or amended from time to time by Arden Realty's
Board of Directors without approval by its stockholders or the partners.
101
<PAGE> 104
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based on the opinion of Latham & Watkins, our
tax counsel, as to the material federal income tax consequences expected to
result to you if you exchange your unregistered notes for exchange notes in the
exchange offer. This discussion is based on:
- the facts described in the registration statement of which this
prospectus is a part;
- the Internal Revenue Code of 1986, as amended;
- 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; and
- court decisions,
all as of the date of this prospectus. In addition, the administrative
interpretations and practices of the Internal Revenue Service include its
practices and policies as expressed in private letter rulings that are not
binding on the Internal Revenue Service, except with respect to the particular
taxpayers who requested and received those rulings. Future legislation, treasury
regulations, administrative interpretations and practices and/or court decisions
may adversely affect the tax considerations contained in this discussion. Any
change could apply retroactively to transactions preceding the date of the
change. The tax considerations contained in this discussion may be challenged by
the Internal Revenue Service, and we have not requested, and do not plan to
request, any rulings from the Internal Revenue Service concerning the tax
treatment of the exchange of unregistered notes for the exchange notes.
Some holders may be subject to special rules not discussed below,
including, 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 part of a position in a
straddle for tax purposes;
- foreign corporations or partnerships; and
- persons who are not citizens or residents of the United States.
YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES
OF EXCHANGING YOUR UNREGISTERED NOTES FOR EXCHANGE NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN LAWS.
The exchange of unregistered notes for exchange notes will be treated as a
"non-event" for federal income tax purposes, because the exchange notes will not
be considered to differ materially in kind or extent from the unregistered
notes. Therefore, no material federal income tax consequences will result to you
from exchanging unregistered notes for exchange notes.
102
<PAGE> 105
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale, offer to resell or other transfers of
its exchange notes. This prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with the resale of
exchange notes received in exchange for unregistered notes where the
unregistered notes were acquired as a result of market-making activities or
other trading activities. We have agreed that for a period of up to 180 days
after the expiration date, we will make this prospectus, as amended or
supplemented, available to any broker-dealer that requests such document in the
letter of transmittal for use in connection with any resale.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers or any other persons. Exchange notes received by broker-dealers
for their own account pursuant to the exchange offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the exchange notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any broker-dealer and/or the purchasers of any exchange notes.
Any broker-dealer that resells exchange notes that were received by it for its
own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of exchange notes and any commissions or concessions received by any
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
We have agreed to pay all expenses incident to our performance of, or
compliance with, the registration rights agreement and will indemnify the
holders of unregistered notes, including any broker-dealers, and specific
parties related to such holders, against specific liabilities, including
liabilities under the Securities Act.
103
<PAGE> 106
LEGAL MATTERS
The validity of the exchange notes offered in this prospectus and specified
legal matters in connection with the exchange offer will be passed upon for us
by Latham & Watkins, Costa Mesa, California, and Ballard Spahr Andrews &
Ingersoll, LLP, Baltimore, Maryland. The description of United States federal
income tax consequences contained in "Federal Income Tax Consequences" is based
upon the opinion of Latham & Watkins.
EXPERTS
The consolidated financial statements of Arden Realty Limited Partnership
at December 31, 1999 and 1998, and for each of the three years in the period
ended December 31, 1999, appearing in this prospectus and registration statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such report given on the authority of such firm as experts in accounting
and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-4 we have
filed with the Securities and Exchange Commission under the Securities Act. This
prospectus does not contain all of the information included in the registration
statement. For further information about us and the exchange notes, you should
refer to the registration statement. In this prospectus we summarize material
provisions of contracts and other documents to which we refer you. Since this
prospectus may not contain all of the information that you may find important,
you should review the full text of these documents. We have filed these
documents as exhibits to our registration statement.
Arden Realty files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy materials that it has
filed with the SEC at the following SEC public reference rooms:
<TABLE>
<S> <C> <C>
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
</TABLE>
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
Arden Realty's SEC filings can also be read at the following address:
New York Stock Exchange
20 Broad Street
New York, New York 10005
Arden Realty's SEC filings are also available to the public on the SEC's
Web site at http://www.sec.gov.
We have established a Web site at http://www.ardenrealty.com. The
information on our Web site is not a part of this prospectus.
After the exchange offer registration statement is declared effective, we
will become subject to the information and reporting requirements of the
Exchange Act and will file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
rooms, our Web site and the Web site of the SEC referred to above.
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<PAGE> 107
ARDEN REALTY LIMITED PARTNERSHIP
REPORT OF INDEPENDENT AUDITORS
The Partners
Arden Realty Limited Partnership
We have audited the accompanying consolidated balance sheets of Arden
Realty Limited Partnership as of December 31, 1999 and 1998 and the related
consolidated statements of income, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the management of Arden Realty Limited
Partnership. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Arden Realty
Limited Partnership at December 31, 1999 and 1998 and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States.
/s/ ERNST & YOUNG LLP
Los Angeles, California
January 31, 2000
F-1
<PAGE> 108
ARDEN REALTY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Commercial properties:
Land...................................................... $ 467,157 $ 447,339
Buildings and improvements................................ 1,833,052 1,673,149
Tenant improvements....................................... 104,990 52,706
---------- ----------
2,405,199 2,173,194
Less: accumulated depreciation............................ (146,384) (84,312)
---------- ----------
2,258,815 2,088,882
Properties under development.............................. 183,349 150,716
---------- ----------
Net investment in real estate.......................... 2,442,164 2,239,598
Cash and cash equivalents................................... 7,056 4,578
Restricted cash............................................. 18,513 12,409
Rent and other receivables, net of allowance of $2,390 and
$1,573 at December 31, 1999 and 1998, respectively........ 11,785 9,024
---------- ----------
Due from general partner.................................... 2,446 1,947
Mortgage notes receivable, net of discount of $2,014 and
$2,463 at December 31, 1999 and 1998, respectively........ 13,847 14,329
Deferred rent............................................... 23,932 17,004
Prepaid financing and leasing costs, net of accumulated
amortization of $17,044 and $7,425 at December 31, 1999
and 1998, respectively.................................... 50,148 31,230
Prepaid expenses and other assets........................... 3,013 3,747
---------- ----------
Total assets........................................... $2,572,904 $2,333,866
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable...................................... $ 740,806 $ 543,927
Unsecured lines of credit................................... 288,850 296,450
Accounts payable and accrued expenses....................... 34,482 21,787
Security deposits........................................... 16,073 13,933
---------- ----------
Total liabilities...................................... 1,080,211 876,097
---------- ----------
Minority interest........................................... 2,953 2,925
Partners' capital:
Preferred partner, 2,000,000 Series B Cumulative............ 50,000 --
Redeemable Preferred Units outstanding at December 31, 1999
General and limited partners, 65,509,000 common OP Units
outstanding at December 31, 1999 and 1998, respectively... 1,441,907 1,456,891
Receivable from general partner for common partnership
units..................................................... (2,167) (2,047)
---------- ----------
Total partners' capital................................ 1,489,740 1,454,844
---------- ----------
Total liabilities and partners' capital.............. $2,572,904 $2,333,866
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE> 109
ARDEN REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenue.................................................... $337,853 $281,067 $133,817
Property operating expenses................................ 101,284 86,570 44,332
-------- -------- --------
236,569 194,497 89,485
General and administrative................................. 6,753 6,264 3,888
Interest................................................... 60,239 43,403 19,511
Loss on valuation of derivative............................ -- -- 3,111
Depreciation and amortization.............................. 69,837 51,822 20,260
Interest and other income.................................. (2,822) (3,515) (1,630)
-------- -------- --------
Income before minority interest............................ 102,562 96,523 44,345
Minority interest.......................................... (169) (729) (59)
-------- -------- --------
Net income............................................ $102,393 $ 95,794 $ 44,286
======== ======== ========
Net income allocated to:
Preferred units.......................................... $ 1,354 $ -- $ --
======== ======== ========
Common units............................................. $101,039 $ 95,794 $ 44,286
======== ======== ========
Earnings per common operating partnership unit:
Earnings per common unit -- basic........................ $ 1.54 $ 1.55 $ 1.44
======== ======== ========
Earnings per common unit -- diluted...................... $ 1.54 $ 1.55 $ 1.43
======== ======== ========
Weighted average common operating partnership units
outstanding:
Basic.................................................... 65,509 61,846 30,797
======== ======== ========
Diluted.................................................. 65,566 61,999 31,042
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 110
ARDEN REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(IN THOUSANDS)
<TABLE>
<CAPTION>
RECEIVABLE
FROM
PREFERRED LIMITED GENERAL GENERAL
PARTNER PARTNERS PARTNER PARTNER TOTAL
--------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997................. $ -- $ 81,356 $ 305,132 $ -- $ 386,488
Conversions.............................. -- (3,427) 3,427 -- --
Distributions............................ -- (4,573) (39,336) -- (43,909)
Contributions............................ -- 25,486 343,657 -- 369,143
Net income............................... -- 4,318 39,968 -- 44,286
Adjustment to reflect limited
partners' capital at redemption
value............................... -- 6,741 (6,741) -- --
------- -------- ---------- ------- ----------
Balance at December 31, 1997............... -- 109,901 646,107 -- 756,008
Conversions.............................. -- (3,899) 3,899 -- --
Distributions............................ -- (5,137) (92,269) -- (97,406)
Contributions............................ -- 8,218 710,582 -- 718,800
Receivable and interest from general
partner............................... -- -- -- (2,047) (2,047)
Redemption of units...................... -- (16,305) -- -- (16,305)
Net income............................... -- 4,933 90,861 -- 95,794
Adjustment to reflect limited partners'
capital at redemption value........... -- (25,737) 25,737 -- --
------- -------- ---------- ------- ----------
Balance at December 31, 1998............... -- 71,974 1,384,917 (2,047) 1,454,844
Conversions.............................. -- (19,241) 19,241 -- --
Issuance of preferred units.............. 50,000 -- -- -- 50,000
Issuance costs........................... -- (38) (962) -- (1,000)
Distributions............................ (1,354) (4,629) (110,394) -- (116,377)
Interest on receivable from general
partner............................... -- -- -- (120) (120)
Net income............................... 1,354 3,850 97,189 -- 102,393
Adjustment to reflect limited partners'
capital at redemption value........... -- (8,782) 8,782 -- --
------- -------- ---------- ------- ----------
Balance at December 31, 1999............... $50,000 $ 43,134 $1,398,773 $(2,167) $1,489,740
======= ======== ========== ======= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 111
ARDEN REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1999 1998 1997
--------- ----------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................................. $ 102,393 $ 95,794 $ 44,286
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest.................................... 169 729 59
Depreciation and amortization........................ 69,837 51,822 20,260
Amortization of loan costs and fees.................. 2,868 1,941 823
Changes in operating assets and liabilities:
Rents and other receivables....................... (2,279) 1,280 (22,340)
Due from general partner.......................... (499) 1,336 (3,283)
Deferred rent..................................... (6,928) (8,193) (2,742)
Prepaid financing and leasing costs............... (28,537) (24,821) (10,796)
Prepaid expenses and other assets................. (86) 1,538 (3,497)
Accounts payable and accrued expenses............. 12,675 5,182 10,280
Security deposits................................. 2,140 7,086 3,257
--------- ----------- ---------
Net cash provided by operating activities....... 151,753 133,694 36,307
--------- ----------- ---------
INVESTING ACTIVITIES:
Acquisitions and improvements of commercial
properties........................................... (264,832) (1,103,117) (639,670)
Cash and cash equivalents of consolidated real estate
partnership.......................................... -- -- 2,849
Escrow deposit......................................... -- 20,000 (20,000)
--------- ----------- ---------
Net cash used in investing activities........... (264,832) (1,083,117) (656,821)
--------- ----------- ---------
FINANCING ACTIVITIES:
Proceeds from mortgage loans........................... 310,038 677,520 308,202
Repayment of mortgage loans............................ (113,259) (370,659) (175,036)
Proceeds from secured line of credit................... -- -- 28,700
Repayment of secured line of credit.................... -- -- (28,700)
Proceeds from unsecured lines of credit................ 209,661 413,350 443,500
Repayments of unsecured lines of credit................ (217,261) (357,300) (254,100)
Increase in restricted cash............................ (6,104) (8,369) (4,040)
Proceeds from issuances of common partnership units,
net of issuance costs................................ -- 708,582 343,565
Distributions and redemption paid to common partnership
unit holders......................................... (115,023) (113,711) (43,909)
Distributions to preferred operating partnership unit
holder............................................... (1,354) -- --
Distributions to minority interests.................... (141) (712) --
Proceeds from issuance of preferred operating
partnership units.................................... 50,000 -- --
Preferred partnership units issuance costs............. (1,000) -- --
--------- ----------- ---------
Net cash provided by financing activities....... 115,557 948,701 618,182
--------- ----------- ---------
Net increase (decrease) in cash and cash equivalents... 2,478 (722) (2,332)
Cash and cash equivalents at beginning of period....... 4,578 5,300 7,632
--------- ----------- ---------
Cash and cash equivalents at end of period............. $ 7,056 $ 4,578 $ 5,300
========= =========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest, net of amounts
capitalized.......................................... $ 58,365 $ 48,206 $ 19,191
========= =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 112
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS
DESCRIPTION OF BUSINESS
The terms "Operating Partnership," "Partnership," "us," "we" and "our" as
used in these financial statements refer to Arden Realty Limited Partnership.
The term "Arden Realty" refers to Arden Realty, Inc. or Arden Realty Limited
Partnership.
ORGANIZATION AND FORMATION
We are an operating partnership that owns, manages, leases, develops,
renovates and acquires commercial properties located in Southern California.
Arden Realty, a REIT, is our sole general partner and, as of December 31, 1999,
owned 96.7% of our common partnership units, or common OP Units. Arden Realty
conducts substantially all of its operations through us and our subsidiaries.
Commencing with its taxable year ended December 31, 1996, Arden Realty has
operated and qualified as a REIT for federal income tax purposes.
Arden Realty conducts substantially all of its operations through us. As of
December 31, 1999, we directly or indirectly owned a portfolio of 142 primarily
office properties containing approximately 18.5 million net rentable square feet
and three properties with approximately 700,000 square feet under development.
Arden Realty's interest in us entitles it to share in cash distributions
from, and in our profits and losses in proportion to its percentage ownership.
Specific individuals and entities own our remaining common OP Units, including
Messrs. Ziman and Coleman, our Chairman and Chief Executive Officer and our
President and Chief Operating Officer, respectively, together with other
entities and persons who were issued common OP Units in connection with our
acquisition of specific properties previously owned by those entities and
persons. Holders of common OP Units are entitled to cause us to redeem their
common OP Units for cash. Arden Realty, however, may, instead of paying cash,
elect to exchange those common OP Units for shares of its common stock on a
one-for-one basis, subject to specific limitations. With each redemption or
exchange of common OP Units, Arden Realty's percentage interest in us will
increase.
As our sole general partner, Arden Realty generally has the exclusive power
under our partnership agreement to manage us and conduct our business, subject
to limited exceptions. Arden Realty's board of directors manages our affairs. We
cannot be terminated until the year 2096 without the approval of a majority of
our partners or in connection with the sale of all or substantially all of our
assets, a business combination, a judicial decree or the redemption of all the
OP Units held by our limited partners.
We are a Maryland limited partnership. Arden Realty is a Maryland
corporation. Arden Realty's common stock is listed on the New York Stock
Exchange under the symbol "ARI."
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include our accounts and
our subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation.
F-6
<PAGE> 113
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RISKS AND UNCERTAINTIES
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Our properties are all located in Southern California. As a result of our
geographic concentration, the operations of these properties could be affected
by the economic conditions in this region.
SEGMENT INFORMATION
We view our operations as principally one segment and the financial
information disclosed herein represents all of the financial information related
to our principal operating segment.
COMMERCIAL PROPERTIES
Our properties are stated at cost. When indicators of impairment exist,
write-downs to estimated fair value would be recognized if a property's
estimated undiscounted future cash flows, before interest charges, are less than
its book value. Based on our assessment, no write-downs to estimated fair value
were necessary as of December 31, 1999 and 1998, respectively.
Repair and maintenance costs are charged to expenses as incurred and
significant replacements and betterments are capitalized.
Depreciation is calculated under the straight-line method using forty-year
lives for buildings, ten-year lives for building improvements and five-year
lives for furniture, fixtures and equipment. Amortization of tenant improvements
is calculated using the straight-line method over the term of the related lease.
CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments with original
maturities of three months or less when acquired.
RESTRICTED CASH
Restricted cash at December 31, 1999 and 1998 primarily consists of $13.7
million and $10 million, respectively, in cash deposits as required by some of
our mortgage loans payable and $4.8 million and $2.4 million, respectively, in
impound accounts for real estate taxes and insurance, as required by some of our
mortgage loans payable.
PREPAID FINANCING AND LEASING COSTS
Costs associated with leasing properties are capitalized and amortized to
expense on a straight-line basis over the related lease term. Costs associated
with obtaining long-term financing are capitalized and amortized to interest
expense over the term of the related loan.
F-7
<PAGE> 114
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
REVENUE RECOGNITION
Minimum rent, including rental abatements and contractual fixed increases
attributable to operating leases, is recognized on a straight-line basis over
the term of the related lease. Amounts expected to be received in later years
are included in deferred rents. Property operating expense reimbursements due
from tenants for common area maintenance, real estate taxes and other
recoverable costs are recognized in the period the related expenses are
incurred.
INCOME TAXES
Our taxable income is reportable by our partners on their separate income
tax returns. Accordingly, no provision has been made for income taxes in the
accompanying consolidated statements of operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Our disclosures of estimated fair value of financial instruments at
December 31, 1999 were determined using available market information and
appropriate valuation methodologies. Considerable judgment is necessary to
interpret market data and develop estimated fair value. The use of different
market assumptions or estimation methodologies may have a material effect on the
estimated fair value amounts.
Our cash equivalents, mortgage notes receivable, accounts payable, the
lines of credit and other financial instruments are carried at amounts that
reasonably approximate their fair value amounts. The unrealized gain on our
mortgage notes payable at December 31, 1999 was approximately $20.4 million.
Estimated fair value is based on interest rates currently available for issuance
of debt with similar terms and remaining maturities.
3. COMMERCIAL PROPERTIES
The following table sets forth specific information regarding our
acquisition of office properties for the year ended December 31, 1999.
<TABLE>
<CAPTION>
APPROXIMATE NET TOTAL
RENTABLE MONTH OF ACQUISITION
PROPERTY NAME LOCATION SQUARE FEET ACQUISITION COST(1)
------------- -------- --------------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Hillside Corporate Center................ Westlake 59,876 February $ 9,600
Westlake Gardens II...................... Westlake 48,874 April 7,300
Howard Hughes Tower...................... Los Angeles 313,833 May 53,000
2001 Wilshire Boulevard.................. Santa Monica 101,125 September 19,900
------- -------
Total.................................. 523,708 $89,800
======= =======
</TABLE>
- -------------------------
(1) Total acquisition cost includes purchase and closing costs.
We capitalize interest and taxes related to buildings under construction
and renovation to the extent those assets qualify for capitalization.
F-8
<PAGE> 115
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Total interest incurred and the amount capitalized for the years ended
December 31, 1999, 1998 and 1997 were as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Total interest incurred................... $69,826 $52,323 $20,689
Interest capitalized...................... (9,587) (8,920) (1,178)
------- ------- -------
Interest expensed......................... $60,239 $43,403 $19,511
======= ======= =======
</TABLE>
Office space in our properties is generally leased to tenants under lease
terms that provide for the tenants to pay for increases in operating expenses in
excess of specified amounts.
Future minimum lease payments to be received under noncancelable operating
leases existing as of December 31, 1999, are as follows (in thousands):
<TABLE>
<S> <C>
2000.............................................. $278,668
2001.............................................. 241,222
2002.............................................. 200,375
2003.............................................. 152,055
2004.............................................. 97,517
Thereafter........................................ 159,542
</TABLE>
The above future minimum lease payments do not include specified payments
for tenant reimbursements of operating expenses.
We lease the land underlying the office buildings or parking structures of
six of our buildings. Ground lease expense, including amounts netted against
parking revenues, was approximately $1.7 million, $2.0 million and $1.6 million
for the years ended December 31, 1999, 1998 and 1997, respectively. Future
minimum ground lease payments due under existing ground leases are as follows
(in thousands):
<TABLE>
<S> <C>
2000.............................................. $ 1,716
2001.............................................. 1,717
2002.............................................. 1,754
2003.............................................. 1,754
2004.............................................. 1,785
Thereafter........................................ 118,307
</TABLE>
4. MORTGAGE NOTES RECEIVABLE
In September 1997, we purchased two mortgage notes receivable, secured by a
single commercial office property, with an aggregate balance of approximately
$17.6 million, for approximately $14.4 million. These notes bear interest at the
Eleventh District Cost of Funds plus 3.25% per annum, require monthly payments
of principal, interest, and additional net cash flow from the office property
and mature on May 31, 2004. These notes had an effective interest rate of 7.9%
at December 31, 1999.
F-9
<PAGE> 116
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. MORTGAGE LOANS PAYABLE AND UNSECURED LINES OF CREDIT
A summary of mortgage loans payable and unsecured lines of credit are as
follows:
<TABLE>
<CAPTION>
NUMBER
OF
DECEMBER 31, EFFECTIVE ANNUAL PROPERTIES MATURITY
MORTGAGE DEBT FIXED --------------------- INTEREST RATE AT FIXED/FLOATING SECURING MONTH/
TYPE OF DEBT 1999 1998 DECEMBER 31, 1999 DEBT LOAN YEAR
------------------- ---------- -------- ----------------- -------------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE LOANS PAYABLE:
Fixed
Mortgage Financing I(1).................. $ 175,000 $175,000 7.52% Fixed 18 6/04
Mortgage Financing III(2)................ 136,100 136,100 6.74 Fixed 22 4/08
Mortgage Financing IV(2)................. 111,200 111,200 6.61 Fixed 12 4/08
Mortgage Financing V(3).................. 114,016 -- 6.94 Fixed 12 4/09
Mortgage Financing VI(3)................. 22,426 -- 7.54 Fixed 3 4/09
Westwood Center(3)....................... 14,859 15,167 8.09 Fixed 1 5/03
Activity Business Center(3).............. 8,003 8,142 8.85 Fixed 1 5/06
299 North Euclid(2)...................... 5,000 5,000 7.00 Fixed 1 7/02
145 South Fairfax(3)..................... 4,050 4,079 8.93 Fixed 1 1/27
Marin Corporate Center(3)................ 3,168 3,257 9.00 Fixed 1 7/15
Conejo Business Center(3)................ 3,114 3,203 8.75 Fixed (Note 4) 7/15
Conejo Business Center(3)................ 1,358 1,401 7.88 Fixed (Note 4) 7/15
---------- --------
598,294 462,549
Floating
Lehman Prepayable Term Loan II and
III(1)................................... 120,475 -- 8.07 LIBOR + 2.25% 9 11/00
Construction Loan........................ 22,037 -- 8.23 LIBOR + 2.0% (Note 5) 12/00
Lehman Prepayable Term Loan I............ -- 81,378 -- LIBOR + .75% 7 --
---------- --------
740,806 543,927
UNSECURED LINES OF CREDIT:
Wells Fargo Line of Credit............... 280,850 296,450 7.52 LIBOR + 1.3% -- 6/00
City National Bank Line of Prime Rate --%
Credit................................. 8,000 -- 7.63 0.875 -- 8/00
---------- --------
288,850 296,450
---------- --------
Total Debt........................... $1,029,656 $840,377
========== ========
</TABLE>
- -------------------------
(1) Requires monthly payments of interest only, with outstanding principal
balance due upon maturity.
(2) Requires monthly payments of interest only for five years and monthly
payments of principal and interest thereafter.
(3) Requires monthly payments of principal and interest.
(4) Both mortgage loans are secured by Conejo Business Center.
(5) This loan is secured by property and construction improvements relating to
the 6060 Center Drive office building in the Howard Hughes Center.
MORTGAGE LOANS PAYABLE
On April 5, 1999, we closed a $115 million loan with Mass Mutual Life
Insurance Company (the "Mortgage Financing V"). Proceeds from this loan were
used to repay $76.4 million of our Lehman Prepayable Term Loan I and to repay a
portion of our unsecured lines of credit. On April 30, 1999 we closed a $22.5
million loan with an affiliate of Lehman Brothers (the "Mortgage Financing VI").
Proceeds from this loan were used to repay a portion of our unsecured lines of
credit. On May 5, 1999, we
F-10
<PAGE> 117
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
refinanced the remaining $35 million outstanding under the Lehman Prepayable
Term Loan I with one secured note payable totaling $62.5 million (the "Lehman
Prepayable Term Loan II") to an affiliate of Lehman Brothers. The remaining
proceeds from this loan were used to repay a portion of our unsecured lines of
credit.
On July 23, 1999, we entered into a construction loan with a total
commitment of $50 million (the "Construction Loan") related to our development
of the approximately 241,000 net rentable square foot Center Drive office
building in the Howard Hughes Center. Subject to meeting specific construction
completion and leasing benchmarks, as defined, the interest rate on the
Construction Loan may be reduced to LIBOR plus 1.75%, then to LIBOR plus 1.5%.
As of December 31, 1999, there was $22.0 million outstanding on the Construction
Loan and $28 million was available for additional borrowing.
On July 27, 1999, we closed a $58 million loan with an affiliate of Lehman
Brothers (the "Lehman Prepayable Term Loan III"). Proceeds from this loan were
used to repay a portion of our unsecured lines of credit and to fund specific
capital expenditures. In January 2000, we expanded this loan from $58 million to
$83 million.
In connection with two of our mortgage loans payable to an affiliate of
Lehman Brothers, we entered into a treasury rate lock agreement, or the swap
agreement, with a notional amount of $100 million and locked in the United
States 10-year treasury rate at 6.174%. On April 16, 1998, we settled the swap
agreement for $4.5 million and are amortizing the cost of settling the swap
agreement over the term of the two related mortgage loans payable to an
affiliate of Lehman Brothers.
Following is a summary of scheduled principal payments for our mortgage
loans as of December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, AMOUNT
------------ --------
<S> <C>
2000............................................ $145,299
2001............................................ 3,004
2002............................................ 8,236
2003............................................ 16,838
2004............................................ 178,292
Thereafter...................................... 389,137
--------
Total........................................ $740,806
========
</TABLE>
UNSECURED LINES OF CREDIT
As of December 31, 1999 and 1998, we had an unsecured line of credit in the
amount of $300 million with a group of banks led by Wells Fargo Bank. This line
of credit's interest rate ranges between LIBOR plus 1.2% and LIBOR plus 1.45%,
depending on our leverage ratio. The effective interest rate at December 31,
1999 was 7.52%. The interest rate may be lowered to between LIBOR plus 0.9% and
LIBOR plus 1.15%, depending on our unsecured debt rating. Under specific
circumstances, we have the option to convert the interest rate to the prime rate
plus 0.5%. The outstanding principal balance of this line of credit was $280.9
million and $296.4 million at December 31, 1999 and 1998, respectively.
This line of credit is subject to customary conditions to borrowing;
contains representations, warranties and defaults customary in REIT financings;
and contains financial covenants, including requirements for a minimum tangible
net worth, maximum liabilities to asset values, and minimum interest, unsecured
interest and fixed charge coverage ratios, all calculated as defined in the
Wells Fargo line of credit documentation, and requirements to maintain a pool of
unencumbered properties that meet specific defined
F-11
<PAGE> 118
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
characteristics and are approved by the group of banks led by Wells Fargo Bank.
This line of credit also contains restrictions on, among other things,
indebtedness, investments, distributions, liens and mergers. In addition, this
line of credit has a commitment fee ranging from 0.125% to 0.25% on the unused
balance. This line of credit matures on June 1, 2000. Proceeds from this line of
credit have been used, among other things, to provide funds for tenant
improvements and capital expenditures and provide for working capital and other
purposes.
As of December 31, 1999 and 1998 we also had an unsecured line of credit in
the amount of $10 million with City National Bank.
In January 1997, Arden Realty entered into interest rate floor and cap
transactions with a notional amount of $155.0 million to hedge its exposure to
variable interest rates. Arden Realty entered into these agreements to convert
floating rate liabilities to fixed rate liabilities. In July 1997, Arden Realty
repaid all of its outstanding floating rate debt at the time with proceeds from
an equity offering and in October 1997, the swap agreement was retired resulting
in a loss on the derivative of $3.1 million.
6. PARTNERS' CAPITAL
A common OP Unit and a share of common stock in Arden Realty have
essentially the same economic characteristics as they share equally in our total
net income or loss and distributions. A common OP Unit may be redeemed for cash
or, at the election of Arden Realty, for shares of common stock of Arden Realty
on a one-for-one basis, subject to adjustment.
On September 7, 1999, we completed a $50 million private placement of
8 5/8% Series B Cumulative Redeemable Preferred Units to an institutional
investor. The Preferred OP Units are callable by us after five years and are
exchangeable after ten years by the holder into 8 5/8% Series B Cumulative
Redeemable Preferred Stock of Arden Realty, on a one-for-one basis. The
Preferred OP Units have no stated maturity or mandatory redemption and are
subordinate to all debt. We used the net proceeds from this private placement to
repay a portion of our lines of credit.
During 1998, we issued 300,255 common OP Units, valued at approximately
$8.2 million in connection with specific property acquisitions. During 1998, we
also redeemed 542,382 common OP Units at a cost of approximately $16.3 million
in cash based on the original issuance price of the related common OP Units.
The outstanding common OP Units held by limited partners are initially
recorded at fair value and subsequently adjusted based on fair value at the
balance sheet date as measured by the closing price of Arden Realty's common
stock at that date multiplied by the total number of common OP Units held by
limited partners.
In January 2000, we made a distribution of $0.445 per common OP Unit.
7. COMMITMENTS AND CONTINGENCIES
CAPITAL COMMITMENTS
As of December 31, 1999, we had approximately $23.6 million outstanding in
capital commitments related to tenant improvements, renovation costs and general
property-related capital expenditures.
F-12
<PAGE> 119
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
LITIGATION
We do not believe there is any litigation threatened against us other than
routine litigation arising out of the ordinary course of business, some of which
is expected to be covered by liability insurance and all of which is not
expected to have a material adverse effect on our consolidated financial
statements.
CONCENTRATION OF CREDIT RISK
We maintain our cash and cash equivalents at financial institutions. The
combined account balances at each institution periodically exceed FDIC insurance
coverage, and as a result, there is a concentration of credit risk related to
amounts on deposit in excess of FDIC insurance coverage. Management believes
that the risk is not significant.
We generally do not require collateral or other security from our tenants,
other tan security deposits.
8. RELATED PARTY TRANSACTIONS
PROMISSORY NOTES RECEIVABLE FROM GENERAL PARTNER FOR COMMON OP UNITS
In August 1998, we issued 85,106 common OP Units to Arden Realty, related
to the issuance of 42,553 shares of Arden Realty's common stock to each of two
executive officers. In consideration for the issuance of the common stock, the
executive officers executed promissory notes in the amount of $1 million each.
The promissory notes are recourse and secured by the shares of common stock
issued to the executive officers, bear interest at 6% per year with all accrued
interest and principal due on August 14, 2004. Provided that the executive
officers are still employed by Arden Realty, the outstanding principal amount of
the promissory notes will be forgiven as follows; August 14, 2001, $100,000;
August 14, 2002, $166,667; August 14, 2003, $200,000; and August 14, 2004,
$200,000. Additionally, provided that the executive officers are still employed
by us, all accrued and unpaid interest and the outstanding principal amount of
the promissory notes will be forgiven upon a change in control, as defined in
the promissory note, of us or upon the death or disability of the executive
officers. See Note 13.
DUE FROM OUR GENERAL PARTNER
Due from our general partner represents the net balance of intercompany
transactions between us and Arden Realty for amounts reimbursable under the
terms of our partnership agreement.
F-13
<PAGE> 120
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. REVENUE FROM RENTAL OPERATIONS AND PROPERTY OPERATING EXPENSES
Revenue f rom rental operations and property operating expenses for the
years ended December 31, 1999, 1998 and 1997 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Rental................................................... $292,688 $250,467 $118,085
Tenant reimbursements.................................... 13,863 9,505 5,945
Parking, net of expenses................................. 14,384 12,223 7,397
Other rental operations.................................. 16,918 8,872 2,390
-------- -------- --------
337,853 281,067 133,817
-------- -------- --------
PROPERTY OPERATING EXPENSES:
Repairs and maintenance.................................. 32,902 27,141 15,154
Utilities................................................ 28,305 26,559 14,321
Real estate taxes........................................ 23,167 19,433 8,003
Insurance................................................ 3,993 4,110 2,125
Ground rent.............................................. 891 714 314
Marketing and other...................................... 12,026 8,613 4,415
-------- -------- --------
101,284 86,570 44,332
-------- -------- --------
$236,569 $194,497 $ 89,485
======== ======== ========
</TABLE>
10. STOCK OPTION PLAN
Arden Realty has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for our employee and directors stock options
because, as discussed below, the alternative fair value accounting provided for
under FASB Statement No. 123, "Accounting for Stock-Based Compensation"
("Statement 123") requires use of option valuation models that were not
developed for use in valuing employee stock options. Under Statement 123,
because the exercise price of employee and director stock options Arden Realty
granted equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.
Arden Realty established a stock option plan for the purpose of attracting
and retaining executive officers, directors and other key employees. As of
December 31, 1999, 4,200,000 of Arden Realty's authorized shares of common stock
have been reserved for issuance under that plan.
All holders of the above options have a ten-year period to exercise and all
options were granted at exercise prices equal to the market prices at the date
of the grant.
Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if Arden Realty had
accounted for its employee stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1999, 1998 and 1997, respectively: risk-free interest rate of
6.67%, 5.68%, and 5.81%; dividend yield of 5.79%, 7.25% and 5.2%; volatility
factor of the expected market price of Arden Realty's common stock of .245,
.268, and .194. The weighted average expected life of the options ranges between
eight and 10 years.
F-14
<PAGE> 121
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restriction
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because Arden Realty's employee and director stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of Arden
Realty's employee and director stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. Arden
Realty's pro forma information for the years ended December 31, 1999, 1998 and
1997 follows (in thousands, except earnings per share information):
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Pro forma net income........................................ $98,257 $88,711 $38,711
======= ======= =======
Pro forma net income per share.............................. $ 1.48 $ 1.51 $ 1.39
======= ======= =======
</TABLE>
A summary of Arden Realty's stock option activity, and related information
for the years ended December 31, 1999, 1998 and 1997 follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------- ------------------- -------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
OPTIONS EXERCISE OPTIONS EXERCISE OPTIONS EXERCISE
(000S) PRICE (000S) PRICE (000S) PRICE
------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of period...... 3,140 $25.56 1,303 $25.27 930 $20.15
Granted............................... 760 19.67 1,847 26.03 556 32.09
Exercised............................. -- -- -- -- (147) 20.00
Forfeited............................. (10) 25.94 (10) 20.00 (36) 20.00
------ ------ ------ ------ ------ ------
Outstanding at end of year............ 3,890 $25.38 3,140 $25.56 1,303 $25.27
====== ====== ====== ====== ====== ======
Weighted-average fair value of options
granted............................. $ 3.35 $ 3.27 $ 3.72
</TABLE>
Exercise prices for options outstanding as of December 31, 1999 ranged from
$19.13 to $32.25. The weighted average remaining contractual life of those
options is 8.4 years.
11. EMPLOYEE RETIREMENT SAVINGS PLAN
Effective June 12, 1997, Arden Realty adopted a retirement savings plan
pursuant to Section 401(k) of the Internal Revenue Code (the "Code") whereby
participants may contribute a portion of their compensation to their respective
retirement accounts in an amount not to exceed the maximum allowed under the
Code. The plan provides for matching contributions by us, which amounted to
approximately $385,000 in 1999, $187,000 in 1998 and $71,000 in 1997. Plan
participants are immediately vested in their contributions and are vested
equally over four years in matching contributions by us.
12. YEAR 2000 -- UNAUDITED
In 1999, we completed our remediation and testing of systems with respect
to the Year 2000 date change. As a result of our planning and implementation
efforts, we experienced no significant disruptions in mission critical
information technology and non-information technology systems and believe those
systems successfully responded to the Year 2000 date change. We incurred costs
of approximately
F-15
<PAGE> 122
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
$500,000 during 1999 in connection with remediating our systems. We are not
aware of any material problems resulting from Year 2000 issues, either with our
products, our internal systems or the products and services of third parties. We
will continue to monitor our mission critical computer applications and those of
our suppliers and vendors throughout the year to ensure that any latent Year
2000 matters that may arise are addressed promptly.
13. SUBSEQUENT EVENT -- UNAUDITED
PROMISSORY NOTE RECEIVABLE FROM GENERAL PARTNER FOR COMMON OP UNITS
Mr. Sobel resigned as Executive Vice President and Director of Property
Operations effective February 18, 2000. At the time of his termination, Mr.
Sobel surrendered the common stock underlying his promissory note, discussed in
Note 8 above, and executed a new promissory note in the amount of $223,887,
representing the difference between the value of the common stock surrendered
and the unpaid principal and interest on his original promissory note. The new
promissory note bears interest at 6.56%, with all accrued interest and principal
due on February 18, 2002. In addition, effective with his termination, Arden
Realty and Mr. Sobel entered into a consulting and non-competition agreement for
a term of two years. Under this agreement, Mr. Sobel will receive compensation
of $6,000 per month which will be applied against the unpaid interest and
principal on the new promissory note.
F-16
<PAGE> 123
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. QUARTERLY RESULTS
Following is a summary of our revenue and expenses for the years ended
December 31, 1999, 1998 and 1997. Revenue and expenses have fluctuated
significantly from quarter to quarter primarily due to property acquisitions
(unaudited).
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1999 1999 1999 1999
--------- -------- ------------- ------------
(IN THOUSANDS, EXCEPT UNIT AMOUNTS)
<S> <C> <C> <C> <C>
Revenue..................................... $ 79,336 $ 82,712 $ 86,723 $ 89,082
Property operating expenses................. (23,510) (24,444) (26,744) (26,586)
General and administrative.................. (1,291) (1,578) (1,715) (2,169)
Interest expense............................ (13,183) (14,455) (16,047) (16,554)
Depreciation and amortization............... (16,215) (17,173) (17,810) (18,639)
Interest and other income................... 670 671 751 730
Minority interests.......................... (54) (34) (49) (32)
-------- -------- -------- --------
Net Income............................. $ 25,753 $ 25,699 $ 25,109 $ 25,832
======== ======== ======== ========
Net Income per common unit:
Basic..................................... $ 0.39 $ 0.39 $ 0.38 $ 0.39
Diluted................................... $ 0.39 $ 0.39 $ 0.38 $ 0.39
</TABLE>
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1998 1998 1998 1998
--------- -------- ------------- ------------
(IN THOUSANDS, EXCEPT UNIT AMOUNTS)
<S> <C> <C> <C> <C>
Revenue..................................... $ 54,759 $ 70,503 $ 76,738 $ 79,067
Property operating expenses................. (16,738) (21,543) (24,072) (24,217)
General and administrative.................. (1,489) (1,290) (1,467) (2,018)
Interest expense............................ (8,612) (10,539) (11,988) (12,264)
Depreciation and amortization............... (11,296) (12,930) (12,954) (14,642)
Interest and other income................... 1,458 695 680 682
Minority interests.......................... (615) (42) (37) (35)
-------- -------- -------- --------
Net Income............................. $ 17,467 $ 24,854 $ 26,900 $ 26,573
======== ======== ======== ========
Net Income per common unit:
Basic..................................... $ 0.34 $ 0.38 $ 0.41 $ 0.41
Diluted................................... $ 0.34 $ 0.38 $ 0.41 $ 0.41
</TABLE>
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1997 1997
--------- -------- ------------- ------------
(IN THOUSANDS, EXCEPT UNIT AMOUNTS)
<S> <C> <C> <C> <C>
Revenue..................................... $ 24,916 $ 29,704 $ 36,431 $ 42,766
Property operating expenses................. (7,894) (9,544) (11,737) (15,157)
General and administrative.................. (823) (859) (879) (1,327)
Interest expense............................ (3,024) (5,883) (4,816) (5,788)
Loss on valuation of derivative............. -- -- (3,111) --
Depreciation and amortization............... (3,562) (4,458) (5,241) (6,999)
Interest and other income................... 54 59 450 1,067
Minority interests.......................... -- (9) (43) (7)
-------- -------- -------- --------
Net Income............................. $ 9,667 $ 9,010 $ 11,054 $ 14,555
======== ======== ======== ========
Net Income per common unit:
Basic..................................... $ 0.39 $ 0.37 $ 0.31 $ 0.38
Diluted................................... $ 0.39 $ 0.36 $ 0.31 $ 0.38
</TABLE>
F-17
<PAGE> 124
15. SCHEDULE OF COMMERCIAL PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
<TABLE>
<CAPTION>
INITIAL COSTS BASIS STEP UP
------------------------ ---------------------- COSTS CAPITALIZED
SQUARE BUILDINGS AND BUILDINGS AND SUBSEQUENT TO
FOOTAGE LAND IMPROVEMENTS LAND IMPROVEMENTS ACQUISITION(2)
---------- -------- ------------- ------ ------------- -----------------
(IN THOUSANDS, EXCEPT SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C>
Century Park Center.................. 243,404 $ 7,189 $ 16,742 $ -- $ -- $ 7,604
Beverly Atrium....................... 59,650 4,127 11,513 117 328 2,146
Woodland Hills Financial Center...... 224,955 6,566 14,754 365 880 4,788
Anaheim City Centre.................. 175,391 515 11,199 94 2,075 3,069
425 West Broadway.................... 71,589 1,500 4,436 305 918 815
1950 Sawtelle........................ 103,106 1,988 7,263 -- -- 1,677
Bristol Plaza........................ 84,014 1,820 3,380 257 485 1,827
16000 Ventura........................ 174,841 1,700 17,189 185 1,929 2,856
5000 East Spring..................... 163,358 -- 11,658 -- 424 2,951
70 South Lake........................ 100,133 1,360 9,097 -- -- 1,570
Westwood Terrace..................... 135,943 2,103 16,850 -- -- 1,719
5601 Lindero Canyon.................. 105,830 2,577 6,067 -- -- 1,715
6100 Wilshire........................ 202,704 1,200 19,902 -- -- 3,873
Calabasas Commerce Center............ 126,771 1,262 9,725 -- -- 1,247
Long Beach -- DF&G................... 272,013 -- 14,452 -- -- 287
Skyview Center....................... 391,675 6,514 33,701 -- -- 4,021
400 Corporate Pointe................. 164,598 3,382 17,527 75 390 1,755
5832 Bolsa........................... 49,355 690 3,526 15 80 524
9665 Wilshire........................ 158,684 6,697 22,230 139 473 4,845
Imperial Bank Tower.................. 540,413 3,722 35,184 64 625 9,216
100 West Broadway.................... 191,727 4,570 15,255 -- -- 1,575
Norwalk.............................. 122,175 4,508 5,532 -- -- 1,972
303 Glenoaks Blvd. .................. 175,289 6,500 18,132 -- -- 1,621
10351 Santa Monica................... 96,251 3,080 7,906 -- -- 825
2730 Wilshire........................ 55,080 3,515 5,944 -- -- 1,046
Grand Avenue Plaza................... 81,448 620 2,832 -- -- 3,846
Burbank Executive Plaza.............. 60,395 1,100 4,384 -- -- 1,788
California Federal Building.......... 81,243 1,500 5,981 -- -- 1,146
Center Promenade..................... 174,837 2,310 9,266 -- -- 1,643
Los Angeles Corporate Center......... 389,293 26,781 15,139 -- -- 3,869
5200 West Century.................... 310,910 2,080 9,360 -- -- 16,464
Sumitomo Bank Building............... 110,641 2,560 10,257 -- -- 1,414
10350 Santa Monica................... 42,292 861 3,456 -- -- 436
10780 Santa Monica................... 92,486 2,625 7,997 -- -- 855
California Twin Center............... 155,189 4,680 14,877 -- -- 1,380
Whittier Financial Center............ 135,415 3,575 10,798 -- -- 2,017
6800 Owensmouth...................... 80,014 1,725 5,851 -- -- 561
Clarendon Crest...................... 43,063 1,300 3,951 -- -- 235
Noble Professional Center............ 51,828 1,657 5,096 -- -- 338
South Bay Centre..................... 202,830 4,775 14,365 -- -- 1,536
<CAPTION>
TOTAL COSTS
------------------------
BUILDINGS AND ACCUMULATED YEAR BUILT/
LAND IMPROVEMENTS TOTAL DEPRECIATION(1) ENCUMBRANCES RENOVATED
-------- ------------- ---------- --------------- ------------ ------------
(IN THOUSANDS, EXCEPT SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C>
Century Park Center.................. $ 7,189 $ 24,346 $ 31,535 $ 6,463 $ -- 1972
Beverly Atrium....................... 4,244 13,987 18,231 2,808 5,268(3) 1989
Woodland Hills Financial Center...... 6,931 20,422 27,353 4,565 14,564(3) 1972/95
Anaheim City Centre.................. 609 16,343 16,952 2,798 8,914(3) 1986
425 West Broadway.................... 1,805 6,169 7,974 900 4,733(3) 1984
1950 Sawtelle........................ 1,988 8,940 10,928 1,722 7,285(3) 1988/95
Bristol Plaza........................ 2,077 5,692 7,769 912 4,082(3) 1982
16000 Ventura........................ 1,885 21,974 23,859 3,343 10,828(3) 1980/96
5000 East Spring..................... -- 15,033 15,033 2,922 -- 1989/95
70 South Lake........................ 1,360 10,667 12,027 1,340 6,677(3) 1982/94
Westwood Terrace..................... 2,103 18,569 20,672 2,142 -- 1988
5601 Lindero Canyon.................. 2,577 7,782 10,359 1,415 6,225(3) 1989
6100 Wilshire........................ 1,200 23,775 24,975 3,137 11,566(3) 1986
Calabasas Commerce Center............ 1,262 10,972 12,234 1,365 8,103(3) 1990
Long Beach -- DF&G................... -- 14,739 14,739 1,516 -- 1987/95
Skyview Center....................... 6,514 37,722 44,236 4,651 27,604(3) 1981/87/95
400 Corporate Pointe................. 3,457 19,672 23,129 2,046 15,583(3) 1987
5832 Bolsa........................... 705 4,130 4,835 390 2,675(3) 1985
9665 Wilshire........................ 6,836 27,548 34,384 2,779 -- 1972/92 - 93
Imperial Bank Tower.................. 3,786 45,025 48,811 5,144 -- 1982/96
100 West Broadway.................... 4,570 16,830 21,400 1,723 15,120(3) 1987/96
Norwalk.............................. 4,508 7,504 12,012 533 7,186(3) 1978
303 Glenoaks Blvd. .................. 6,500 19,753 26,253 1,811 13,104(3) 1983/96
10351 Santa Monica................... 3,080 8,731 11,811 771 5,541(3) 1984
2730 Wilshire........................ 3,515 6,990 10,505 564 4,933(3) 1985
Grand Avenue Plaza................... 620 6,678 7,298 729 5,969(3) 1980
Burbank Executive Plaza.............. 1,100 6,172 7,272 581 3,350(3) 1978/83
California Federal Building.......... 1,500 7,127 8,627 670 5,026(3) 1978/83
Center Promenade..................... 2,310 10,909 13,219 908 -- 1982
Los Angeles Corporate Center......... 26,781 19,008 45,789 1,442 21,043(3) 1986
5200 West Century.................... 2,080 25,824 27,904 863 -- 1982
Sumitomo Bank Building............... 2,560 11,671 14,231 886 -- 1970/90 - 91
10350 Santa Monica................... 861 3,892 4,753 297 2,280(3) 1979
10780 Santa Monica................... 2,625 8,852 11,477 872 -- 1984
California Twin Center............... 4,680 16,257 20,937 1,730 -- 1983
Whittier Financial Center............ 3,575 12,815 16,390 1,173 11,561(4) 1967/82
6800 Owensmouth...................... 1,725 6,412 8,137 530 -- 1986
Clarendon Crest...................... 1,300 4,186 5,486 349 3,266(3) 1990
Noble Professional Center............ 1,657 5,434 7,091 461 3,580(3) 1985/93
South Bay Centre..................... 4,775 15,901 20,676 1,384 13,682(3) 1984
</TABLE>
F-18
<PAGE> 125
<TABLE>
<CAPTION>
INITIAL COSTS BASIS STEP UP
------------------------ ---------------------- COSTS CAPITALIZED
SQUARE BUILDINGS AND BUILDINGS AND SUBSEQUENT TO
FOOTAGE LAND IMPROVEMENTS LAND IMPROVEMENTS ACQUISITION(2)
---------- -------- ------------- ------ ------------- -----------------
(IN THOUSANDS, EXCEPT SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C>
8383 Wilshire........................ 417,463 $ 13,570 $ 45,505 $ -- $ -- $ 6,683
Parkway Center....................... 61,333 1,480 5,941 -- -- 411
Centerpointe La Palma................ 597,550 16,011 64,400 -- -- 2,717
299 North Euclid..................... 73,522 1,050 6,110 -- -- 4,878
2800 28th Street..................... 103,506 2,937 9,063 -- -- 1,566
Harbor Corporate Center.............. 63,925 870 3,538 -- -- 505
1000 Town Center..................... 107,656 2,800 11,260 -- -- 365
Mariner Court........................ 105,436 2,350 9,461 -- -- 688
Pacific Gateway II................... 223,731 6,287 19,191 -- -- 3,023
1821 East Dyer....................... 115,061 1,808 5,474 -- -- 2,475
Crown Cabot Financial................ 172,900 7,056 21,360 -- -- 2,927
120 South Spalding................... 60,656 2,775 8,544 -- -- 4,179
South Bay Technology Center.......... 104,815 1,600 4,782 -- -- 842
Gateway Center....................... 84,081 2,698 8,141 -- -- 461
Renaissance Court.................... 61,245 1,580 5,477 -- -- 778
Foremost Professional Plaza.......... 60,534 2,049 6,196 -- -- 331
Northpoint........................... 104,235 1,800 20,272 -- -- 603
Thousand Oaks Plaza.................. 13,434 444 1,343 -- -- 27
Rancho Plaza......................... 24,057 711 2,213 -- -- 54
Pennsfield Plaza..................... 21,202 800 2,383 -- -- 187
Conejo Business Center............... 69,017 2,489 7,359 -- -- 336
Marin Corporate Center............... 51,360 1,956 5,915 -- -- 262
Evergreen Plaza...................... 75,722 2,489 6,911 -- -- 444
145 South Fairfax.................... 53,994 1,825 5,551 -- -- 659
Bernardo Regency..................... 47,916 1,625 4,937 -- -- 281
City Centre.......................... 302,519 8,250 24,951 -- -- 1,281
Wilshire Pacific Plaza............... 100,122 3,750 11,317 -- -- 2,285
Glendale Corporate Center............ 108,209 2,750 12,734 -- -- 942
World Savings Center................. 469,115 -- 110,382 -- -- 7,528
Beverly Sunset Medical Plaza......... 139,711 7,180 21,666 -- -- 4,230
Sunset Pointe Plaza.................. 58,105 2,075 6,362 -- -- 419
Activity Business Center............. 167,045 3,650 11,303 -- -- 385
Westlake Gardens I................... 49,639 1,831 5,550 -- -- 1,920
9100 Wilshire Blvd. ................. 326,227 16,250 48,950 -- -- 3,603
1919 Santa Monica.................... 43,796 2,580 7,772 -- -- 521
600 Corporate Pointe................. 273,339 8,575 35,325 -- -- 2,426
150 East Colorado.................... 61,168 1,988 5,841 -- -- 1,007
5161 Lankershim...................... 178,317 5,016 25,568 -- -- 2,477
1501 Hughes Way...................... 77,060 1,348 4,058 -- -- 1,126
3901 Via Oro......................... 53,195 692 2,081 -- -- 1,257
Huntington Beach Plaza I & II........ 52,186 1,109 3,317 -- -- 237
Fountain Valley Plaza................ 107,252 2,949 9,377 -- -- 905
3300 Irvine Avenue................... 74,224 2,215 6,697 -- -- 880
Von Karman Corporate Center.......... 451,477 11,513 34,783 -- -- 3,372
South Coast Executive Plaza.......... 60,605 1,570 4,731 -- -- 402
One Venture.......................... 43,324 1,137 3,492 -- -- 875
City Centre.......................... 139,806 4,792 14,470 -- -- 1,113
Orange Financial Center.............. 305,439 10,379 34,415 -- -- 3,784
Lambert Office Plaza................. 32,807 1,095 3,296 -- -- 363
Carlsbad Corporate Center............ 125,000 3,722 15,061 -- -- 2,028
Balboa Corporate Center.............. 69,890 2,759 8,303 -- -- 97
Panorama Corporate Center............ 133,149 6,512 19,593 -- -- 233
<CAPTION>
TOTAL COSTS
------------------------
BUILDINGS AND ACCUMULATED YEAR BUILT/
LAND IMPROVEMENTS TOTAL DEPRECIATION(1) ENCUMBRANCES RENOVATED
-------- ------------- ---------- --------------- ------------ ------------
(IN THOUSANDS, EXCEPT SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C>
8383 Wilshire........................ $ 13,570 $ 52,188 $ 65,758 $ 3,958 $ -- 1971/93
Parkway Center....................... 1,480 6,352 7,832 513 5,029(3) 1992/95
Centerpointe La Palma................ 16,011 67,117 83,128 5,236 35,140(3) 1986/88/90
299 North Euclid..................... 1,050 10,988 12,038 554 5,000 1983
2800 28th Street..................... 2,937 10,629 13,566 762 -- 1979
Harbor Corporate Center.............. 870 4,043 4,913 265 -- 1985
1000 Town Center..................... 2,800 11,625 14,425 809 -- 1989
Mariner Court........................ 2,350 10,149 12,499 736 7,337(3) 1989
Pacific Gateway II................... 6,287 22,214 28,501 1,251 13,302(4) 1982/90
1821 East Dyer....................... 1,808 7,949 9,757 336 -- 1980/88
Crown Cabot Financial................ 7,056 24,287 31,343 1,755 -- 1989
120 South Spalding................... 2,775 12,723 15,498 485 8,749(3) 1984
South Bay Technology Center.......... 1,600 5,624 7,224 330 -- 1984
Gateway Center....................... 2,698 8,602 11,300 580 5,532(3) 1988
Renaissance Court.................... 1,580 6,255 7,835 327 -- 1981/92
Foremost Professional Plaza.......... 2,049 6,527 8,576 436 -- 1992
Northpoint........................... 1,800 20,875 22,675 1,366 -- 1991
Thousand Oaks Plaza.................. 444 1,370 1,814 87 -- 1988
Rancho Plaza......................... 711 2,267 2,978 145 -- 1987
Pennsfield Plaza..................... 800 2,570 3,370 165 -- 1989
Conejo Business Center............... 2,489 7,695 10,184 493 4,472 1991
Marin Corporate Center............... 1,956 6,177 8,133 396 3,168 1986
Evergreen Plaza...................... 2,489 7,355 9,844 471 -- 1979/96
145 South Fairfax.................... 1,825 6,210 8,035 400 4,050 1984
Bernardo Regency..................... 1,625 5,218 6,843 332 -- 1986
City Centre.......................... 8,250 26,232 34,482 1,589 -- 1982
Wilshire Pacific Plaza............... 3,750 13,602 17,352 726 -- 1976/87
Glendale Corporate Center............ 2,750 13,676 16,426 776 -- 1985
World Savings Center................. -- 117,910 117,910 6,504 -- 1983
Beverly Sunset Medical Plaza......... 7,180 25,896 33,076 1,038 -- 1963/92 - 95
Sunset Pointe Plaza.................. 2,075 6,781 8,856 382 3,855(3) 1988
Activity Business Center............. 3,650 11,688 15,338 633 8,003 1987
Westlake Gardens I................... 1,831 7,470 9,301 388 4,527(4) 1998
9100 Wilshire Blvd. ................. 16,250 52,553 68,803 3,301 35,000(4) 1971/90
1919 Santa Monica.................... 2,580 8,293 10,873 447 3,724(3) 1991
600 Corporate Pointe................. 8,575 37,751 46,326 2,066 17,584(3) 1989
150 East Colorado.................... 1,988 6,848 8,836 406 5,106(3) 1979/97
5161 Lankershim...................... 5,016 28,045 33,061 1,765 13,573(3) 1985/97
1501 Hughes Way...................... 1,348 5,184 6,532 190 -- 1983/97
3901 Via Oro......................... 692 3,338 4,030 277 -- 1986/97
Huntington Beach Plaza I & II........ 1,109 3,554 4,663 188 1,950(3) 1984/96
Fountain Valley Plaza................ 2,949 10,282 13,231 639 4,833(3) 1982
3300 Irvine Avenue................... 2,215 7,577 9,792 417 3,244(3) 1981/97
Von Karman Corporate Center.......... 11,513 38,155 49,668 2,080 17,180(3) 1981/84
South Coast Executive Plaza.......... 1,570 5,133 6,703 221 2,262(3) 1979/97
One Venture.......................... 1,137 4,367 5,504 236 -- 1990/97
City Centre.......................... 4,792 15,583 20,375 869 7,055(3) 1985/97
Orange Financial Center.............. 10,379 38,199 48,578 2,011 18,184(3) 1985/95
Lambert Office Plaza................. 1,095 3,659 4,754 174 -- 1986/97
Carlsbad Corporate Center............ 3,722 17,089 20,811 1,539 9,327(3) 1996
Balboa Corporate Center.............. 2,759 8,400 11,159 439 6,147(3) 1990
Panorama Corporate Center............ 6,512 19,826 26,338 1,038 13,191(3) 1991
</TABLE>
F-19
<PAGE> 126
<TABLE>
<CAPTION>
INITIAL COSTS BASIS STEP UP
------------------------ ---------------------- COSTS CAPITALIZED
SQUARE BUILDINGS AND BUILDINGS AND SUBSEQUENT TO
FOOTAGE LAND IMPROVEMENTS LAND IMPROVEMENTS ACQUISITION(2)
---------- -------- ------------- ------ ------------- -----------------
(IN THOUSANDS, EXCEPT SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C>
Ruffin Corporate Center.............. 45,059 $ 1,766 $ 5,315 $ -- $ -- $ 61
Skypark Office Plaza................. 202,164 5,733 21,608 -- -- 843
Governor Office Plaza................ 104,065 3,382 10,177 -- -- 1,101
5120 Shoreham........................ 37,759 1,224 4,073 -- -- 81
Sorrento Valley Science.............. 181,207 6,841 21,067 -- -- 977
Torreyanna Science Park.............. 81,204 5,035 15,148 -- -- 270
Waples Tech Center................... 28,119 1,010 3,027 -- -- 307
10251 Vista Sorrento................. 69,386 1,839 7,202 -- -- 127
Camarillo Business Center............ 154,216 3,522 10,602 -- -- 1,451
Centrelake Plaza..................... 110,763 1,570 9,473 -- -- 1,605
Tower Plaza I........................ 72,350 2,080 6,280 -- -- 727
Tower Plaza II....................... 19,301 265 802 -- -- 100
Tower Plaza III...................... 12,483 172 520 -- -- 86
Chicago Avenue Business Park......... 47,482 1,223 3,687 -- -- 208
Havengate Center..................... 80,557 1,913 5,759 -- -- 942
HDS Plaza............................ 104,178 2,604 7,838 -- -- 492
5702 Bolsa........................... 27,731 589 1,775 -- -- 33
5672 Bolsa........................... 11,968 254 767 -- -- 131
5632 Bolsa........................... 21,568 458 1,381 -- -- 25
Huntington Commerce Center........... 67,551 992 2,997 -- -- 177
Savi Tech Center..................... 341,446 8,280 24,911 -- -- 773
Yorba Linda Business Park............ 167,142 2,629 7,913 -- -- 216
Cymer Technology Center.............. 155,612 5,446 16,387 -- -- 219
Poway Industrial..................... 112,000 1,876 5,646 -- -- 96
10180 Scripps Ranch.................. 43,560 1,165 3,507 -- -- 95
10965 - 93 Via Frontera.............. 77,920 1,792 5,391 -- -- 100
Westridge............................ 48,955 1,807 5,591 -- -- 350
Ontario Airport Commerce Center...... 213,127 2,398 7,194 -- -- 325
Highlands I.......................... 26,856 470 1,418 -- -- 109
Highlands II......................... 41,210 793 2,394 -- -- 80
Hunter Business Park................. 106,782 1,148 3,439 -- -- 378
Tower Plaza Retail................... 133,481 4,531 13,660 -- -- 739
Howard Hughes -- Spectrum............ 36,959 2,500 7,500 -- -- 13
11075 Santa Monica................... 35,696 1,225 3,746 -- -- 675
Continental Grand.................... 235,926 7,125 40,451 -- -- 1,591
Calabasas Tech Center................ 273,526 11,513 34,591 -- -- 1,543
Oceangate Tower...................... 210,907 3,080 20,386 -- -- 1,019
Lyons Plaza.......................... 61,203 2,078 6,267 -- -- 265
Genesee Executive Plaza.............. 155,820 6,750 20,178 -- -- 1,689
Solar Drive Business Park............ 125,132 4,250 12,770 -- -- 519
91 Freeway Business Center........... 93,277 2,900 9,179 -- -- 699
601 South Glenoaks................... 72,524 2,450 7,519 -- -- 221
Mini Suites.......................... -- -- -- -- -- 185
Hillside Corporate Center............ 59,876 2,213 7,336 -- -- 725
Westlake Gardens II.................. 48,874 1,832 5,493 -- -- 908
Howard Hughes Tower.................. 313,833 5,830 47,170 -- -- 1,703
<CAPTION>
TOTAL COSTS
------------------------
BUILDINGS AND ACCUMULATED YEAR BUILT/
LAND IMPROVEMENTS TOTAL DEPRECIATION(1) ENCUMBRANCES RENOVATED
-------- ------------- ---------- --------------- ------------ ------------
(IN THOUSANDS, EXCEPT SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C>
Ruffin Corporate Center.............. $ 1,766 $ 5,376 $ 7,142 $ 281 $ 3,668(3) 1990
Skypark Office Plaza................. 5,733 22,451 28,184 1,196 1986
Governor Office Plaza................ 3,382 11,278 14,660 603 5,425(3) 1986
5120 Shoreham........................ 1,224 4,154 5,378 335 3,197(3) 1984
Sorrento Valley Science.............. 6,841 22,044 28,885 1,211 15,914(4) 1984
Torreyanna Science Park.............. 5,035 15,418 20,453 802 9,500(3) 1980/97
Waples Tech Center................... 1,010 3,334 4,344 152 -- 1990
10251 Vista Sorrento................. 1,839 7,329 9,168 381 3,882(3) 1981/95
Camarillo Business Center............ 3,522 12,053 15,575 658 8,923(3) 1984/97
Centrelake Plaza..................... 1,570 11,078 12,648 562 -- 1989
Tower Plaza I........................ 2,080 7,007 9,087 352 -- 1988
Tower Plaza II....................... 265 902 1,167 52 -- 1983
Tower Plaza III...................... 172 606 778 35 -- 1983
Chicago Avenue Business Park......... 1,223 3,895 5,118 206 -- 1986
Havengate Center..................... 1,913 6,701 8,614 271 -- 1985
HDS Plaza............................ 2,604 8,330 10,934 427 -- 1987
5702 Bolsa........................... 589 1,808 2,397 95 941(3) 1987/97
5672 Bolsa........................... 254 898 1,152 49 330(3) 1987
5632 Bolsa........................... 458 1,406 1,864 73 845(3) 1987
Huntington Commerce Center........... 992 3,174 4,166 163 1,502(3) 1987
Savi Tech Center..................... 8,280 25,684 33,964 1,319 14,728(3) 1989
Yorba Linda Business Park............ 2,629 8,129 10,758 427 4,377(3) 1988
Cymer Technology Center.............. 5,446 16,606 22,052 868 10,918(3) 1986
Poway Industrial..................... 1,876 5,742 7,618 299 3,233(3) 1991/96
10180 Scripps Ranch.................. 1,165 3,602 4,767 186 1,997(3) 1978/96
10965 - 93 Via Frontera.............. 1,792 5,491 7,283 286 2,841(3) 1982/97
Westridge............................ 1,807 5,941 7,748 345 2,972(3) 1984/96
Ontario Airport Commerce Center...... 2,398 7,519 9,917 433 4,821(4) 1987/97
Highlands I.......................... 470 1,527 1,997 78 -- 1988
Highlands II......................... 793 2,474 3,267 127 -- 1990
Hunter Business Park................. 1,148 3,817 4,965 190 -- 1990
Tower Plaza Retail................... 4,531 14,399 18,930 795 -- 1970/97
Howard Hughes -- Spectrum............ 2,500 7,513 10,013 328 -- 1993
11075 Santa Monica................... 1,225 4,421 5,646 183 -- 1983
Continental Grand.................... 7,125 42,042 49,167 2,133 28,653(3) 1986
Calabasas Tech Center................ 11,513 36,134 47,647 1,766 -- 1990
Oceangate Tower...................... 3,080 21,405 24,485 1,194 -- 1971/93 - 94
Lyons Plaza.......................... 2,078 6,532 8,610 295 -- 1990
Genesee Executive Plaza.............. 6,750 21,867 28,617 974 17,524(3) 1984
Solar Drive Business Park............ 4,250 13,289 17,539 528 -- 1982
91 Freeway Business Center........... 2,900 9,878 12,778 375 -- 1986/97
601 South Glenoaks................... 2,450 7,740 10,190 307 6,097(3) 1990
Mini Suites.......................... -- 185 185 10 -- --
Hillside Corporate Center............ 2,213 8,061 10,274 343 5,027(4) 1998
Westlake Gardens II.................. 1,832 6,401 8,233 23 3,683(4) 1999
Howard Hughes Tower.................. 5,830 48,873 54,703 1,434 26,640(4) 1987
</TABLE>
F-20
<PAGE> 127
<TABLE>
<CAPTION>
INITIAL COSTS BASIS STEP UP
------------------------ ---------------------- COSTS CAPITALIZED
SQUARE BUILDINGS AND BUILDINGS AND SUBSEQUENT TO
FOOTAGE LAND IMPROVEMENTS LAND IMPROVEMENTS ACQUISITION(2)
---------- -------- ------------- ------ ------------- -----------------
(IN THOUSANDS, EXCEPT SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C>
2001 Wilshire Blvd................... 101,125 $ 5,007 $ 14,893 $ -- $ -- $ 82
---------- -------- ---------- ------ ------ --------
17,849,790 $465,541 $1,719,924 $1,616 $8,607 $209,511
========== ======== ========== ====== ====== ========
<CAPTION>
TOTAL COSTS
------------------------
BUILDINGS AND ACCUMULATED YEAR BUILT/
LAND IMPROVEMENTS TOTAL DEPRECIATION(1) ENCUMBRANCES RENOVATED
-------- ------------- ---------- --------------- ------------ ------------
(IN THOUSANDS, EXCEPT SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C>
2001 Wilshire Blvd................... $ 5,007 $ 14,975 $ 19,982 $ 72 $ -- 1980
-------- ---------- ---------- -------- ---------
$467,157 $1,938,042 $2,405,199 $146,384 $ 703,910
======== ========== ========== ======== =========
</TABLE>
- -------------------------
(1) The depreciable life for buildings and improvements ranges from ten to forty
years. Tenant improvements are depreciated over the remaining term of the
lease.
(2) Includes total capitalized interest of $20.4 million.
(3) All of these properties are collateral for Arden Realty's $558.7 million
Mortgage Financings. The encumbrance allocated to an individual property is
based on the related individual release price.
(4) All of these properties are collateral for Arden Realty's $120.5 million
Lehman Prepayable Term Loan II and III. The encumbrance allocated to an
individual property is based on the related individual release price.
F-21
<PAGE> 128
ARDEN REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. SCHEDULE OF COMMERCIAL PROPERTIES AND ACCUMULATED DEPRECIATION (CONTINUED)
The changes in our investment in commercial properties and related
accumulated depreciation for each of the periods in the three years ended
December 31, are as follows (in thousands):
<TABLE>
<CAPTION>
ARDEN REALTY, INC.
--------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
COMMERCIAL PROPERTIES:
Balance at beginning of period....................... $2,173,194 $1,239,032 $ 546,707
Improvements......................................... 100,031 76,488 23,642
Deletions............................................ (591) (44) (335)
Acquisition of properties............................ 89,800 1,007,347 669,018
Transfers from (to) properties under development..... 42,765 (149,629) --
---------- ---------- ----------
Balance at end of period............................. $2,405,199 $2,173,194 $1,239,032
========== ========== ==========
ACCUMULATED DEPRECIATION:
Balance at beginning of period....................... $ (84,312) $ (35,860) $ (17,139)
Depreciation for period.............................. (61,452) (48,938) (19,056)
Deletions............................................ 591 44 335
Transfers to (from) properties under development..... (1,211) 442 --
---------- ---------- ----------
Balance at end of period............................. $ (146,384) $ (84,312) $ (35,860)
========== ========== ==========
</TABLE>
F-22
<PAGE> 129
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY US. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FORWARD-LOOKING
STATEMENTS........................... 2
PROSPECTUS SUMMARY..................... 3
RISK FACTORS........................... 15
NO CASH PROCEEDS....................... 23
RATIO OF EARNINGS TO FIXED CHARGES..... 23
CAPITALIZATION......................... 24
SELECTED FINANCIAL DATA................ 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS........................... 27
BUSINESS............................... 39
MARKET INFORMATION..................... 43
PROPERTIES............................. 44
DESCRIPTION OF OTHER DEBT.............. 56
THE EXCHANGE OFFER..................... 58
DESCRIPTION OF EXCHANGE NOTES.......... 68
DESCRIPTION OF SPECIFIC PROVISIONS OF
OUR PARTNERSHIP AGREEMENT............ 84
MANAGEMENT............................. 89
TRANSACTIONS WITH RELATED PARTIES...... 98
POLICIES WITH RESPECT TO CERTAIN
ACTIVITIES........................... 99
FEDERAL INCOME TAX CONSEQUENCES........ 102
PLAN OF DISTRIBUTION................... 103
LEGAL MATTERS.......................... 104
EXPERTS................................ 104
WHERE YOU CAN FIND MORE INFORMATION.... 104
FINANCIAL STATEMENTS................... F-1
</TABLE>
UNTIL , 2000, ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE
NOTES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENT OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
ARDEN REALTY
LIMITED PARTNERSHIP
OFFER TO EXCHANGE
$200,000,000 8.875% SENIOR NOTES DUE
2005 FOR ANY AND ALL UNREGISTERED
8.875% SENIOR NOTES DUE 2005
AND
$50,000,000 9.150% SENIOR NOTES DUE 2010 FOR ANY AND ALL UNREGISTERED
9.150% SENIOR NOTES DUE 2010
-------------------------
PROSPECTUS
--------------- , 2000
-------------------------
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 130
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Maryland General Corporation Law permits a Maryland corporation to
include in its charter a provision limiting the liability of its directors and
officers to the corporation and its stockholders for money damages expect for
liability resulting from (a) actual receipt of an improper benefit or profit in
money, property or services or (b) active and deliberate dishonesty established
by a final judgment and material to the cause of action. Arden Realty's charter
contains a provision which eliminates that kind of liability to the maximum
extent permitted by Maryland law.
The charter authorizes Arden Realty, to the maximum extent permitted by
Maryland law, to obligate itself to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to:
(a) any present or former director or officer; or
(b) any individual who, while a director of and at the request of
Arden Realty, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise as a director,
officer, partner or trustee of that corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise from and against
any claim or liability which those persons may incur by reason of their
status as a present or former director or officer of Arden Realty.
The bylaws obligate Arden Realty, to the maximum extent permitted by
Maryland law, to indemnify and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to:
(a) any present or former director or officer who is made a party to
the proceeding by reason of his service in that capacity; or
(b) any individual who, while a director and at the request of Arden
Realty, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise as a director,
officer, partner or trustee of that corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, and who is made
a party to the proceeding by reason of his service in that capacity against
any claim or liability to which he may become subject by reason of his
service.
The charter and the bylaws also permit Arden Realty to indemnify and
advance expenses to any person who served a predecessor of Arden Realty in any
of the capacities described above and to any employee or agent of Arden Realty
or a predecessor of Arden Realty.
The Maryland General Corporation Law requires a corporation to indemnify a
director or officer who has been successful, on the merits or otherwise, in the
defense of any proceeding to which he is made a party by reason of his service
in that capacity. A Maryland corporation is permitted to indemnify its present
and former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless it is established that:
(a) the act or omission of the director or officer was material to the
matter giving rise to the proceeding and (i) was committed in bad faith or
(ii was the result of active and deliberate dishonesty;
(b) the director or officer actually received an improper personal
benefit in money, property or services; or
(c) in the case of any criminal proceeding, the director or officer
had reasonable cause to believe that the act or omission was unlawful.
II-1
<PAGE> 131
A Maryland corporation, however, may not indemnify for an adverse judgment
in a suit by or in the right of the corporation or for a judgment of liability
on the basis that a personal benefit was improperly received, unless, in either
case, a court orders indemnification and then only for expenses. A Maryland
corporation is permitted to advance reasonable expenses to a director or officer
upon receipt by the corporation of (a) a written affirmation by the director or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification and (b) a written undertaking by him or on his
behalf to repay the amount paid or reimbursed if it shall ultimately be
determined that the standard of conduct was not met.
Our partnership agreement also provides for indemnification and advance of
expenses of Arden Realty and its officers and directors similar to the
indemnification and advance of expenses provided to officers and directors of
Arden Realty in its charter and bylaws, and provides that Arden Realty will not
be liable to us and its partners if it acted in good faith.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Purchase Agreement for the unregistered notes.
3.1* Second Amended and Restated Agreement of Limited Partnership
of Arden Realty Limited Partnership, dated September 7,
1999, filed as an exhibit to Arden Realty's quarterly report
on Form 10-Q filed with the Commission on November 15, 1999.
4.1 Indenture between Arden Realty Limited Partnership and The
Bank of New York, as trustee, dated March 14, 2000.
4.2 Form of 2005 exchange note.
4.3 Form of 2010 exchange note.
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding
the validity of the exchange notes.
5.2 Opinion of Latham & Watkins regarding the validity of the
exchange notes.
8.1 Opinion of Latham & Watkins regarding tax matters.
10.1* 1996 Stock Option and Incentive Plan of Arden Realty, Inc.
and Arden Realty Limited Partnership as filed as an exhibit
to Arden Realty's registration statement on Form S-11 (No.
333-8163).
10.2* Amendment Number 1 to the 1996 Stock Option and Incentive
Plan of Arden Realty, Inc. and Arden Realty Limited
Partnership as filed as an exhibit to Arden Realty's
Schedule 14A filed with the Commission on June 23, 1998.
10.3* Form of Officers and Directors Indemnification Agreement as
filed as an exhibit to Arden Realty's registration statement
on Form S-11 (No. 333-8163).
10.4* Loan Agreement dated June 8, 1998 by and between Arden
Realty Finance III, LLC, a Delaware limited liability
company and Lehman Brothers Realty Corporation, a Delaware
corporation filed as an exhibit to Arden Realty's quarterly
report of Form 10-Q filed with the Commission on August 14,
1998.
10.5* Mortgage Note, dated June 8, 1998 for $136,100,000 by and
between Arden Realty Finance III, L.L.C., a Delaware limited
liability company, and Lehman Brothers Realty Corporation, a
Delaware corporation. (Exhibit B. to Exhibit 10.4 above).
10.6* Tenant Estoppel Certificate (Exhibit C. to Exhibit 10.4
above).
10.7* Subordination, Non-Disturbance and Attornment Agreement
(Exhibit D. to Exhibit 10.4 above).
10.8* Deed of Trust, Assignment of Rents and Leases, Security
Agreement, and Fixture Filing dated as of June 8, 1998 made
by Arden Realty Finance III, L.L.C. as Grantor, to
Commonwealth Land Title Company as Trustee for the benefit
of Lehman Brothers Realty Corporation as Beneficiary, filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q filed with the Commission on August 14, 1998.
</TABLE>
II-2
<PAGE> 132
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.9* Assignment of Leases and Rents dated June 8, 1998, by and
between Arden Realty Finance III, L.L.C., a Delaware limited
liability company and Lehman Brothers Realty Corporation, a
Delaware corporation, its successors and assigns filed as an
exhibit to Arden Realty's quarterly report on Form 10-Q
filed with the Commission on August 14, 1998.
10.10* Collateral Assignment of Management Agreement and
Subordination Agreement dated as of June 8, 1998 among Arden
Realty Finance III, L.L.C., a Delaware limited liability
company ("Borrower"), Lehman Brothers Realty Corporation, a
Delaware corporation, ("Lender"), and Arden Realty Limited
Partnership, a Maryland limited partnership ("Manager"),
filed as an exhibit to Arden Realty's quarterly report on
Form 10-Q filed with the Commission on August 14, 1998.
10.11* Security Agreement is entered into as of June 8, 1998 by and
between Arden Realty Finance III, L.L.C., a Delaware limited
liability company and Lehman Brothers Realty Corporation, a
Delaware corporation, filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q filed with the Commission on
August 14, 1998.
10.12* Environmental Indemnity Agreement dated June 8, 1998 by
Arden Realty Finance III, L.L.C., a Delaware limited
liability company, in favor of Lehman Brothers Realty
Corporation, a Delaware corporation, filed as an exhibit to
Arden Realty's quarterly report on Form 10-Q filed with the
Commission on August 14, 1998.
10.13* Letter agreement between Lehman Brothers Realty Corporation,
or an affiliate thereof ("Lender"), Arden Realty Finance
III, L.L.C. ("Borrower"), Arden Realty, Inc. (the "REIT")
and Arden Realty Limited Partnership (the "Operating
Partnership"), filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q filed with the Commission on
August 14, 1998.
10.14* Loan Agreement by and between Arden Realty Finance IV, LLC,
a Delaware limited liability company and Lehman Brothers
Realty Corporation, a Delaware corporation, filed as an
exhibit to Arden Realty's quarterly report on Form 10-Q
filed with the Commission on August 14, 1998.
10.15* Mortgage Note, dated June 8, 1998 for $100,600,000 by and
between Arden Realty Finance IV, L.L.C., a Delaware limited
liability company ("Maker"), and Lehman Brothers Realty
Corporation, a Delaware corporation (Exhibit B to Exhibit
10.14 above).
10.16* Tenant Estoppel Certificate (Exhibit C. to Exhibit 10.14
above).
10.17* Subordination, Non-Disturbance and Attornment Agreement
(Exhibit D. to Exhibit 10.14 above).
10.18* Deed of Trust, Assignment of Rents and Leases, Security
Agreement, and Fixture Filing dated as of June 8, 1998 made
by Arden Realty Finance IV, L.L.C. as Grantor, to
Commonwealth Land Title Company as Trustee for the benefit
of Lehman Brothers Realty Corporation as Beneficiary, filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q filed with the Commission on August 14, 1998.
10.19* Assignment of Leases and Rents dated June 8, 1998, by and
between Arden Realty Finance IV, L.L.C., a Delaware limited
liability company ("Assignor"), and Lehman Brothers Realty
Corporation, a Delaware corporation, its successors and
assigns ("Assignee"), filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q filed with the Commission on
August 14, 1998.
10.20* Collateral Assignment of Management Agreement and
Subordination Agreement dated as of June 8, 1998 among Arden
Realty Finance IV, L.L.C., a Delaware limited liability
company ("Borrower"), Lehman Brothers Realty Corporation, a
Delaware corporation, ("Lender"), and Arden Realty Limited
Partnership, a Maryland limited partnership ("Manager"),
filed as an exhibit to Arden Realty's quarterly report on
Form 10-Q filed with the Commission on August 14, 1998.
10.21* Security Agreement is entered into as of June 8, 1998 by and
between Arden Realty Finance IV, L.L.C., a Delaware limited
liability company ("Debtor"), and Lehman Brothers Realty
Corporation, a Delaware corporation ("Secured Party"), filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q filed with the Commission on August 14, 1998.
</TABLE>
II-3
<PAGE> 133
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.22* Environmental Indemnity Agreement dated June 8, 1998 by
Arden Realty Finance IV, L.L.C., a Delaware limited
liability company ("Indemnitor"), in favor of Lehman
Brothers Realty Corporation, a Delaware corporation
("Lender"), filed as an exhibit to Arden Realty's quarterly
report on Form 10-Q filed with the Commission on August 14,
1998.
10.23* Letter agreement between Lehman Brothers Realty Corporation,
or an affiliate thereof ("Lender"), Arden Realty Finance IV,
L.L.C. ("Borrower"), Arden Realty, Inc. (the "REIT") and
Arden Realty Limited Partnership (the "Operating
Partnership"), filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q filed with the Commission on
August 14, 1998.
10.24* Amended and Restated Employment Agreement dated August 4,
1998, between Arden Realty and Mr. Richard S. Ziman, filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q/A filed with the Commission on December 15, 1998.
10.25* Amended and Restated Employment Agreement dated August 4,
1998, between Arden Realty and Mr. Victor J. Coleman, filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q/A filed with the Commission on December 15, 1998.
10.26* Amended and Restated Employment Agreement dated August 4,
1998, between Arden Realty and Ms. Diana M. Laing, filed as
an exhibit to Arden Realty's quarterly report on Form 10-Q/A
filed with the Commission on December 15, 1998.
10.27* Amended and Restated Employment Agreement dated August 4,
1998, between Arden Realty and Mr. Herbert Porter, filed as
an exhibit to Arden Realty's quarterly report on Form 10-Q/A
filed with the Commission on December 15, 1998.
10.28* Amended and Restated Employment Agreement dated January 1,
1999, between Arden Realty and Mr. Robert Peddicord, filed
as a exhibit to Arden Realty's quarterly report on Form 10-Q
filed with the Commission on May 14, 1999.
10.29* Promissory Note dated August 14, 1998, between Arden Realty
and Ms. Diana M. Laing, filed as an exhibit to Arden
Realty's quarterly report on Form 10-Q/A filed with the
Commission on December 15, 1998.
10.30* Agreement dated August 14, 1998, between Arden Realty and
Ms. Diana M. Laing, filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q/A filed with the Commission on
December 15, 1998.
10.31* Restricted Stock Agreement dated August 14, 1998, between
Arden Realty and Ms. Diana M. Laing, filed as an exhibit to
Arden Realty's quarterly report on Form 10-Q/A filed with
the Commission on December 15, 1998.
10.32* Miscellaneous Rights Agreement among Arden Realty, Arden
Realty Limited Partnership, NAMIZ, Inc. and Mr. Ziman as
filed as an exhibit to Arden Realty's registration statement
on Form S-11 (No. 333-8163).
10.33* Credit Facility documentation consisting of First Amended
and Restated Revolving Credit Agreement by and among the
Operating Partnership and Chase Manhattan Bank, Lehman
Brothers Realty Corporation and Wells Fargo Bank as filed as
an exhibit to Arden Realty's registration statement of Form
S-11 (No. 333-30059).
10.34* Mortgage Financing documentation consisting of Loan
Agreement by and between Arden Realty's special purpose
financing subsidiary and Lehman Brothers Realty Corporation
(the Loan Agreement includes the Mortgage Note, Deed of
Trust, and form of Tenant Estoppel Certificate and Agreement
as exhibits) as filed as an exhibit to Arden Realty's
registration statement of Form S-11 (No. 333-30059).
10.35* Promissory Note, dated as of March 30, 1999, between
Massachusetts Mutual Life Insurance Company and Arden Realty
Finance V, L.L.C. filed as an exhibit to Arden Realty's
current report Form 8-K filed with the Commission on April
20, 1999.
10.36* Deed of Trust and Security Agreement, dated as of March 30,
1999, with Arden Realty Finance V, L.L.C. as the Trustor and
Massachusetts Mutual Life Insurance Company as the
Beneficiary filed as an exhibit to Arden Realty's current
report on Form 8-K filed with the Commission on April 20,
1999.
</TABLE>
II-4
<PAGE> 134
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.37* Assignment of Leases and Rents, dated as of March 30, 1999,
between Massachusetts Mutual Life Insurance Company and
Arden Realty Finance V, L.L.C. filed as an exhibit to Arden
Realty's current report on Form 8-K filed with the
Commission on April 20, 1999.
10.38* Subordination of Management Agreement, dated as of March 30,
1999, between Massachusetts Mutual Life Insurance Company
and Arden Realty Finance V. L.L.C. filed as an exhibit to
Arden Realty's current report on Form 8-K filed with the
Commission on April 20, 1999.
10.39* Environmental Indemnification and Hold Harmless Agreement,
dated as of March 30, 1999, between Massachusetts Mutual
Life Insurance Company and Arden Realty Finance V, L.L.C.
filed as an exhibit to Arden Realty's current report on Form
8-K filed with the Commission on April 20, 1999.
10.40 Registration Rights Agreement between Arden Realty Limited
Partnership and the initial purchasers of the unregistered
notes.
12.1 Statement regarding computation of ratios.
21.1 Subsidiaries of Arden Realty Limited Partnership.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included
in Exhibit 5.1).
23.3 Consent of Latham & Watkins (included in Exhibit 5.2 and 8).
24.1 Power of Attorney (included on signature page to the
registration statement).
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers.
99.4 Form of Letter to Clients.
</TABLE>
- -------------------------
* Incorporated by reference in connection with the offering of the exchange
notes.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of a prospectus
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
II-5
<PAGE> 135
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offering
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 20 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, enforceable. 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 as to whether such indemnification by it is against public policy
as expressed in the act, and will be governed by the final adjudication of such
issue.
II-6
<PAGE> 136
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California on April 21, 2000.
ARDEN REALTY LIMITED PARTNERSHIP
By: Arden Realty, Inc.
Its: General Partner
By: /s/ RICHARD S. ZIMAN
------------------------------------
Richard S. Ziman
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Victor J. Coleman and Diana M. Laing, and each of them, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and for his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments
and any registration statement pursuant to Rule 462(b)) to this registration
statement on Form S-4 and to file the same with all exhibits thereto and any
other documents in connection therewith, with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing necessary or desirable to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on
April 21, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ RICHARD S. ZIMAN Chairman of the Board,
- --------------------------------------------- Chief Executive Officer and Director
Richard S. Ziman
/s/ VICTOR J. COLEMAN President, Chief Operating
- --------------------------------------------- Officer and Director
Victor J. Coleman
/s/ DIANA M. LAING Executive Vice President and
- --------------------------------------------- Chief Financial Officer
Diana M. Laing
/s/ RICHARD S. DAVIS Senior Vice President and
- --------------------------------------------- Chief Accounting Officer
Richard S. Davis
/s/ DAVID A. SWARTZ Secretary and General Counsel
- ---------------------------------------------
David A. Swartz
</TABLE>
II-7
<PAGE> 137
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ CARL D. COVITZ Director
- ---------------------------------------------
Carl D. Covitz
/s/ LARRY S. FLAX Director
- ---------------------------------------------
Larry S. Flax
/s/ PETER S. GOLD Director
- ---------------------------------------------
Peter S. Gold
/s/ STEVEN C. GOOD Director
- ---------------------------------------------
Steven C. Good
/s/ KENNETH B. ROATH Director
- ---------------------------------------------
Kenneth B. Roath
</TABLE>
II-8
<PAGE> 138
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Purchase Agreement for the unregistered notes.
3.1* Second Amended and Restated Agreement of Limited Partnership
of Arden Realty Limited Partnership, dated September 7,
1999, filed as an exhibit to Arden Realty's quarterly report
on Form 10-Q filed with the Commission on November 15, 1999.
4.1 Indenture between Arden Realty Limited Partnership and The
Bank of New York, as trustee, dated March 14, 2000.
4.2 Form of 2005 exchange note.
4.3 Form of 2010 exchange note.
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding
the validity of the exchange notes.
5.2 Opinion of Latham & Watkins regarding the validity of the
exchange notes.
8.1 Opinion of Latham & Watkins regarding tax matters.
10.1* 1996 Stock Option and Incentive Plan of Arden Realty, Inc.
and Arden Realty Limited Partnership as filed as an exhibit
to Arden Realty's registration statement on Form S-11 (No.
333-8163).
10.2* Amendment Number 1 to the 1996 Stock Option and Incentive
Plan of Arden Realty, Inc. and Arden Realty Limited
Partnership as filed as an exhibit to Arden Realty's
Schedule 14A filed with the Commission on June 23, 1998.
10.3* Form of Officers and Directors Indemnification Agreement as
filed as an exhibit to Arden Realty's registration statement
on Form S-11 (No. 333-8163).
10.4* Loan Agreement dated June 8, 1998 by and between Arden
Realty Finance III, LLC, a Delaware limited liability
company and Lehman Brothers Realty Corporation, a Delaware
corporation filed as an exhibit to Arden Realty's quarterly
report of Form 10-Q filed with the Commission on August 14,
1998.
10.5* Mortgage Note, dated June 8, 1998 for $136,100,000 by and
between Arden Realty Finance III, L.L.C., a Delaware limited
liability company, and Lehman Brothers Realty Corporation, a
Delaware corporation. (Exhibit B. to Exhibit 10.4 above).
10.6* Tenant Estoppel Certificate (Exhibit C. to Exhibit 10.4
above).
10.7* Subordination, Non-Disturbance and Attornment Agreement
(Exhibit D. to Exhibit 10.4 above).
10.8* Deed of Trust, Assignment of Rents and Leases, Security
Agreement, and Fixture Filing dated as of June 8, 1998 made
by Arden Realty Finance III, L.L.C. as Grantor, to
Commonwealth Land Title Company as Trustee for the benefit
of Lehman Brothers Realty Corporation as Beneficiary, filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q filed with the Commission on August 14, 1998.
10.9* Assignment of Leases and Rents dated June 8, 1998, by and
between Arden Realty Finance III, L.L.C., a Delaware limited
liability company and Lehman Brothers Realty Corporation, a
Delaware corporation, its successors and assigns filed as an
exhibit to Arden Realty's quarterly report on Form 10-Q
filed with the Commission on August 14, 1998.
10.10* Collateral Assignment of Management Agreement and
Subordination Agreement dated as of June 8, 1998 among Arden
Realty Finance III, L.L.C., a Delaware limited liability
company ("Borrower"), Lehman Brothers Realty Corporation, a
Delaware corporation, ("Lender"), and Arden Realty Limited
Partnership, a Maryland limited partnership ("Manager"),
filed as an exhibit to Arden Realty's quarterly report on
Form 10-Q filed with the Commission on August 14, 1998.
10.11* Security Agreement is entered into as of June 8, 1998 by and
between Arden Realty Finance III, L.L.C., a Delaware limited
liability company and Lehman Brothers Realty Corporation, a
Delaware corporation, filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q filed with the Commission on
August 14, 1998.
</TABLE>
<PAGE> 139
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.12* Environmental Indemnity Agreement dated June 8, 1998 by
Arden Realty Finance III, L.L.C., a Delaware limited
liability company, in favor of Lehman Brothers Realty
Corporation, a Delaware corporation, filed as an exhibit to
Arden Realty's quarterly report on Form 10-Q filed with the
Commission on August 14, 1998.
10.13* Letter agreement between Lehman Brothers Realty Corporation,
or an affiliate thereof ("Lender"), Arden Realty Finance
III, L.L.C. ("Borrower"), Arden Realty, Inc. (the "REIT")
and Arden Realty Limited Partnership (the "Operating
Partnership"), filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q filed with the Commission on
August 14, 1998.
10.14* Loan Agreement by and between Arden Realty Finance IV, LLC,
a Delaware limited liability company and Lehman Brothers
Realty Corporation, a Delaware corporation, filed as an
exhibit to Arden Realty's quarterly report on Form 10-Q
filed with the Commission on August 14, 1998.
10.15* Mortgage Note, dated June 8, 1998 for $100,600,000 by and
between Arden Realty Finance IV, L.L.C., a Delaware limited
liability company ("Maker"), and Lehman Brothers Realty
Corporation, a Delaware corporation (Exhibit B to Exhibit
10.14 above).
10.16* Tenant Estoppel Certificate (Exhibit C. to Exhibit 10.14
above).
10.17* Subordination, Non-Disturbance and Attornment Agreement
(Exhibit D. to Exhibit 10.14 above).
10.18* Deed of Trust, Assignment of Rents and Leases, Security
Agreement, and Fixture Filing dated as of June 8, 1998 made
by Arden Realty Finance IV, L.L.C. as Grantor, to
Commonwealth Land Title Company as Trustee for the benefit
of Lehman Brothers Realty Corporation as Beneficiary, filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q filed with the Commission on August 14, 1998.
10.19* Assignment of Leases and Rents dated June 8, 1998, by and
between Arden Realty Finance IV, L.L.C., a Delaware limited
liability company ("Assignor"), and Lehman Brothers Realty
Corporation, a Delaware corporation, its successors and
assigns ("Assignee"), filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q filed with the Commission on
August 14, 1998.
10.20* Collateral Assignment of Management Agreement and
Subordination Agreement dated as of June 8, 1998 among Arden
Realty Finance IV, L.L.C., a Delaware limited liability
company ("Borrower"), Lehman Brothers Realty Corporation, a
Delaware corporation, ("Lender"), and Arden Realty Limited
Partnership, a Maryland limited partnership ("Manager"),
filed as an exhibit to Arden Realty's quarterly report on
Form 10-Q filed with the Commission on August 14, 1998.
10.21* Security Agreement is entered into as of June 8, 1998 by and
between Arden Realty Finance IV, L.L.C., a Delaware limited
liability company ("Debtor"), and Lehman Brothers Realty
Corporation, a Delaware corporation ("Secured Party"), filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q filed with the Commission on August 14, 1998.
10.22* Environmental Indemnity Agreement dated June 8, 1998 by
Arden Realty Finance IV, L.L.C., a Delaware limited
liability company ("Indemnitor"), in favor of Lehman
Brothers Realty Corporation, a Delaware corporation
("Lender"), filed as an exhibit to Arden Realty's quarterly
report on Form 10-Q filed with the Commission on August 14,
1998.
10.23* Letter agreement between Lehman Brothers Realty Corporation,
or an affiliate thereof ("Lender"), Arden Realty Finance IV,
L.L.C. ("Borrower"), Arden Realty, Inc. (the "REIT") and
Arden Realty Limited Partnership (the "Operating
Partnership"), filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q filed with the Commission on
August 14, 1998.
10.24* Amended and Restated Employment Agreement dated August 4,
1998, between Arden Realty and Mr. Richard S. Ziman, filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q/A filed with the Commission on December 15, 1998.
10.25* Amended and Restated Employment Agreement dated August 4,
1998, between Arden Realty and Mr. Victor J. Coleman, filed
as an exhibit to Arden Realty's quarterly report on Form
10-Q/A filed with the Commission on December 15, 1998.
</TABLE>
<PAGE> 140
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.26* Amended and Restated Employment Agreement dated August 4,
1998, between Arden Realty and Ms. Diana M. Laing, filed as
an exhibit to Arden Realty's quarterly report on Form 10-Q/A
filed with the Commission on December 15, 1998.
10.27* Amended and Restated Employment Agreement dated August 4,
1998, between Arden Realty and Mr. Herbert Porter, filed as
an exhibit to Arden Realty's quarterly report on Form 10-Q/A
filed with the Commission on December 15, 1998.
10.28* Amended and Restated Employment Agreement dated January 1,
1999, between Arden Realty and Mr. Robert Peddicord, filed
as a exhibit to Arden Realty's quarterly report on Form 10-Q
filed with the Commission on May 14, 1999.
10.29* Promissory Note dated August 14, 1998, between Arden Realty
and Ms. Diana M. Laing, filed as an exhibit to Arden
Realty's quarterly report on Form 10-Q/A filed with the
Commission on December 15, 1998.
10.30* Agreement dated August 14, 1998, between Arden Realty and
Ms. Diana M. Laing, filed as an exhibit to Arden Realty's
quarterly report on Form 10-Q/A filed with the Commission on
December 15, 1998.
10.31* Restricted Stock Agreement dated August 14, 1998, between
Arden Realty and Ms. Diana M. Laing, filed as an exhibit to
Arden Realty's quarterly report on Form 10-Q/A filed with
the Commission on December 15, 1998.
10.32* Miscellaneous Rights Agreement among Arden Realty, Arden
Realty Limited Partnership, NAMIZ, Inc. and Mr. Ziman as
filed as an exhibit to Arden Realty's registration statement
on Form S-11 (No. 333-8163).
10.33* Credit Facility documentation consisting of First Amended
and Restated Revolving Credit Agreement by and among the
Operating Partnership and Chase Manhattan Bank, Lehman
Brothers Realty Corporation and Wells Fargo Bank as filed as
an exhibit to Arden Realty's registration statement of Form
S-11 (No. 333-30059).
10.34* Mortgage Financing documentation consisting of Loan
Agreement by and between Arden Realty's special purpose
financing subsidiary and Lehman Brothers Realty Corporation
(the Loan Agreement includes the Mortgage Note, Deed of
Trust, and form of Tenant Estoppel Certificate and Agreement
as exhibits) as filed as an exhibit to Arden Realty's
registration statement of Form S-11 (No. 333-30059).
10.35* Promissory Note, dated as of March 30, 1999, between
Massachusetts Mutual Life Insurance Company and Arden Realty
Finance V, L.L.C. filed as an exhibit to Arden Realty's
current report Form 8-K filed with the Commission on April
20, 1999.
10.36* Deed of Trust and Security Agreement, dated as of March 30,
1999, with Arden Realty Finance V, L.L.C. as the Trustor and
Massachusetts Mutual Life Insurance Company as the
Beneficiary filed as an exhibit to Arden Realty's current
report on Form 8-K filed with the Commission on April 20,
1999.
10.37* Assignment of Leases and Rents, dated as of March 30, 1999,
between Massachusetts Mutual Life Insurance Company and
Arden Realty Finance V, L.L.C. filed as an exhibit to Arden
Realty's current report on Form 8-K filed with the
Commission on April 20, 1999.
10.38* Subordination of Management Agreement, dated as of March 30,
1999, between Massachusetts Mutual Life Insurance Company
and Arden Realty Finance V. L.L.C. filed as an exhibit to
Arden Realty's current report on Form 8-K filed with the
Commission on April 20, 1999.
10.39* Environmental Indemnification and Hold Harmless Agreement,
dated as of March 30, 1999, between Massachusetts Mutual
Life Insurance Company and Arden Realty Finance V, L.L.C.
filed as an exhibit to Arden Realty's current report on Form
8-K filed with the Commission on April 20, 1999.
10.40 Registration Rights Agreement between Arden Realty Limited
Partnership and the initial purchasers of the unregistered
notes.
12.1 Statement regarding computation of ratios.
</TABLE>
<PAGE> 141
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
21.1 Subsidiaries of Arden Realty Limited Partnership.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included
in Exhibit 5.1).
23.3 Consent of Latham & Watkins (included in Exhibit 5.2 and 8).
24.1 Power of Attorney (included on signature page to the
registration statement).
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers.
99.4 Form of Letter to Clients.
</TABLE>
- -------------------------
* Incorporated by reference in connection with the offering of the exchange
notes.
<PAGE> 1
EXHIBIT 1.1
ARDEN REALTY LIMITED PARTNERSHIP
as Issuer
$200,000,000
8.875% SENIOR NOTES DUE 2005
AND
$50,000,000
9.150% SENIOR NOTES DUE 2010
PURCHASE AGREEMENT
March 14, 2000
LEHMAN BROTHERS INC.
Three World Financial Center
New York, New York 10285
MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
SALOMON SMITH BARNEY INC.
388 Greenwich Street, 4th Floor
New York, New York 10013
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017-2070
BANC ONE CAPITAL MARKETS, INC.
1 Banc One Plaza
Chicago, Illinois 60670
A. G. EDWARDS & SONS, INC.
One North Jefferson Avenue
St. Louis, Missouri 63103
Dear Sirs:
Arden Realty Limited Partnership, a Maryland limited partnership (the
"Issuer"), the sole general partner of which is Arden Realty, Inc., a Maryland
corporation (the "General Partner"), proposes to issue and sell, severally and
not jointly, to Lehman Brothers Inc., Morgan Stanley & Co. Incorporated, Salomon
Smith Barney Inc., Chase Securities Inc., Banc One Capital Markets, Inc. and A.
G. Edwards & Sons, Inc. (collectively, the "Initial Purchasers"), upon the terms
and conditions set forth in this agreement ("Agreement"), $200,000,000 of the
<PAGE> 2
Issuer's 8.875% Senior Notes due 2005 (the "Series A Notes") and $50,000,000 of
the Issuer's 9.150% Senior Notes due 2010 (the "Series B Notes," together with
the Series A Notes, the "Notes"). The Notes will have terms and provisions which
are summarized in the Offering Memorandum dated as of the date hereof. The Notes
are to be issued pursuant to an indenture (the "Indenture") to be entered into
among the Issuer and The Bank of New York, as trustee (the "Trustee"). This is
to confirm the agreement concerning the purchase of the Notes from the Issuer by
the Initial Purchasers. Capitalized terms used but not defined herein shall have
the meanings given to such terms in the Indenture.
Proceeds from the offering of the Notes will be used to repay secured
debt, borrowings under the Issuer's $300 million unsecured revolving line of
credit and for working capital and other general partnership purposes relating
to the Issuer.
The Notes will be offered and sold to the Initial Purchasers pursuant to
an exemption from the registration requirements under the Securities Act of
1933, as amended (the "Securities Act"). The Issuer has prepared a preliminary
offering memorandum, dated February 29, 2000 (the "Preliminary Offering
Memorandum"), and has prepared an offering memorandum, dated March 14, 2000 (the
"Offering Memorandum"), setting forth information regarding the Issuer and the
Notes. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all documents incorporated by
reference therein and all amendments and supplements thereto. The Issuer hereby
confirms that it has authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale of the
Notes by the Initial Purchasers.
You have advised the Issuer that you will make offers (the "Exempt
Resales") of the Notes purchased by you hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely (i) to persons whom you
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Securities Act ("QIBs"), (ii) outside the United States to
certain persons in offshore transactions in reliance on Regulation S
("Regulation S") under the Securities Act and (iii) to a limited number of
persons whom you reasonably believe to be "institutional accredited investors"
as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act ("IAIs") (the persons specified in clauses (i), (ii) and (iii)
being collectively referred to herein as the "Eligible Purchasers"). As used
herein, the terms "offshore transaction," "United States" and "U.S. person" have
the respective meanings given to them in Regulation S.
Holders (including subsequent transferees) of the Notes will have the
registration rights described in the Offering Memorandum, which will be set
forth in the registration rights agreement related thereto (the "Registration
Rights Agreement"), to be dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, for so long as such Notes
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement).
Pursuant to the Registration Rights Agreement, the Issuer will agree to
file with the Securities and Exchange Commission (the "Commission") under the
circumstances set forth therein, (i) a registration statement under the
Securities Act (the "Exchange Offer Registration
2
<PAGE> 3
Statement") relating to the Issuer's new 8.875% Senior Notes due 2005 (the
"Series A Exchange Notes") to be offered in exchange for the Series A Notes
(such offer to exchange being referred to as the "Series A Exchange Offer") and
the Issuer's new 9.150% Senior Notes due 2010 (the "Series B Exchange Notes,"
together with the Series A Exchange Notes, the "Exchange Notes") to be offered
in exchange for the Series B Notes (such offer to exchange being referred to as
the "Series B Exchange Offer," together with the Series A Exchange Offer, the
"Exchange Offers") and, if necessary, (ii) a shelf registration statement
pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement" and, together with the Exchange Offer Registration Statement, the
"Registration Statements") relating to the resale by certain holders of the
Notes and to use its best efforts to cause such Registration Statements to be
declared and remain effective and usable for the periods specified in the
Registration Rights Agreement and to consummate the Exchange Offers.
This Agreement, the Indenture, the Notes and the Registration Rights
Agreement are hereinafter sometimes referred to collectively as the "Operative
Documents."
1. Representations, Warranties and Agreements of the Issuer. The Issuer
represents, warrants and agrees that:
(a) The Preliminary Offering Memorandum and the Offering Memorandum
with respect to the Notes have been prepared by the Issuer for use by the
Initial Purchasers in connection with the Exempt Resales. No order or decree
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum (or any supplement or amendment thereto), or any order asserting that
the transactions contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued and no proceeding for that
purpose has commenced or is pending or, to the knowledge of the Issuer, is
contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates and the Offering Memorandum as of the Closing Date
(together with any supplement or amendment thereto), did not and will not
contain an untrue statement of a material fact or omit to state a material fact
necessary, in order to make the statements, in light of the circumstances under
which they were made, not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Preliminary
Offering Memorandum and the Offering Memorandum (or any supplement or amendment
thereto) made in reliance upon and in conformity with information relating to
any Initial Purchaser furnished to the Issuer in writing by or on behalf of any
Initial Purchaser expressly for use therein.
(c) The market-related data and estimates included in the
Preliminary Offering Memorandum and the Offering Memorandum (or any supplement
or amendment thereto) are based on or derived from sources which the Issuer
believes to be reliable and accurate.
(d) The Issuer is a limited partnership duly formed and existing
under and by virtue of the laws of the State of Maryland and is in good standing
with the Maryland State Department of Assessments and Taxation (the "SDAT") with
partnership power to own, lease
3
<PAGE> 4
and operate its properties, to conduct the business in which it is engaged or
proposes to engage as described in the Offering Memorandum and to enter into and
perform its obligations under this Agreement. The Issuer is duly qualified or
registered as a foreign partnership and is in good standing in each jurisdiction
in which such qualification or registration is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure so to qualify or be registered or to be in good standing in such
other jurisdiction would not result in a material adverse effect on the
consolidated financial position, results of operation, business or prospects of
the Issuer and its subsidiaries, taken as a whole (a "Material Adverse Effect").
The General Partner is the sole general partner of the Issuer and, immediately
after the Closing Date will be the sole general partner of the Issuer and will
own approximately 96.7% of all outstanding common units of partnership interest
of the Issuer.
(e) Each of the subsidiaries (as defined in Section 15 hereof) of
the Issuer has been duly organized and is a validly existing partnership or
limited liability company in good standing under the laws of its jurisdiction of
organization and in each other jurisdiction in which qualification or
registration is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
be registered or to be in good standing in such other jurisdiction would not
result in a Material Adverse Effect. Each subsidiary has all power and authority
necessary to own or hold its respective properties and to conduct the businesses
in which it is engaged; and none of the subsidiaries (other than Arden Realty
Finance, L.P.) is a "significant subsidiary," as such term is defined in Rule
405 of the Rules and Regulations.
(f) All of the issued partnership interests (the "Partnership
Interests") of the Issuer have been duly and validly authorized and issued and
are fully paid and, with respect to the Partnership Interests owned by the
General Partner are owned directly by the General Partner, free and clear of all
liens, encumbrances, equities or claims; all outstanding Partnership Interests
have been offered and sold in compliance with all applicable laws (including,
without limitation, federal and state securities laws); and all of the issued
partnership or membership interests, as the case may be, of each subsidiary of
the Issuer have been duly and validly authorized and issued and are fully paid
and are owned directly or indirectly by the Issuer, free and clear of all liens,
encumbrances, equities or claims.
(g) The second amended and restated partnership agreement of the
Issuer (the "Partnership Agreement") has been duly authorized, executed and
delivered by the General Partner on behalf of the Issuer and constitutes the
valid agreement thereof, enforceable in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law); and the execution, delivery and performance of the
Partnership Agreement and each amendment thereto did not at the time of
execution and delivery constitute a breach of, or default under any material
contract, lease or other instrument to which the Issuer was a party or by which
its properties have been bound or any law, administrative regulation or
administrative or court decree in force at the time. The Partnership Agreement
conforms in all material respects to the description thereof contained in the
Offering Memorandum.
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<PAGE> 5
(h) The Issuer has all requisite partnership power and authority to
execute, deliver and perform its obligations under the Operative Documents.
(i) This Agreement has been duly authorized, executed and delivered
by the Issuer.
(j) The Indenture has been duly and validly authorized by the Issuer
and upon its due execution and delivery and, assuming due authorization,
execution and delivery by the Trustee, will constitute a valid and binding
obligation of the Issuer, enforceable against the Issuer in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law). On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture Act
of 1939, as amended (the "TIA"), and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder. The Indenture will
conform in all material respects to the description thereof contained in the
Offering Memorandum.
(k) The Notes have been duly and validly authorized by the Issuer
and when duly executed by the Issuer in accordance with the terms of the
Indenture and, assuming due authentication of the Notes by the Trustee, upon
delivery to the Initial Purchasers against payment therefor in accordance with
the terms hereof, will have been validly issued and delivered, and will
constitute valid and binding obligations of the Issuer, will be in the form
contemplated by, and entitled to the benefits of, the Indenture, and enforceable
against the Issuer in accordance with their terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law). The Notes will conform in all material respects to the description thereof
contained in the Offering Memorandum. Such Notes are senior unsecured
obligations of the Issuer and rank on a parity with all existing and future
senior unsecured indebtedness of the Issuer.
(l) The Exchange Notes have been duly and validly authorized by the
Issuer and if and when duly issued and authenticated in accordance with the
terms of the Indenture and delivered in accordance with the Exchange Offers
provided for in the Registration Rights Agreement, will constitute valid and
binding obligations of the Issuer entitled to the benefits of the Indenture, and
will be enforceable against the Issuer in accordance with their terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law). Such Exchange Notes will be senior unsecured obligations
of the Issuer and will rank on a parity with all existing and future senior
unsecured indebtedness of the Issuer.
(m) The Registration Rights Agreement has been duly authorized by
the Issuer and, when executed by the Issuer in accordance with the terms hereof,
will be validly executed and delivered and (assuming the due execution and
delivery thereof by the Initial Purchasers) will be the valid and binding
obligation of the Issuer, enforceable against the Issuer
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<PAGE> 6
in accordance with its terms, subject to the effects of bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law). The
Registration Rights Agreement will conform in all material respects to the
description thereof contained in the Offering Memorandum.
(n) Neither the Issuer nor any of its subsidiaries is (i) in
violation of its charter, by-laws, certificate of limited partnership, articles
of organization, operating agreement or partnership agreement, as the case may
be, (ii) in default, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due performance or
observance of any term, obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan agreement, note, lease
or other agreement or instrument to which it is a party or by which it is bound
or to which any of its properties or assets is subject or (iii) in violation of
any law, ordinance, governmental rule, regulation or court decree to which it or
its property or assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business except, in the case of clauses (ii) and (iii) for such defaults,
violations or failures to obtain that would not, singly or in the aggregate,
have a Material Adverse Effect.
(o) The execution, delivery and performance of this Agreement and
the other Operative Documents by the Issuer, compliance by the Issuer with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any contract, indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument to which the Issuer or any of its
subsidiaries is a party or by which the Issuer or any of its subsidiaries is
bound or to which any of the property or assets of the Issuer or any of its
subsidiaries is subject, that would have, singly or in the aggregate, a Material
Adverse Effect, (ii) result in any violation of the provisions of the
certificate of limited partnership, partnership agreement, certificate of
formation, limited liability company agreement or other organizational document
of the Issuer or any of its subsidiaries, (iii) result in the violation of any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Issuer or any of its subsidiaries or any of
their respective properties, assets or businesses, that would have, singly or in
the aggregate, a Material Adverse Effect, (iv) result in the imposition of or
creation of (or the obligation to create or impose) a lien, encumbrance, equity
or claim under, any agreement or instrument to which the Issuer or any of its
subsidiaries is a party or by which the Issuer or any of its subsidiaries or any
of their respective property is bound, except where such lien, encumbrance,
equity or claim would not have a Material Adverse Effect or (v) result in the
termination, suspension or revocation of any Authorization (as defined below) of
the Issuer or any of its subsidiaries or result in any other impairment of the
rights of the holder of any such Authorization as would not have, singly or in
the aggregate, a Material Adverse Effect; and except (A) as and as have been or
will be obtained by the Closing Date and (B) as may be required in connection
with the registration of the Exchange Notes under the Securities Act,
qualification of the Indenture under the TIA and compliance with the securities
and Blue Sky laws of various jurisdictions, no consent, approval, authorization
or order of, or filing or registration with, any such court or governmental
agency or body is required for the execution,
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<PAGE> 7
delivery and performance of this Agreement and the other Operative Documents by
the Issuer, compliance by the Issuer with all provisions hereof and thereof and
the consummation of the transactions contemplated hereby and thereby.
(p) Except as described in the Offering Memorandum, there are no
legal or governmental proceedings pending or to the knowledge of the Issuer
threatened to which the Issuer or any of its subsidiaries is or to the knowledge
of the Issuer could be a party or of which any property or assets of the Issuer
or any of its subsidiaries is or could be the subject which, if determined
adversely to the Issuer or any of its subsidiaries, would, singly or in the
aggregate, have a Material Adverse Effect; and to the best of the Issuer's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(q) Except as disclosed in the Offering Memorandum: (i) there has
been no storage, disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, medical wastes, hazardous wastes or
hazardous substances by the Issuer or any of its subsidiaries (or, to the
knowledge of the Issuer or any of its predecessors in interest or any other
person) at, upon or from any of the property now or previously owned or leased
by the Issuer or its subsidiaries, in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require any removal, remedial or other response action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for any
violation or response action which would not have, singly or in the aggregate
with all such violations and response actions, a Material Adverse Effect; (ii)
there has been no storage, disposal, generation, manufacture, refinement,
transportation, handling or treatment of toxic wastes, medical wastes, hazardous
wastes or hazardous substances by the Issuer or any of its subsidiaries (or, to
the knowledge of the Issuer, any of its predecessors in interest) at or upon any
property owned by anyone else in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or which would require any
removal, remedial or other response action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except for any violation or
response action which would not have, singularly or in the aggregate with all
such violations and response actions, a Material Adverse Effect; and (iii) there
has been no material spill, discharge, leak, emission, injection, escape,
placement, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Issuer
or any of its subsidiaries or with respect to which the Issuer or any of its
subsidiaries has knowledge, except for any such spill, discharge, leak,
emission, injection, escape, placement, dumping or release which would not have
singly or in the aggregate with all such spills, discharges, leaks, emissions,
injections, escapes, placements, dumpings and releases, a Material Adverse
Effect. The terms "hazardous wastes," "toxic wastes," "hazardous substances" and
"medical wastes" shall have the meanings specified in any applicable local,
state, federal and foreign laws or regulations with respect to environmental
protection. There are no underground storage tanks located on or in any of the
properties owned or leased by the Issuer or any of its subsidiaries except such
tanks, individually or in the aggregate, the existence of which would not have a
Material Adverse Effect.
(r) The Issuer and its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of
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<PAGE> 8
1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Issuer or
any of its subsidiaries would have any liability; none of the Issuer or any of
its subsidiaries has incurred and nor expects to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Issuer or any of its subsidiaries
would have any liability that is intended to be qualified under Section 401(a)
of the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification, except for such noncompliance, reportable events, liabilities or
failures to qualify that would not result in a Material Adverse Effect.
(s) Each of the Issuer and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "Authorization") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including without limitation, under any applicable
environmental laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect, and each of the Issuer and
its subsidiaries is in compliance with all the terms and conditions thereof and
with the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing body)
which allows or, after notice or lapse of time or both, would allow, revocation,
suspension or termination of any such Authorization or results or, after notice
or lapse of time or both, would result in any other impairment of the rights of
the holder of any such Authorization; and such Authorizations contain no
restrictions that are burdensome to the Issuer or any of its subsidiaries;
except where such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a Material Adverse
Effect.
(t) (i) The Issuer and its subsidiaries have good and marketable
title in fee simple to all real property and own all personal property purported
to be owned by them, in each case free and clear of all liens, encumbrances and
defects, except such as are described in the Offering Memorandum, or such as
would not materially affect the value of such property and do not have a
Material Adverse Effect (except for such real property, buildings and personal
property as are described in subparagraph (ii) below); and (ii) all real
property, buildings and personal property held under lease by the Issuer and its
subsidiaries are held by them under valid, existing and enforceable leases, in
each case free and clear of all liens, encumbrances and defects except such as
are described in the Offering Memorandum, and such exceptions as would not have
a Material Adverse Effect.
(u) The Issuer and its subsidiaries own, possess or can acquire on
reasonable terms, adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights and licenses
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<PAGE> 9
necessary for the conduct of their respective businesses, and have no reason to
believe that the conduct of their respective business will conflict with, and
have not received any notice of any claim of conflict with, any such rights of
others, which conflict (if the subject of an unfavorable decision, ruling or
finding), would result in a Material Adverse Effect.
(v) Ernst & Young LLP, who have certified certain financial
statements included in the Preliminary Offering Memorandum and the Offering
Memorandum, whose report appears therein and who have delivered the initial
letter referred to in Section 7(g) hereof, are independent public accountants
under Rule 101 of the American Institute of Certified Public Accountants' Code
of Professional Conduct and its interpretations and rulings thereunder.
(w) The historical financial statements (including the related
notes) included in the Offering Memorandum (and any amendment or supplement
thereto) present fairly the financial condition and results of operations of the
entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles of the United States applied on a consistent basis
throughout the periods involved and all adjustments necessary for a fair
presentation of results for such periods have been made; and the financial and
statistical information and data set forth in the Offering Memorandum (and any
amendment or supplement thereto) present fairly the information and data shown
therein and have been prepared on a basis consistent with such financial
statements and the books and records of the respective entities presented
therein.
(x) Neither the Issuer nor any of its subsidiaries is and, after
giving effect to offering and sale of the Notes and the application of the net
proceeds thereof as described in the Offering Memorandum, will be an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder.
(y) Except as described in the Offering Memorandum, there are no
contracts, agreements or understandings between the Issuer and any person
granting such person the right to require the Issuer to file a registration
statement under the Securities Act with respect to any securities of the Issuer
owned or to be owned by such person or to require the Issuer to include such
securities in the securities registered pursuant to the Registration Statements
or in any securities being registered pursuant to any other registration
statement filed by the Issuer under the Securities Act.
(z) Neither the Issuer nor any of its subsidiaries, nor any agent
thereof acting on the behalf of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the Notes to
violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(aa) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act (i)
has imposed (or has informed the Issuer that it is considering imposing) any
condition (financial or otherwise) on the Issuer's retaining any rating assigned
to the Issuer, any securities of the Issuer or (ii) has
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<PAGE> 10
indicated to the Issuer that it is considering (a) the downgrading, suspension,
or withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Issuer or any securities of the Issuer.
(bb) Since the date of the latest audited financial statements
included in the Offering Memorandum and except as disclosed in the Offering
Memorandum, (i) there has been no material adverse change in the financial
condition, results of operations or business of the Issuer or any of its
subsidiaries, whether or not arising in the ordinary course of business, (ii) no
material casualty loss or material condemnation or other adverse event with
respect to any business or property of the Issuer or any of its subsidiaries has
occurred, (iii) there have been no transactions or acquisitions entered into by
the Issuer or any of its subsidiaries other than those in the ordinary course of
business, which are material with respect to the Issuer and its subsidiaries
taken as a whole, (iv) there have been no material liabilities or obligations,
direct or contingent, incurred by the Issuer or any of its subsidiaries, other
than liabilities and obligations which were incurred in the ordinary course of
business, (v) there has been no dividend or distribution of any kind declared,
paid or made by the Issuer with respect to its Partnership Interests, (vi) there
has been no material change in the Partnership Interests of the Issuer, or any
increase in the indebtedness of the Issuer or any of its subsidiaries and (vii)
there have been no securities issued or granted by Issuer or any of its
subsidiaries.
(cc) There is (i) no material unfair labor practice complaint
pending against the Issuer or any of its subsidiaries nor, to the best knowledge
of the Issuer, threatened against any of them before the National Labor
Relations Board or any state or local labor relations board, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Issuer or any of its
subsidiaries or, to the best knowledge of the Issuer, threatened against any of
them, and (ii) no material strike, labor dispute, slowdown or stoppage pending
against the Issuer or any of its subsidiaries nor, to the best knowledge of the
Issuer, threatened against the Issuer or any of its subsidiaries which in any
case would have a Material Adverse Effect.
(dd) Each of the Issuer and its subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(ee) The Issuer and its subsidiaries have filed all federal, state
and local income and franchise tax returns required to be filed through the date
hereof and have paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Issuer or any of its subsidiaries which has had (nor
does the Issuer have any knowledge of any tax deficiency which, individually or
in the aggregate, if determined adversely to the Issuer or any of its
subsidiaries, would have) a Material Adverse Effect.
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(ff) The Issuer and each of its subsidiaries that is a partnership
are properly classified as partnerships, and not as corporations or as
associations taxable as corporations, for Federal income tax purposes throughout
the period from May 20, 1996 through the date hereof, or, in the case of such
subsidiaries that have terminated, through the date of termination of such
subsidiaries.
(hh) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Securities Act.
(ii) When the Notes are issued and delivered pursuant to this
Agreement, such Notes are eligible for resale pursuant to Rule 144A under the
Securities Act and will not be of the same class (within the meaning of Rule
144A under the Securities Act) as securities of the Issuer that are listed on a
national securities exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or that are quoted in a
United States automated inter-dealer quotation system.
(jj) Assuming (i) that your representations and warranties in
Section 2 are true, (ii) compliance by you with your covenants set forth in
Section 2, (iii) that the representations of the IAIs set forth in the IAI
letters are true and (iv) that each of the Eligible Purchasers is a QIB, a
person who acquires the Notes in an "offshore transaction" and is not a "U.S.
Person" (within the meaning of Regulation S under the Securities Act) or an IAI,
the purchase of the Notes by the Initial Purchasers pursuant hereto and the
resale of the Notes pursuant to Exempt Resales are exempt from the registration
requirements of the Securities Act. No form of general solicitation or general
advertising (within the meaning of Rule 502(c) of the Securities Act) was used
by the Issuer or any of its representatives (other than you, as to whom the
Issuer makes no representation) in connection with the offer and sale of the
Notes, including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(kk) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(ll) None of the Issuer nor any of its affiliates or any person
acting on their behalf (other than the Initial Purchasers, as to whom the Issuer
makes no representation) (i) has engaged or will engage in any directed selling
efforts within the meaning of Regulation S with respect to the Notes and (ii)
has complied and will comply with the offering restrictions requirements of
Regulation S.
(mm) The sale of the Notes pursuant to Regulation S is not part of a
plan or scheme to evade the registration provisions of the Securities Act.
(nn) The Issuer and its affiliates and all persons acting on their
behalf (other than the Initial Purchasers, as to whom the Issuer makes no
representation) have complied with the offering restrictions requirements of
Regulation S in connection with the offering of the
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Notes outside the United States and, in connection therewith, the Offering
Memorandum will contain the disclosure required by Rule 902(g)(2).
(oo) The Notes sold in reliance on Regulation S will be represented
upon issuance by a temporary global security that may not be exchanged for
definitive securities until the expiration of the distribution compliance
periods referred to in Rule 903(c)(3) of the Securities Act and only upon
certification of beneficial ownership of such Security by non-U.S. persons or
U.S. persons who purchased such Notes in transactions that were exempt from the
registration requirements of the Securities Act.
(pp) Each certificate signed by any officer of the General Partner
of the Issuer and delivered to the Initial Purchasers or counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by the Issuer to
each Initial Purchaser as to the matters covered thereby.
(qq) Except as described in the Offering Memorandum, the Issuer and
each of its subsidiaries carry, or are covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries in similar
geographic locations.
(rr) There are no contracts or other documents which are required to
be described in the Offering Memorandum which have not been described in the
Offering Memorandum.
(ss) No material relationship, direct or indirect, exists between or
among the Issuer or any of its subsidiaries on the one hand, and the directors,
officers, partners, stockholders, customers or suppliers of the Issuer or any of
its subsidiaries on the other hand, which is required to be described in the
Offering Memorandum which is not so described.
(tt) None of the Issuer or any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Issuer or any of its subsidiaries, has used any partnership funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from partnership funds;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(uu) The statements set forth in the Offering Memorandum under the
captions "Description of Other Debt," "Description of Notes" and "Exchange
Offer; Registration Rights" insofar as they describe the terms of the agreements
and securities referred to therein, are accurate and fairly present the
information required to be shown in all material respects.
(vv) The Issuer and its subsidiaries are currently in substantial
compliance with all presently applicable provisions of the Americans with
Disabilities Act and no failure of the Issuer or any of its subsidiaries to
comply with all presently applicable provisions of the Americans with
Disabilities Act, individually or in the aggregate, would result in a Material
Adverse Effect.
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2. Subsequent Offers and Resales of the Notes.
(a) Each of the Initial Purchasers and the Issuer hereby establish and
agree to observe the following procedures in connection with the sale of the
Notes:
(i) Offers and sales of the Notes shall only be made (A) to
persons whom the offeror or seller reasonably believes to be QIBs, (B)
to a limited number of IAIs or (C) non-U.S. persons outside the United
States, as defined in Regulation S under the Securities Act, to whom the
offeror or seller reasonably believes offers and sales of the Notes may
be made in reliance upon Regulation S under the Securities Act. Each
Initial Purchaser severally agrees that it will not offer, sell or
deliver any of the Notes in any jurisdiction outside the United States
except under circumstances that will result in compliance with the
applicable laws thereof, and that it will take at its own expense
whatever action is required to permit its purchase and sale of the Notes
in such jurisdictions.
(ii) No general solicitation or general advertising (within the
meaning of Rule 502(c) under the Securities Act) will be used in the
United States in connection with the offering or sale of the Notes.
(iii) In the case of a non-bank Eligible Purchaser of a Note
acting as a fiduciary for one or more third parties, each third party
shall, in the judgment of the applicable Initial Purchaser, be an IAI or
a QIB or a non-U.S. person outside the United States.
(iv) Each Initial Purchaser will take reasonable steps to inform,
and cause each of its U.S. affiliates to take reasonable steps to
inform, persons acquiring Notes from such Initial Purchaser or
affiliate, as the case may be, in the United States that the Notes (A)
have not been and will not be registered under the Securities Act, (B)
are being sold to them without registration under the Securities Act in
reliance on Rule 144A or in accordance with another exemption from
registration under the Securities Act, as the case may be and (C) may
not be offered, sold or otherwise transferred except (1) to the Issuer,
(2) outside the United States in accordance with Regulation S or (3)
inside the United States in accordance with (x) Rule 144A to a person
whom the seller reasonably believes is a QIB that is purchasing such
Notes for its own account or the account of a QIB to whom notice is
given that the offer, sale or transfer is being made in reliance on Rule
144A or (y) pursuant to another available exemption from registration
under the Securities Act.
(v) No sale of the Notes to any one IAI will be for less than
U.S. $100,000 and for any other Eligible Purchaser will be for less than
U.S. $1,000 principal amount and no Note will be issued in a smaller
principal amount, as applicable. If the Eligible Purchaser is a non-bank
fiduciary acting on behalf of others, each person for whom it is acting
must purchase at least U.S. $1,000 or U.S. $100,000 principal amount of
the Notes, as applicable.
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<PAGE> 14
(vi) The transfer restrictions and the other provisions set forth
in the Offering Memorandum under the heading "Notice to Investors,"
including the legend required thereby, shall apply to the Notes except
as otherwise agreed by the Issuer and the Initial Purchasers.
(vii) Each Initial Purchaser severally represents and warrants
that:
(A) it has not offered or sold and, prior to the
expiration of six months from the closing of the offering
of the Notes, will not offer or sell any notes to persons
in the United Kingdom, except to persons whose ordinary
activities involve them in acquiring, holding, managing or
disposing of investments (as principals or as agents) for
the purposes of their businesses or otherwise in
circumstances which have not constituted or resulted in
and will not constitute or result in an offer to the
public in the United Kingdom, within the meaning of the
Public Offers of Securities Regulations 1995;
(B) it has complied and will comply with all
applicable provisions of the Financial Services Act of
1986 with respect to anything done by it in relation to
the Notes in, from or otherwise involving the United
Kingdom; and
(C) it has not issued or passed on and will not
issue or pass on in the United Kingdom any document
created or received by it in connection with the issue of
the Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1996 (as
amended) or is a person to whom such document may
otherwise lawfully be issued or passed on.
(b) The Issuer covenants with each Initial Purchaser as follows:
(i) The Issuer agrees that it will not and will cause its
affiliates not to, directly or indirectly, solicit any offer to
buy, sell or make any offer or sale of, or otherwise negotiate in
respect of, securities of the Issuer of any class if, as a result
of the doctrine of "integration" referred to in Rule 902 under
the Securities Act, such offer or sale would render invalid (for
the purpose of (i) the sale of the Notes by the Issuer to the
Initial Purchasers, (ii) the resale of the Notes by the Initial
Purchasers to Eligible Purchasers or (iii) the resale of the
Notes by such Eligible Purchasers to others) the exemption from
the registration requirements of the Securities Act provided by
Section 4(2) thereof or by Rule 144A or by Regulation S
thereunder or otherwise.
(ii) The Issuer agrees that, in order to render the Notes
eligible for resale pursuant to Rule 144A under the Securities
Act, while any of the Notes remain outstanding, it will make
available, upon request, to any holder of Notes or prospective
purchasers of Notes the information specified in Rule 144(d)(4),
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<PAGE> 15
unless the Issuer furnishes information to the SEC pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
(iii) Until the expiration of two years after the original
issuance of the Notes, the Issuer will not, and will cause its
affiliates not to, resell any Notes which are "restricted
securities" (as such term is defined under Rule 144(a)(3) under
the Securities Act), whether as beneficial owner or otherwise
(except as agent acting as a securities broker on behalf of and
for the account of customers in the ordinary course of business
in unsolicited broker's transactions).
(c) Each Initial Purchaser, severally and not jointly, represents and
warrants to, and agrees with, the Issuer that it is a QIB within the meaning of
Rule 144A under the Securities Act.
(d) Each Initial Purchaser understands that the Notes have not been and
will not be registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S under the Securities Act or pursuant to
an exemption from the registration requirements of the Securities Act. Each
Initial Purchaser severally represents and agrees that, except as permitted by
Section 2(a) above, it has offered and sold Notes and will offer and sell Notes
(i) as part of its distribution at any time or (ii) otherwise until forty days
after the later of the date upon which the offering of the Notes commences and
the Closing Date, only in accordance with Rule 903 of Regulation S, Rule 144A
under the Securities Act or another applicable exemption from the registration
requirements of the Securities Act. Accordingly, neither the Initial Purchasers,
their subsidiaries nor any persons acting on their behalf have engaged or will
engage in any directed selling efforts with respect to Notes sold hereunder
pursuant to Regulation S, and the Initial Purchasers, their affiliates and any
person acting on their behalf have complied and will comply with the offering
restrictions requirements of Regulation S. Each Initial Purchaser severally
agrees that, at or prior to confirmation of a sale of Notes pursuant to
Regulation S, it will have sent to each distributor, dealer or person receiving
a selling concession, fee or other remuneration that purchases Notes from it
during the restricted period a confirmation or notice substantially to the
following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of
the offering or the Closing Date, except in either case in accordance
with Regulation S or Rule 144A if available under the Securities Act.
Terms used above have the meanings assigned to them in Regulation S."
(e) Each Initial Purchaser represents and warrants severally that it has
not entered and will not enter into any contractual arrangement with respect to
the distribution or delivery of the Notes, except with its affiliates or with
the prior written consent of the Issuer.
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<PAGE> 16
The terms used in this Section 2 that have meanings assigned to them
in Regulation S are used herein as so defined.
3. Purchase of the Notes by the Initial Purchasers.
(a) On the basis of the representations and warranties contained in,
and subject to the terms and conditions of, this Agreement, the Issuer agrees to
sell to each Initial Purchaser, severally and not jointly, and each Initial
Purchaser, severally and not jointly, agrees to purchase at the price set forth
in Schedule B attached hereto, the aggregate principal amount of Notes set forth
in Schedule A opposite the name of such Initial Purchaser.
(b) The Issuer shall not be obligated to deliver any of the Notes to
be delivered on the Closing Date (as defined herein), except upon payment for
all the Notes to be purchased on the Closing Date as provided herein.
4. Delivery of the Notes and Payment Therefor.
(a) Delivery to the Initial Purchasers of and payment for the Notes
shall be made at the office of Hogan & Hartson L.L.P., 555 13th Street, N.W.,
Washington, D.C. 20004-1109, at 9:00 A.M., New York City time, on March 17, 2000
(the "Closing Date") in person or via overnight courier or facsimile by
agreement between the Initial Purchasers and the Issuer. The place and method of
closing for the Notes and the Closing Date may be varied by agreement between
the Initial Purchasers and the Issuer.
(b) The Notes will be delivered to the Initial Purchasers against
payment of the purchase price therefor in immediately available funds. The Notes
will be evidenced by one or more global securities in definitive form (the
"Global Notes") and/or by additional definitive securities, and will be
registered, in the case of the Global Note, in the name of Cede & Co. as nominee
of The Depository Trust Company ("DTC"), and in the other cases, in such names
and in such denominations as the Initial Purchasers shall request prior to 9:30
A. M., New York City time, on the second business day preceding the Closing
Date. The Notes to be delivered to the Initial Purchasers shall be made
available to the Initial Purchasers in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date.
(c) Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
the Initial Purchasers hereunder.
5. Further Agreements of the Issuer. The Issuer agrees with each Initial
Purchaser as follows:
(a) The Issuer will advise each Initial Purchaser immediately and
confirm such advice in writing, of (i) the issuance by any state securities
commission of any stop order suspending the qualification or exemption from
qualification of any Notes for offering or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose by the Commission
or any state securities commission or other regulatory authority, and (ii) the
happening of any event that makes any statement of a material fact made in the
Offering
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<PAGE> 17
Memorandum untrue or which requires the making of any additions to or changes in
the Offering Memorandum in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Issuer shall use
its best efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption of any Notes under any state securities or Blue
Sky laws and, if at any time any state securities commission shall issue any
stop order suspending the qualification or exemption of any Notes under any
state securities or Blue Sky laws, the Issuer shall use every reasonable effort
to obtain the withdrawal or lifting of such order at the earliest possible time.
(b) The Issuer, as promptly as possible, will furnish to each
Initial Purchaser, without charge, as of the date of the Offering Memorandum,
such number of copies of the Offering Memorandum, and any amendments or
supplements thereto, as such Initial Purchaser may reasonably request.
(c) The Issuer will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers or their counsel shall not previously have been advised and
to which they shall reasonably object after being so advised.
(d) Prior to the execution and delivery of this Agreement, the
Issuer shall have delivered or will deliver to each Initial Purchaser, without
charge, in such quantities as such Initial Purchaser shall have requested or may
hereafter reasonably request, copies of the Preliminary Offering Memorandum.
(e) The Issuer consents to the use, in accordance with the
securities or Blue Sky laws of the jurisdictions in which the Notes are offered
by the Initial Purchasers and by dealers, prior to the date of the Offering
Memorandum, of each Preliminary Offering Memorandum so furnished by them. The
Issuer consents to the use of the Offering Memorandum in accordance with the
securities or Blue Sky laws of the jurisdictions in which the Notes are offered
by the Initial Purchasers and by all dealers to whom Notes may be sold, in
connection with the offering and sale of the Notes.
(f) If, at any time prior to completion of the distribution of the
Notes by the Initial Purchasers to Eligible Purchasers, any event shall occur
that in the reasonable judgment of the Issuer or in the opinion of counsel for
the Initial Purchasers should be set forth in the Offering Memorandum in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it is necessary to supplement or amend the
Offering Memorandum in order to comply with any law, the Issuer will, subject to
Section 5(c), forthwith prepare an appropriate supplement or amendment thereto
(in form and substance reasonably satisfactory to counsel for the Initial
Purchasers), so that, as so amended or supplemented, the Offering Memorandum
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances existing at the time it is delivered to an Eligible Purchaser, not
misleading, and will expeditiously furnish to each Initial Purchaser and dealer
a reasonable number of copies thereof.
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<PAGE> 18
(g) The Issuer will cooperate with the Initial Purchasers and with
their counsel in connection with the qualification of the Notes for offering and
sale by the Initial Purchasers and by dealers under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may designate and will file
such consents to service of process or other documents necessary or appropriate
in order to effect such qualification; provided that in no event shall the
Issuer be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of the
Notes, in any jurisdiction where it is not now so subject.
(h) During the period beginning on the date hereof and continuing to
and including the date 180 days after the Closing Date, the Issuer will not
offer, sell, contract to sell or otherwise transfer or dispose of any debt
securities (except pursuant to the Exchange Offer) of the Issuer or any of its
subsidiaries or any warrants, rights or options to purchase or otherwise acquire
debt securities of the Issuer or any of its subsidiaries substantially similar
to the Notes (other than (i) the Notes, (ii) loans secured by real property or
interests therein, (iii) bank loans or lines of credit or (iv) commercial paper
issued in the ordinary course of business), without the prior written consent of
Lehman Brothers Inc.
(i) So long as any of the Notes are outstanding, the Issuer will
furnish to the Initial Purchasers (A) as soon as available, a copy of each
report of the Issuer mailed to Issuer's unitholders generally or filed with any
stock exchange or regulatory body and (B) from time to time such other
information concerning the Issuer as the Initial Purchasers may reasonably
request.
(j) The Issuer will apply the net proceeds from the sale of the
Notes to be sold by it hereunder substantially in accordance with the
description set forth in the Offering Memorandum under the caption "Use of
Proceeds."
(k) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, the Issuer has not taken, nor will
it take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Notes to facilitate the sale or resale of the Notes. Except as permitted by
the Securities Act, the Issuer will not distribute any offering material in
connection with the Exempt Resales.
(l) The Issuer will use its best efforts to permit the Notes to be
eligible for clearance and settlement through DTC.
(m) From and after the Closing Date, so long as any of the Notes are
outstanding and are "restricted securities" within the meaning of the Rule
144(a)(3) under the Securities Act or, if earlier, until two years after the
Closing Date, but only during any period in which the Issuer is not subject to
Section 13 or 15(d) of the Exchange Act, the Issuer will furnish to holders of
the Notes and prospective purchasers of Notes designated by such holders, upon
request of such holders or such prospective purchasers, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to permit
compliance with Rule 144A in connection with resale of the Notes.
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<PAGE> 19
(n) The Issuer agrees not to sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Notes in a manner
that would require the registration under the Securities Act of the sale to the
Initial Purchasers or the Eligible Purchasers of the Notes.
(o) The Issuer agrees to comply with all the terms and conditions of
the Registration Rights Agreement, the Indenture and all agreements set forth in
the representation letter of the Issuer to DTC relating to the approval of the
Notes by DTC for "book entry" transfer.
(p) The Issuer agrees to cause the Exchange Offers to be made in the
appropriate form, as contemplated by the Registration Rights Agreement, to
permit registration of the Exchange Notes to be offered in exchange for the
Series A Notes or the Series B Notes, as applicable, and to comply with all
applicable federal and state securities laws in connection with such Exchange
Offers.
(q) The Issuer agrees that prior to any registration of the Exchange
Notes pursuant to the Registration Rights Agreement, or at such earlier time as
may be required, the Indenture shall be qualified under the 1939 Act and any
necessary supplemental indentures will be entered into in connection therewith.
(r) The Issuer will not voluntarily claim, and will resist actively
all attempts to claim, the benefit of any usury laws against holders of the
Notes.
(s) The Issuer will do and perform all things required or necessary
to be done and performed under this Agreement by it prior to the Closing Date,
and to satisfy all conditions precedent to the Initial Purchasers' obligations
hereunder to purchase the Notes.
(t) The Issuer shall take all reasonable action necessary to enable
Standard & Poors, a division of The McGraw Hill Companies, Inc. ("S&P") and
Moody's Investors Service, Inc. ("Moody's") to provide their respective
investment-grade credit ratings of the Notes.
6. Expenses. The Issuer agrees to pay all costs, expenses, fees and
taxes incident to and in connection with: (i) the preparation, printing, filing
and distribution of the Preliminary Offering Memorandum and the Offering
Memorandum (including, without limitation, financial statements and exhibits)
and all amendments and supplements thereto (but not, however, legal fees and
expenses of Initial Purchasers' counsel incurred in connection therewith), (ii)
the preparation, printing (including, without limitation, word processing and
duplication costs) and delivery of this Agreement, the other Operative
Documents, all Blue Sky Memoranda and all other agreements, memoranda,
correspondence and other documents printed and delivered in connection wherewith
and with the Exempt Resales (but not, however, legal fees and expenses of
Initial Purchasers' counsel incurred in connection with any of the foregoing
other than reasonable fees of such counsel plus reasonable disbursements
incurred in connection with the preparation, printing and delivery of such Blue
Sky Memoranda), (iii) the authorization, issuance, sale and delivery by the
Issuer of the Notes, (iv) the qualification of the Notes for offer and sale
under the securities or Blue Sky laws of the several states (including, without
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<PAGE> 20
limitation, the reasonable fees and disbursements of Initial Purchasers' counsel
relating to such registration or qualification), (v) furnishing such copies of
the Preliminary Offering Memorandum and the Offering Memorandum, and all
amendments and supplements thereto, as may be reasonably requested for use in
connection with the Exempt Resales, (vi) the preparation of certificates for the
Notes (including, without limitation, printing and engraving thereof), (vii) the
fees, disbursements and expenses of the Issuer's counsel and accountants, (viii)
all fees and expenses (including fees and expenses of Issuer's counsel) of the
Issuer in connection with approval of the Notes by DTC for "book-entry"
transfer, (ix) any fees charged by securities rating services for rating the
Notes and (x) the performance by the Issuer of their other obligations under
this Agreement.
7. Conditions of Initial Purchasers' Obligations. The obligations of the
Initial Purchasers hereunder are subject to the accuracy, when made and on the
Closing Date, of the representations and warranties of the Issuer contained
herein, to the performance by the Issuer of its obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Offering Memorandum shall have been printed and copies made
available to you not later than 6:00 p.m., New York City time, on the business
day following the date of this Agreement, or at such later date and time as you
may approve in writing.
(b) The Initial Purchasers shall not have discovered and disclosed
to the Issuer on or prior to the Closing Date that the Offering Memorandum or
any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of Hogan & Hartson L.L.P., counsel for the Initial
Purchasers, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All partnership proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the other Operative
Documents and the Offering Memorandum, and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Initial Purchasers, and
the Issuer shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(d) Latham & Watkins shall have furnished to the Initial Purchasers,
its written opinion (based on the assumptions and subject to the exclusions
contained therein), as counsel to the Issuer, addressed to the Initial
Purchasers and dated the Closing Date, substantially as to the matters set forth
in Exhibit A hereto.
(e) Ballard Spahr Andrews & Ingersoll, LLP shall have furnished to
the Initial Purchasers, its written opinion (based on the assumptions and
subject to the exclusions contained therein), as special Maryland counsel to the
Issuer, addressed to the Initial Purchasers and dated the Closing Date,
substantially as to the matters set forth in Exhibit B hereto.
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<PAGE> 21
(f) The Initial Purchasers shall have received from Hogan & Hartson
L.L.P., counsel for the Initial Purchasers, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Notes, the Offering
Memorandum and other related matters as the Initial Purchasers may reasonably
require, and the Issuer shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(g) At the time of execution of this Agreement, the Initial
Purchasers shall have received from Ernst & Young LLP a letter, in form and
substance satisfactory to the Initial Purchasers, addressed to the Initial
Purchasers and dated the date hereof (i) confirming that they are independent
public accountants under Rule 101 of the American Institute of Certified Public
Accountants' Code of Professional Conduct and its interpretations and rulings
thereunder and (ii) stating, as of the date hereof (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Offering Memorandum, as of a
date not more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information (including pro
forma financial information) and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with registered
public offerings.
(h) With respect to the letter of Ernst & Young LLP referred to in
the preceding paragraph and delivered to the Initial Purchasers concurrently
with the execution of this Agreement (the "initial letter"), the Issuer shall
have furnished to the Initial Purchasers a letter (the "bring-down letter") of
such accountants, addressed to the Initial Purchasers and dated the Closing Date
(i) confirming that they are independent public accountants under Rule 101 of
the American Institute of Certified Public Accountants' Code of Professional
Conduct and its interpretations and rulings thereunder, (ii) stating, as of the
date of the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more than five
days prior to the date of the bring-down letter), the conclusions and findings
of such firm with respect to the financial information (including pro forma
financial information) and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set forth in
the initial letter.
(i) The Issuer shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of the Chief Executive Officer, President
or a Vice President of the General Partner on its behalf and the chief financial
officer of the General Partner stating that:
(A) The representations, warranties and agreements of the Issuer
in Section 1 are true and correct as of the Closing Date; the Issuer has
complied with all its agreements contained herein; and the conditions set forth
in Sections 7(j) and 7(l) have been fulfilled; and
(B) They have carefully examined the Offering Memorandum and, in
their opinion (a) as of its date, the Offering Memorandum did not include any
untrue statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (b) since the date of such Offering Memorandum no event has occurred
which should have been set forth in a supplement or
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<PAGE> 22
amendment to the Offering Memorandum and (c) except as reflected in or
contemplated by the Offering Memorandum, there shall not have been since the
respective dates as of which information is given in the Offering Memorandum,
any material adverse change in the financial condition or in the results of
operations, business affairs or business prospects of the Issuer and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (other than changes relating to the economy in
general or the Issuer's industry in general and not specifically related to the
Issuer).
(j) Neither the Issuer nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Memorandum (i) any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Memorandum or (ii)
since such date there shall not have been any change in the capital stock,
Partnership Interests or long-term debt of the Issuer or any of its subsidiaries
or any change, or any development involving a prospective change, in or
affecting the general affairs, business prospects, management, financial
position, stockholders' or unitholders' equity, as applicable, or results of
operations of the Issuer and its subsidiaries, otherwise than as set forth or
contemplated in the Offering Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Initial Purchasers,
so material and adverse as to make it impracticable or inadvisable to proceed
with the delivery of the Notes being delivered on the Closing Date on the terms
and in the manner contemplated in the Offering Memorandum.
(k) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Issuer on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Initial Purchasers, impracticable or inadvisable to market the Notes or to
enforce contracts for the sale of the Notes in the manner contemplated in the
Offering Memorandum.
(l) On the Closing Date, the Notes shall be rated at least BBBby S&P
and Baa3 by Moody's and the Issuer shall have delivered to the Initial
Purchasers a letter dated on or before the Closing Date from each such rating
agency, or other evidence satisfactory to the Initial Purchasers, confirming
that the Notes have such ratings; and subsequent to the execution and delivery
of this Agreement (i) no downgrading shall have occurred in the rating accorded
debt securities of the Issuer by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) of the Rules and
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Regulations and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of the Issuer's debt securities.
(m) The Issuer shall have furnished a Secretary's Certificate in
form and substance satisfactory to the Initial Purchasers.
(n) On the Closing Date, the Registration Rights Agreement shall
have been fully executed and delivered by the Issuer.
(o) Hogan & Hartson L.L.P. shall have been furnished with such other
documents and opinions, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Agreement and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(p) All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
8. Indemnification and Contribution.
(a) The Issuer agrees to indemnify and hold harmless each Initial
Purchaser, its officers and employees and each person, if any, who controls any
Initial Purchaser within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Notes), to which any Initial
Purchaser, such officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (B) in any blue sky application or other document prepared or
executed by the Issuer (or based upon any written information furnished by the
Issuer) specifically for the purpose of qualifying any or all of the Notes under
the securities laws of any state or other jurisdiction (any such application,
document or information being hereinafter called a "Blue Sky Application"), (ii)
the omission or alleged omission to state in the Preliminary Offering Memorandum
or the Offering Memorandum, or in any amendment or supplement thereto, or in any
Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any Initial Purchaser in
connection with, or relating in any manner to, the Notes or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Issuer shall not be
liable under this clause (iii) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by any Initial Purchaser through its gross
negligence or
23
<PAGE> 24
willful misconduct), and shall reimburse any Initial Purchaser and each such
officer, employee or controlling person promptly upon demand for any legal or
other expenses reasonably incurred by any Initial Purchaser, such officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Issuer shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in the Offering
Memorandum, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with written information
concerning any Initial Purchaser furnished to the Issuer by or on behalf of any
Initial Purchaser specifically for inclusion therein; and provided further, that
the foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum shall not inure to the benefit of any Initial Purchaser from whom the
person asserting any such losses, claims, damages or liabilities purchased
Notes, or any person controlling such Initial Purchaser, if a copy of the
Offering Memorandum (as then amended or supplemented if the Issuer shall have
furnished any amendments or supplements thereto) was not seen or given by or on
behalf of such Initial Purchaser to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the Notes
to such person, and if the Offering Memorandum (as so amended or supplemented)
would have corrected any such untrue statement of a material fact contained in,
and each omission or alleged omission of material fact from, such Preliminary
Offering Memorandum giving rise to such losses, claims, damages or liabilities,
unless such failure is the result of noncompliance by the Issuer with Section
5(b) hereof. The foregoing indemnity agreement is in addition to any liability
which the Issuer may otherwise have to any Initial Purchaser or to any officer,
employee or controlling person of such Initial Purchaser.
(b) Each Initial Purchaser severally agrees to indemnify and hold
harmless the Issuer, its officers and employees, each of its directors, and each
person, if any, who controls the Issuer within the meaning of the Securities
Act, from and against any loss, claim, damage or liability, or any action in
respect thereof, to which the Issuer or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning any Initial Purchaser furnished
to the Issuer by or on behalf of such Initial Purchaser specifically for
inclusion therein, and shall reimburse the Issuer and any such director, officer
or controlling person for any legal or other expenses reasonably incurred by the
Issuer or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which each Initial Purchaser
may otherwise have to the Issuer or any such director, officer, employee or
controlling person.
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<PAGE> 25
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, any
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel, it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to one local counsel) at
any time for all such indemnified parties, which firm shall be designated in
writing by the Initial Purchasers, if the indemnified parties under this Section
8 consist of the Initial Purchasers or any of their officers, employees or
controlling persons, or by the Issuer, if the indemnified parties under this
Section 8 consist of the Issuer or any of its directors, officers, employees or
controlling persons. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld or delayed), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld or delayed), but if settled with the
consent of the indemnifying party or if there be a final
25
<PAGE> 26
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Issuer, on the one hand, and the Initial Purchasers, on the
other, from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Issuer, on the one hand, and the
Initial Purchasers, on the other, with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Issuer, on the one hand, and the Initial Purchasers, on
the other, with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes purchased
under this Agreement (before deducting expenses) received by the Issuer, on the
one hand, and the total discounts and commissions received by the Initial
Purchasers with respect to the Notes purchased under this Agreement, on the
other hand, bear to the total gross proceeds from the offering of the Notes
under this Agreement, in each case as set forth on the cover page of the
Offering Memorandum. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Issuer or the Initial Purchasers, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Issuer and the Initial Purchasers agree that it would
not be just and equitable if contributions pursuant to this Section 8(d) were to
be determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), the Initial Purchasers
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Notes purchased by it were resold to the Eligible
Purchasers exceeds the amount of any damages which the Initial Purchaser has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The Initial Purchasers' respective obligations to contribute
pursuant to Section 8(d) are several in proportion to the principal amount of
Notes set forth opposite their respective names in Schedule A hereto and not
joint.
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<PAGE> 27
9. Defaulting Initial Purchasers.
If, on the Closing Date, any Initial Purchaser defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Initial Purchasers shall be obligated to purchase the Notes which
the defaulting Initial Purchaser agreed but failed to purchase on the Closing
Date in the respective proportions which the amount of Notes set opposite the
name of each remaining non-defaulting Initial Purchaser in Schedule A hereto
bears to the total amount of Notes set opposite the names of all the remaining
non-defaulting Initial Purchasers in Schedule A hereto; provided, however, that
the remaining non-defaulting Initial Purchasers shall not be obligated to
purchase any of the Notes on the Closing Date if the total amount of Notes which
the defaulting Initial Purchaser or Initial Purchasers agreed but failed to
purchase on such date exceeds 9.09% of the total principal amount of Notes to be
purchased on the Closing Date, and any remaining non-defaulting Initial
Purchaser shall not be obligated to purchase more than 110% of the amount of
Notes which it agreed to purchase on the Closing Date pursuant to the terms of
Section 4. If the foregoing maximums are exceeded, the remaining non-defaulting
Initial Purchasers shall have the right, but shall not be obligated, to
purchase, in such proportion as may be agreed upon among them, all the Notes to
be purchased on the Closing Date. If the remaining Initial Purchasers do not
elect to purchase the Notes which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase on the Closing Date, this Agreement
shall terminate without liability on the part of any non-defaulting Initial
Purchaser or the Issuer, except that the Issuer will continue to be liable for
the payment of expenses to the extent set forth in Sections 8 and 11. As used in
this Agreement, the term "Initial Purchaser" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
Schedule A hereto who, pursuant to this Section 9, purchases Notes which a
defaulting Initial Purchaser agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Issuer for damages caused by its
default. If other Initial Purchasers are obligated or agree to purchase the
Notes of a defaulting or withdrawing Initial Purchaser, either Lehman Brothers
Inc. or the Issuer may postpone the Closing Date for up to seven full business
days in order to effect any changes that in the opinion of counsel for the
Issuer or counsel for the Initial Purchasers may be necessary in the Offering
Memorandum or in any other document or arrangement.
10. Termination. The obligations of the Initial Purchasers hereunder may
be terminated by the Initial Purchasers by notice given to and received by the
Issuer prior to delivery of and payment for the Notes if, prior to that time,
any of the events described in Sections 7(j), 7(k) or 7(l)(i) or (ii) shall have
occurred, or if the conditions in the first two clauses of Section 7(l) shall
not have occurred, or if the Initial Purchasers shall decline to purchase the
Notes for any reason permitted under this Agreement. Such termination shall be
without liability of any party to any other party except as provided in Section
6 and 10 and except that Section 1, 8 and 14 shall survive any such termination
and remain in full force and effect.
11. Reimbursement of Initial Purchasers' Expenses. If the Issuer shall
fail to tender the Notes for delivery to the Initial Purchasers by reason of any
failure, refusal or inability on the part of the Issuer to perform any agreement
on their part to be performed, or because any
27
<PAGE> 28
other condition of the obligations hereunder required to be fulfilled by the
Issuer is not fulfilled other than the conditions set forth in Section 7(k), the
Issuer will reimburse the Initial Purchasers for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase of the
Notes, and upon demand the Issuer shall pay the full amount thereof to the
Initial Purchasers. If this Agreement is terminated pursuant to Section 10 by
reason of the default of one or more Initial Purchasers, the Issuer shall not be
obligated to reimburse any such Initial Purchaser on account of those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(e) if to the Initial Purchasers, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: 212-526-6588), with a copy to Hogan & Hartson L.L.P., 555 Thirteenth
Street, N.W., Washington, D.C. 20004-1109, Attention: J. Warren Gorrell, Jr.
(Fax: 202-637-5910) and, in the case of any notice pursuant to Section 8(d), to
the Director of Litigation, Office of the General Counsel, Lehman Brothers Inc.,
Three World Financial Center, 10th Floor, New York, NY 10285; and
(f) if to the Issuer, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Issuer set forth in the Offering
Memorandum, Attention: Richard S. Ziman (Fax: 310-966-9494), with a copy to
Latham & Watkins, 650 Town Center Drive, 20th Floor, Costa Mesa, California
92626, Attention: William J. Cernius (Fax: 714-755-8290).
Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof. The Issuer shall be entitled to act and
rely upon any request, consent, notice or agreement given by Lehman Brothers
Inc. on behalf of the Initial Purchasers.
13. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the Initial Purchasers, the Issuer and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Issuer contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control each Initial Purchaser within the meaning of
Section 15 of the Securities Act and (B) the indemnity agreement of the Initial
Purchasers contained in Section 8(c) of this Agreement shall be deemed to be for
the benefit of directors of the Issuer and any person controlling the Issuer
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 13, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations, warranties
and agreements of the Issuer and each of the Initial Purchasers contained in
this Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the
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<PAGE> 29
delivery of and payment for the Notes and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.
15. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations of the Commission
under the Securities Act.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York without regard to principles of conflicts
of laws.
Each party irrevocably agrees that any legal suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby ("Related Proceedings") may be instituted in the federal
courts of the United States of America located in the City of New York or the
courts of the State of New York in each case located in the Borough of Manhattan
in the City of New York (collectively, the "Specified Courts"), and irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. The parties further agree that service of
any process, summons, notice or document by mail to such party's address set
forth above shall be effective service of process for any lawsuit, action or
other proceeding brought in any such court. The parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any lawsuit,
action or other proceeding in the Specified Courts, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such lawsuit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
(Signature Page Follows)
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<PAGE> 30
If the foregoing correctly sets forth the agreement between the Issuer
and the Initial Purchasers, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
ARDEN REALTY LIMITED PARTNERSHIP
By: Arden Realty, Inc., its general
partner
By: /s/ DIANA M. LAING
-----------------------------------
Name: Diana M. Laing
Title: Executive Vice President
and Chief Financial Officer
Accepted on behalf of all Initial Purchasers:
LEHMAN BROTHERS INC.
By: /s/ JAMES W. MERLI
-----------------------------------
Authorized Representative
30
<PAGE> 31
SCHEDULE A
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME OF INITIAL PURCHASER SERIES A NOTES
<S> <C>
Lehman Brothers Inc. $125,000,000
Morgan Stanley & Co. Incorporated $ 20,000,000
Salomon Smith Barney Inc. $ 20,000,000
Chase Securities Inc. $ 15,000,000
Banc One Capital Markets $ 10,000,000
A. G. Edwards & Sons, Inc. $ 10,000,000
Total $200,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME OF INITIAL PURCHASER SERIES B NOTES
<S> <C>
Lehman Brothers Inc. $31,250,000
Morgan Stanley & Co. Incorporated $ 5,000,000
Salomon Smith Barney Inc. $ 5,000,000
Chase Securities Inc. $ 3,750,000
Banc One Capital Markets $ 2,500,000
A. G. Edwards & Sons, Inc. $ 2,500,000
Total $50,000,000
</TABLE>
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<PAGE> 32
SCHEDULE B
ARDEN REALTY LIMITED PARTNERSHIP
$200,000,000 8.875% SENIOR NOTES DUE 2005
1. The initial offering price of the 8.875% Senior Notes due 2005 shall
be 99.744% of the principal amount thereof, plus accrued interest, if any, from
the date of issuance.
2. The purchase price to be paid by the Initial Purchasers for the
8.875% Senior Notes due 2005 shall be 99.144% of the principal amount thereof.
3. The interest rate on the 8.875% Senior Notes due 2005 shall be 8.875%
per annum.
ARDEN REALTY LIMITED PARTNERSHIP
$50,000,000 9.150% SENIOR NOTES DUE 2010
1. The initial offering price of the 9.150% Senior Notes due 2010 shall
be 99.181% of the principal amount thereof, plus accrued interest, if any, from
the date of issuance.
2. The purchase price to be paid by the Initial Purchasers for the
9.150% Senior Notes due 2010 shall be 98.531% of the principal amount thereof.
3. The interest rate on the 9.150% Senior Notes due 2010 shall be 9.150%
per annum.
2
<PAGE> 33
EXHIBIT A
OPINION MATTERS
LATHAM & WATKINS
1. Based solely on certificates from public officials, each of the limited
liability companies and limited partnerships on Schedule A-I hereto
whose jurisdiction is listed as California (collectively, the
"California Subsidiaries") has been duly formed and is validly existing
under the laws of the State of California. Based solely on certificates
from public officials, each of the California limited liability
companies that is a California Subsidiary is in good standing under the
laws of the State of California. Each of the California limited
liability companies that is a California Subsidiary has the limited
liability company power and authority to conduct its business as
described in the Offering Memorandum. Each of the California limited
partnerships that is a California Subsidiary has the limited partnership
power and authority to conduct its business as described in the Offering
Memorandum. All of the partnership or limited liability company
interests, as applicable, of each California Subsidiary have been duly
and validly authorized and issued.
2. Based solely on certificates from public officials, each of the limited
liability companies on Schedule A-I hereto whose jurisdiction is listed
as Delaware (collectively, the "Delaware Subsidiaries") has been duly
formed and is validly existing and is in good standing under the laws of
the State of Delaware. Each of the Delaware limited liability companies
that is a Delaware Subsidiary has the limited liability company power
and authority to conduct its business as described in the Offering
Memorandum, and, to our knowledge based solely on certificates from the
California Secretary of State, is duly qualified as a foreign limited
liability company in California and is in good standing in the State of
California. All of the limited liability company interests of each
Delaware Subsidiary have been duly and validly authorized and issued.
3. All of the issued partnership or limited liability company interests of
each of the California Subsidiaries and Delaware Subsidiaries are owned
either by the Issuer or Arden Realty, Inc. ("Arden Realty") and are, to
our knowledge, based solely on an officer's certificate, owned by the
Issuer or Arden Realty, free and clear of all liens, encumbrances,
equities or claims.
4. Assuming due authorization, execution and delivery of the Indenture by
the Issuer and the Trustee, the Indenture is a valid and binding
obligation of the Issuer, and is enforceable against it in accordance
with its terms.
5. The Notes, when paid for by the Initial Purchasers in accordance with
the terms of the Purchase Agreement (assuming the due authorization,
execution and delivery of the Indenture by the Issuer and the Trustee
and due authentication and delivery of the Notes by the Trustee in
accordance with the Indenture), will constitute Notes under the terms of
the Indenture, will constitute the valid and binding obligations of the
Issuer, will be entitled to the benefits of the Indenture, and will be
enforceable against it in accordance with their terms.
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<PAGE> 34
6. Assuming due authorization of the Exchange Notes by the Issuer, when, as
and if (i) the Exchange Offer Registration Statement shall have become
effective pursuant to the provisions of the Securities Act, (ii) the
Indenture shall have been qualified pursuant to the provisions of the
Trust Indenture Act of 1939, as amended, (iii) the Notes being exchanged
for Exchange Notes shall have been validly tendered to the issuer, (iv)
the Exchange Notes shall have been duly executed, authenticated and
issued in accordance with the provisions of the Indenture and duly
delivered to the purchasers thereof in exchange for the Notes, and (v)
any legally required consents, approvals, authorizations or other order
of the Securities and Exchange Commission or any other regulatory
authorities have been obtained, the Exchange Notes will constitute valid
and binding obligations of the Issuer, will be entitled to the benefits
of the Indenture, as applicable.
7. No registration of the Notes under the Securities Act, and no
qualification of the Indenture under the Trust Indenture Act, is
required for the purchase of the Notes by you or the initial resale of
the Notes by you, in each case, in the manner contemplated by the
Purchase Agreement and the Offering Memorandum. We express no opinion,
however, as to when or under what circumstances any Notes initially sold
by you may be reoffered or resold.
8. Assuming due authorization, execution and delivery by the Issuer and the
other parties thereto, the Registration Rights Agreement is a valid and
binding obligation of the Issuer, and is enforceable against it in
accordance with its terms.
9. The issuance and sale of the Notes being delivered on the Closing Date
by the Issuer, the execution, delivery and performance of the Purchase
Agreement and the other Operative Documents by the Issuer and the
compliance by the Issuer with all provisions thereof as of the Closing
Date do not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument identified to us as material to the Issuer or any of its
California Subsidiaries or Delaware Subsidiaries in an officer's
certificate, except for such conflicts, breaches, violations or defaults
that, individually or in the aggregate, would not have a Material
Adverse Effect, nor will such actions result in any violation of the
provisions of the certificate of limited partnership or partnership
agreement of the Issuer, or the certificate of limited partnership or
partnership agreement or limited liability company operating agreement,
as applicable, of any of its California Subsidiaries or Delaware
Subsidiaries, or any federal or California statute, or the Delaware
General Corporation Law, or any order, rule or regulation known to such
counsel of any U.S. federal or California or Delaware state court or
governmental agency or body having jurisdiction over the Issuer or any
of such California Subsidiaries or Delaware Subsidiaries or any of their
properties or assets.
10. To our knowledge, based solely on an officer's certificate and review of
attorney letters furnished to the Issuer's independent public
accountants in connection with their audit of financial statements, and
other than as set forth in the Offering Memorandum, there are no legal
or governmental proceedings pending to which the Issuer or any of its
California Subsidiaries or Delaware Subsidiaries is a party or of which
any property or assets of the Issuer or any of its California
Subsidiaries or Delaware Subsidiaries is the subject which, if
determined adversely to the Issuer or any of its California Subsidiaries
or Delaware
2
<PAGE> 35
Subsidiaries, would have a Material Adverse Effect; and, to our
knowledge, based solely on an officer's certificate, no such proceedings
are threatened or contemplated by California or Delaware governmental
authorities or threatened by others.
11. To our knowledge, there are no contracts or other documents which are
required to be described in the Offering Memorandum which have not been
described.
12. The information in the Offering Memorandum under the headings
"Description of Notes," "Management," "Transactions with Related
Parties" and "Policies with Respect to Certain Activities" to the extent
that it summarizes laws, governmental rules or regulations or documents
referred to therein, are correct in all material respects.
13. The statements contained in the Offering Memorandum under the headings
"Risk Factors - Tax Risks" and "Federal Income Tax Consequences,"
insofar as they describe federal statutes, rules and regulations or
legal conclusions with respect thereto, are correct in all material
respects.
14. The Partnership is properly treated as a partnership for federal income
tax purposes and not as a corporation or as an association taxable as a
corporation, throughout the period from May 20, 1996 through the date
hereof.
15. To our knowledge, the Issuer was not required to obtain any consent,
approval, authorization or order of a Delaware or California
governmental agency for the execution, delivery and performance as of
the Closing Date by the Issuer of the Purchase Agreement, the Indenture
or the Registration Rights Agreement, as applicable, or the issuance,
delivery and sale of the Notes being issued and sold by the Issuer under
the Purchase Agreement except for any such consent, approval,
authorization or order which may be required under the so-called "Blue
Sky" or securities laws of any states (as to which we express no opinion
or advice).
16. The Issuer is not and, upon sale of the Notes to be issued and sold in
accordance with the Purchase Agreement and the application of the net
proceeds to the Issuer of such sale as described in the Offering
Memorandum under the caption "Use of Proceeds," will not be an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
17. To our knowledge, based solely on an officer's certificate, except as
disclosed in the Offering Memorandum, there are no contracts, agreements
or understandings between the Issuer and any person granting such person
the right to require the Issuer to file a registration statement under
the Securities Act with respect to any securities of the Issuer owned or
to be owned by such person or to require the Issuers to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Issuer under the Securities Act.
The foregoing opinions will be subject to certain additional
assumptions, exceptions, limitations and qualifications. In addition, the
opinions to be rendered in paragraphs 4, 5, 6 and 8 relating to the
enforceability of the Indenture, the Registration Rights Agreement, the Notes,
the Exchange Notes and the entitlement of the Notes and the Exchange Notes to
the benefits of the
3
<PAGE> 36
Indenture, will be subject to the following exceptions, limitations and
qualifications: (i) the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, fraudulent transfer, preferential transfer or
distribution laws or other similar laws now or hereafter in effect relating to
or affecting the rights and remedies of creditors generally, including without
limitation, the effect of Section 548 of the United States Bankruptcy Code or
applicable state law; (ii) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought;
(iii) the unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or contribution to
a party with respect to a liability where such indemnification or contribution
is contrary to public policy; and (iv) we express no opinion concerning the
enforceability of the waiver of rights or defenses contained in Section 514 of
the Indenture.
4
<PAGE> 37
SCHEDULE A-I
CALIFORNIA AND DELAWARE SUBSIDIARIES OF
ARDEN REALTY LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
NAME JURISDICTIONS
<S> <C>
Arden Realty Finance III, LLC Delaware
Arden Realty Finance IV, LLC Delaware
Arden Realty Finance V, LLC Delaware
Arden Realty Finance VI, LLC Delaware
Arden Realty Finance Partnership, L.P. California
145 South Fairfax, LLC California
Activity Business Center Limited Partnership California
Westwood Center Limited Partnership California
</TABLE>
5
<PAGE> 38
EXHIBIT B
OPINION MATTERS
BALLARD SPAHR ANDREWS & INGERSOLL
1. The Issuer is a limited partnership duly formed and existing under and
by virtue of the laws of the State of Maryland and is in good standing
with the SDAT. Based solely on a good standing certificate issued by the
Secretary of State of the State of Maryland, the Issuer is qualified to
do business and is in good standing in Maryland. The Issuer has full
power as a limited partnership to conduct its business as described in
the Offering Memorandum.
2. The second amended and restated partnership agreement of the Issuer (the
"Partnership Agreement") has been duly authorized, executed and
delivered by the parties thereto and constitutes the valid agreement
thereof, is enforceable against each party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws affecting creditors'
rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or
in equity).
3. The Purchase Agreement has been duly authorized, executed and delivered
by the Issuer.
4. The Indenture has been duly authorized, executed and delivered by the
Issuer.
5. The Series A Notes and the Series B Notes have been duly authorized,
executed and delivered by the Issuer.
6. The Exchange Notes have been duly authorized by the Issuer.
7. The Registration Rights Agreement has been duly authorized, executed and
delivered by the Issuer.
8. The issuance and sale of the Notes being delivered on the Closing Date
by the Issuer, the execution, delivery and performance of the Purchase
Agreement and the other Operative Documents by the Issuer and the
compliance by the Issuer with all provisions thereof as of the Closing
Date will not result in any violation of the provisions of the Issuer's
certificate of limited partnership or Partnership Agreement or any
Maryland statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction over the
Issuer or any of its properties or assets.
9. To our knowledge, the Issuer was not required to obtain any consent,
approval, authorization or order of a Maryland governmental agency for
the execution, delivery and performance as of the Closing Date by the
Issuer of the Purchase Agreement, the Indenture or the Registration
Rights Agreement, as applicable, or the issuance, delivery and sale of
the Notes being issued and sold by the Issuer under the Purchase
Agreement
1
<PAGE> 39
except for any such consent, approval, authorization or order which may
be required under the so-called "Blue Sky" or securities laws of any
states (as to which we express no opinion or advice).
2
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
- --------------------------------------------------------------------------------
ARDEN REALTY LIMITED PARTNERSHIP
Issuer
and
THE BANK OF NEW YORK
Trustee
-------------------------
INDENTURE
Dated as of March 14, 2000
-------------------------
SENIOR DEBT SECURITIES
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS OF THE ISSUER.....................................................................1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......................1
SECTION 101. DEFINITIONS..................................................................1
Acquired Indebtedness..........................................................2
Act............................................................................2
Additional Amounts.............................................................2
Affiliate......................................................................2
Annual Debt Service Charge.....................................................2
Authenticating Agent...........................................................2
Authorized Newspaper...........................................................2
Bankruptcy Law.................................................................2
Board of Directors.............................................................2
Board Resolution...............................................................2
Business Day...................................................................2
Clearstream....................................................................3
Commission.....................................................................3
Common Depositary..............................................................3
Consolidated Income Available for Debt Service.................................3
Consolidated Interest Expense..................................................3
Consolidated Net Income........................................................3
Conversion Event...............................................................3
Corporate Trust Office.........................................................3
Corporation....................................................................3
Custodian......................................................................3
Debt ..........................................................................4
Defaulted Interest.............................................................4
Dollar.........................................................................4
DTC............................................................................4
ECU............................................................................4
Euroclear......................................................................4
European Community.............................................................4
European Monetary System.......................................................4
European Union.................................................................4
Event of Default...............................................................4
Exchange Act...................................................................4
Exchange Date..................................................................4
Foreign Currency...............................................................5
GAAP...........................................................................5
General Partner................................................................5
Government Obligations.........................................................5
Holder.........................................................................5
Indenture......................................................................5
Indexed Security...............................................................5
Interest.......................................................................5
Interest Payment Date..........................................................6
Issuer.........................................................................6
Issuer Request.................................................................6
Judgment Currency..............................................................6
Legal Holiday..................................................................6
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
Make-Whole Amount..............................................................6
Maturity.......................................................................6
Officers' Certificate..........................................................6
Opinion of Counsel.............................................................6
Original Issue Discount Security...............................................6
Outstanding....................................................................6
Paying Agent...................................................................7
Person ........................................................................8
Place of Payment...............................................................8
Predecessor Security...........................................................8
Recourse Indebtedness..........................................................8
Redemption Date................................................................8
Redemption Price...............................................................8
Registered Security............................................................8
Regular Record Date............................................................8
Reinvestment Rate..............................................................8
Repayment Date.................................................................9
Repayment Price................................................................9
Responsible Officer............................................................9
Secured Debt...................................................................9
Security.......................................................................9
Security Register..............................................................9
Significant Subsidiary.........................................................9
Special Record Date............................................................9
Stated Maturity................................................................9
Statistical Release............................................................9
Subsidiary....................................................................10
Total Assets..................................................................10
Total Unencumbered Assets.....................................................10
Trust Indenture Act or........................................................10
Trustee.......................................................................10
Undepreciated Real Estate Assets..............................................10
United States.................................................................10
United States Person..........................................................10
Unsecured Debt................................................................10
Yield to Maturity.............................................................10
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS........................................10
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE......................................11
SECTION 104. ACTS OF HOLDERS.............................................................11
SECTION 105. NOTICES, ETC., TO TRUSTEE AND ISSUER........................................12
SECTION 106. NOTICE TO HOLDERS; WAIVER...................................................13
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS....................................13
SECTION 108. SUCCESSORS AND ASSIGNS......................................................13
SECTION 109. SEVERABILITY CLAUSE.........................................................13
SECTION 110. BENEFITS OF INDENTURE.......................................................13
SECTION 111. GOVERNING LAW...............................................................14
SECTION 112. LEGAL HOLIDAYS..............................................................14
SECTION 113. QUALIFICATION UNDER TRUST INDENTURE ACT.....................................14
SECTION 114. COUNTERPARTS................................................................14
SECTION 115. JUDGMENT CURRENCY...........................................................14
SECTION 116. NONRECOURSE.................................................................15
ARTICLE TWO SECURITIES FORMS.............................................................15
SECTION 201. FORMS OF SECURITIES.........................................................15
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.............................15
SECTION 203. SECURITIES ISSUABLE IN GLOBAL FORM..........................................16
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
ARTICLE THREE THE SECURITIES..............................................................17
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES........................................17
SECTION 302. CURRENCY, DENOMINATIONS.....................................................20
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING..............................20
SECTION 304. TEMPORARY SECURITIES........................................................22
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.........................24
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES............................26
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS RESERVED...............................27
SECTION 308. PERSONS DEEMED OWNERS.......................................................28
SECTION 309. CANCELLATION................................................................28
SECTION 310. COMPUTATION OF INTEREST.....................................................29
SECTION 311. CUSIP NUMBERS...............................................................29
ARTICLE FOUR SATISFACTION AND DISCHARGE..................................................29
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.....................................29
SECTION 402. APPLICATION OF TRUST FUNDS..................................................30
ARTICLE FIVE REMEDIES.....................................................................30
SECTION 501 EVENTS OF DEFAULT...........................................................30
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT..........................32
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.............33
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM............................................34
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.................34
SECTION 506. APPLICATION OF MONEY COLLECTED..............................................34
SECTION 507. LIMITATION ON SUITS.........................................................35
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM OR
MAKE-WHOLE AMOUNT, IF ANY, INTEREST AND ADDITIONAL AMOUNTS...............35
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES..........................................36
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE..............................................36
SECTION 511. DELAY OR OMISSION NOT WAIVER................................................36
SECTION 512. CONTROL BY HOLDERS OF SECURITIES............................................36
SECTION 513. WAIVER OF PAST DEFAULTS.....................................................36
SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS.....................................37
SECTION 515. UNDERTAKING FOR COSTS.......................................................37
ARTICLE SIX THE TRUSTEE...................................................................37
SECTION 601. NOTICE OF DEFAULTS..........................................................37
SECTION 602. CERTAIN RIGHTS OF TRUSTEE...................................................37
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES......................39
SECTION 604. MAY HOLD SECURITIES.........................................................39
SECTION 605. MONEY HELD IN TRUST.........................................................39
SECTION 606. COMPENSATION AND REIMBURSEMENT..............................................39
SECTION 607. CORPORATE TRUSTEE REQUIRED ELIGIBILITY; CONFLICTING INTERESTS...............40
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...........................40
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR......................................42
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.................42
SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT.........................................43
SECTION 612. TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE ISSUER......................45
ARTICLE SEVEN HOLDERS' LIST AND REPORTS BY TRUSTEE AND ISSUER.............................45
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS................................45
SECTION 702. REPORTS BY TRUSTEE..........................................................45
SECTION 703. REPORTS BY ISSUER...........................................................46
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C>
SECTION 704. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS....................46
ARTICLE EIGHT CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE............................47
SECTION 801. CONSOLIDATIONS AND MERGERS OF ISSUER AND SALES, LEASES AND CONVEYANCE
PERMITTED SUBJECT TO CERTAIN CONDITIONS..................................47
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION..................................47
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL................................47
ARTICLE NINE SUPPLEMENTAL INDENTURES......................................................48
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS..........................48
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.............................49
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES........................................50
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES...........................................50
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.........................................50
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES..........................50
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES...........................................50
ARTICLE TEN COVENANTS.....................................................................50
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM OR MAKE-WHOLE AMOUNT, IF ANY, INTEREST
AND ADDITIONAL AMOUNTS...................................................50
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY............................................51
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST..........................51
SECTION 1004. LIMITATIONS ON INCURRENCE OF DEBT..........................................53
SECTION 1005. [intentionally omitted]....................................................54
SECTION 1006. EXISTENCE..................................................................54
SECTION 1007. MAINTENANCE OF PROPERTIES..................................................54
SECTION 1008. INSURANCE..................................................................54
SECTION 1009. PAYMENT OF TAXES AND OTHER CLAIMS..........................................54
SECTION 1010. PROVISION OF FINANCIAL INFORMATION.........................................54
SECTION 1011. STATEMENT AS TO COMPLIANCE.................................................55
SECTION 1012. ADDITIONAL AMOUNTS.........................................................55
SECTION 1013. WAIVER OF CERTAIN COVENANTS................................................56
SECTION 1014. DELIVERY OF CERTAIN INFORMATION............................................56
SECTION 1015. OFFICERS' CERTIFICATE AS TO AN EVENT OF DEFAULT............................56
ARTICLE ELEVEN REDEMPTION OF SECURITIES...................................................56
SECTION 1101. APPLICABILITY OF ARTICLE...................................................56
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE......................................57
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED..........................57
SECTION 1104. NOTICE OF REDEMPTION.......................................................57
SECTION 1105. DEPOSIT OF REDEMPTION PRICE................................................58
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE......................................58
SECTION 1107. SECURITIES REDEEMED IN PART................................................59
ARTICLE TWELVE SINKING FUNDS..............................................................59
SECTION 1201. APPLICABILITY OF ARTICLE...................................................59
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENT WITH SECURITIES.......................59
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND..................................59
ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS.......................................60
SECTION 1301. APPLICABILITY OF ARTICLE...................................................60
SECTION 1302. REPAYMENT OF SECURITIES....................................................60
SECTION 1303. EXERCISE OF OPTION.........................................................60
SECTION 1304. WHEN SECURITIES PRESENTED FOR REPAYMENT BECOME DUE AND PAYABLE.............61
SECTION 1305. SECURITIES REPAID IN PART..................................................61
ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE.......................................61
SECTION 1401. APPLICABILITY OF ARTICLE; ISSUER'S OPTION TO EFFECT DEFEASANCE OR
COVENANT DEFEASANCE......................................................61
</TABLE>
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<PAGE> 6
<TABLE>
<S> <C>
SECTION 1402. DEFEASANCE AND DISCHARGE...................................................62
SECTION 1403. COVENANT DEFEASANCE........................................................62
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE............................62
SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS...........................................64
ARTICLE FIFTEEN MEETINGS OF HOLDERS OF SECURITIES.........................................64
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED..................................64
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS.........................................65
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS.......................................65
SECTION 1504. QUORUM; ACTION.............................................................65
SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS........66
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS............................67
SECTION 1507. EVIDENCE OF ACTION TAKEN BY HOLDERS........................................67
SECTION 1508. PROOF OF EXECUTION OF INSTRUMENTS..........................................67
ARTICLE SIXTEEN SECURITIES IN FOREIGN CURRENCIES..........................................67
SECTION 1601. APPLICABILITY OF ARTICLE...................................................67
</TABLE>
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<PAGE> 7
ARDEN REALTY LIMITED PARTNERSHIP
Reconciliation and Tie between Trust Indenture Act of 1939 (the
"TIA" or "Trust Indenture Act") and the Indenture, dated as of March 14, 2000
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
Sec. 310(a)(1)............................. 607
(a)(2)............................. 607
(b)................................ 607, 608
Sec. 312(a)................................ 704
Sec. 312(c)................................ 701
Sec. 313(a)................................ 702
(c)................................ 702
Sec. 314(a)................................ 703
(a)(4)............................. 1011
(c)(1)............................. 102
(c)(2)............................. 102
(e)................................ 102
Sec. 315(b) ............................... 601
Sec. 316(a) (last sentence)............... 101 ("Outstanding")
(a)(1)(A).......................... 502, 512
(a)(1)(B).......................... 513
(b)................................ 508
Sec. 317(a)(1) ............................ 503
(a)(2)............................. 504
Sec. 318(a)................................ 113
(c)................................ 113
</TABLE>
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
Attention should also be directed to Section 318(c) of the Trust
Indenture Act, which provides that the provisions of Sections 310 to and
including 317 of the Trust Indenture Act are a part of and govern every
qualified indenture, whether or not physically contained therein.
-vi-
<PAGE> 8
INDENTURE (this "Indenture"), dated as of March 14, 2000, between
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership (the "Issuer"),
having its principal offices at 11601 Wilshire Boulevard, Fourth Floor, Los
Angeles, California 90025-1740 and The Bank of New York, a New York banking
corporation, as Trustee hereunder (the "Trustee"), having its Corporate Trust
Office at 101 Barclay Street, Floor 21 West, New York, New York 10286, Attn.:
Corporate Trust Administration.
RECITALS OF THE ISSUER
The Issuer deems it necessary to issue from time to time for its
lawful purposes senior debt securities (hereinafter called the "Securities")
evidencing its unsecured and unsubordinated indebtedness, and has duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of the Securities, unlimited as to principal amount,
to bear interest at the rates or formulas, to mature at such times and to have
such other provisions as shall be fixed as hereinafter provided.
Upon making the appropriate filings with the Securities and
Exchange Commission, this Indenture will be subject to the provisions of the
Trust Indenture Act of 1939, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder that are deemed to be
incorporated into this Indenture and shall, to the extent applicable, be
governed by such provisions.
All things necessary to make this Indenture a legal, valid and
binding agreement of the Issuer, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the TIA, either
directly or by reference therein, have the meanings assigned to
them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) the words "herein," "hereof," "hereto" and "hereunder" and other
words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision; and
(5) the word "or" is always used inclusively.
<PAGE> 9
"ACQUIRED INDEBTEDNESS" means Debt of a Person (i) existing at
the time the Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from the Person, in each case, other than Debt incurred in
connection with, or in contemplation of, the Person becoming a Subsidiary or
that acquisition. Acquired Indebtedness shall be deemed to be incurred on the
date of the related acquisition of assets from any Person or the date the
acquired Person becomes a Subsidiary.
"ACT," when used with respect to any Holder, has the meaning
specified in Section 104.
"ADDITIONAL AMOUNTS" means any additional amounts which are
required by a Security or by or pursuant to a Board Resolution, under
circumstances specified therein, to be paid by the Issuer in respect of certain
taxes, assessments or other governmental charges imposed on certain Holders and
which are owing to such Holders.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"ANNUAL DEBT SERVICE CHARGE," as of any date means the amount
which is expensed in any 12 month period for Consolidated Interest Expense of
the Issuer and its Subsidiaries.
"AUTHENTICATING AGENT" means any Person authorized by the Trustee
pursuant to Section 611 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"AUTHORIZED NEWSPAPER" means a newspaper, printed in the English
language or in an official language of the place of publication, customarily
published on each day that is a Business Day in the place of publication,
whether or not published on days that are Legal Holidays in the place of
publication, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any day that is a Business Day in the place of publication.
"BANKRUPTCY LAW" has the meaning specified in Section 501.
"BOARD OF DIRECTORS" means the board of directors of the General
Partner or any committee of that board duly authorized to act thereunder.
"BOARD RESOLUTION" means a copy of one or more resolutions
certified by the Secretary or an Assistant Secretary of the General Partner to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"BUSINESS DAY" when used with respect to any Place of Payment or
any other location referred to in this Indenture or in the Securities, means,
unless otherwise specified with respect to any Securities pursuant to Section
301, any day, other than a Saturday or Sunday or other day on which banking
institutions in that Place of Payment or particular location are authorized or
required by law, regulation or executive order to close.
-2-
<PAGE> 10
"CLEARSTREAM" means Clearstream International, or its successor.
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties on such date.
"COMMON DEPOSITARY" has the meaning specified in Section 304(b).
"CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE" for any period
means Consolidated Net Income plus amounts which have been deducted in
determining Consolidated Net Income during such period for (i) Consolidated
Interest Expense, (ii) provision for taxes of the Issuer and its Subsidiaries
based on income, (iii) amortization (other than amortization of debt discount)
and depreciation, (iv) provisions for losses from sales or joint ventures, (v)
increases in deferred taxes and other non-cash items, (vi) charges resulting
from a change in accounting principles and (vii) charges for early
extinguishment of debt, and less amounts which have been added in determining
Consolidated Net Income during such period for (a) provisions for gains from
sales or joint ventures and (b) decreases in deferred taxes and other non-cash
items.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, and
without duplication, all interest (including the interest component of rentals
on leases reflected in accordance with GAAP as capitalized leases on the
Issuer's consolidated balance sheet, letter of credit fees, commitment fees and
other like financial charges) and all amortization of debt discount on all Debt
(including, without limitation, payment-in-kind, zero coupon and other
securities) of the Issuer and its Subsidiaries, but excluding legal fees, title
insurance charges and other out-of-pocket fees and expenses incurred in
connection with the issuance of Debt, all determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" for any period means the amount of net
income (or loss) of the Issuer and its Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP.
"CONVERSION EVENT" means the cessation of use of (i) a Foreign
Currency both by the government of the country or the confederation which issued
such currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community, (ii) the
ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Union or (iii) any
currency unit or composite currency other than the ECU for the purposes for
which it was established.
"CORPORATE TRUST OFFICE" means the principal corporate trust
office of the Trustee at which, at any particular time, its corporate trust
business shall be principally administered, which office at the date hereof is
located at 101 Barclay Street, Floor 21 West, New York, New York 10286, Attn.:
Corporate Trust Administration.
"CORPORATION" includes corporations and limited liability
companies, associations, partnerships, real estate investment trusts, companies
and business trusts.
"CUSTODIAN" has the meaning specified in Section 501.
"DEBT" of any Person means, without duplication, any indebtedness
of such Person, whether or not contingent, in respect of (i) borrowed money
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness
secured by any mortgage, pledge, lien,
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charge, encumbrance or any security interest existing on property owned by such
Person, (iii) the reimbursement obligations, contingent or otherwise, in
connection with any letters of credit actually issued or amounts representing
the balance deferred and unpaid of the purchase price of any property except any
such balance that constitutes an accrued expense or trade payable or (iv) any
lease of property by such Person as lessee which is reflected on such Person's
consolidated balance sheet as a capitalized lease in accordance with GAAP; in
the case of items of indebtedness under (i) through (iii) above only to the
extent that any such items (other than letters of credit) would appear as a
liability on such Person's consolidated balance sheet in accordance with GAAP,
and also includes, to the extent not otherwise included, any obligation by such
Person to be liable for, or to pay, as obligor, guarantor or otherwise (other
than for purposes of collection in the ordinary course of business),
indebtedness of another Person (other than such Person and its Subsidiaries) (it
being understood that "Debt" shall be deemed to be incurred by the Issuer and
its Subsidiaries on a consolidated basis whenever the Issuer and its
Subsidiaries on a consolidated basis shall create, assume, guarantee or
otherwise become liable in respect thereof; Debt of a Subsidiary of the Issuer
existing prior to the time it became a Subsidiary of the Issuer shall be deemed
to be incurred upon such Subsidiary's becoming a Subsidiary of the Issuer, and
Debt of a Person existing prior to a merger or consolidation of such Person with
the Issuer or any Subsidiary of the Issuer in which such Person is the successor
of the Issuer or such Subsidiary shall be deemed to be incurred upon the
consummation of such merger or consolidation); provided, however, that the term
Debt shall not include any such indebtedness that has been the subject of an "in
substance" defeasance in accordance with GAAP.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DOLLAR" or "$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"DTC" has the meaning specified in Section 304(b).
"ECU" means European Currency Units as defined and revised from
time to time by the Council of the European Community.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York,
Brussels Office, or its successor as operator of the Euroclear System.
"EUROPEAN COMMUNITY" means the European Economic Community.
"EUROPEAN MONETARY SYSTEM" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the European
Community.
"EUROPEAN UNION" means the European Community, the European Coal
and Steel Community and the European Atomic Energy Community.
"EVENT OF DEFAULT" has the meaning specified in Article Five.
"EXCHANGE ACT" means the Securities Exchange Act of 1934 and any
successor statute thereto, in each case as amended from time to time, and the
rules and regulations of the Commission thereunder.
"EXCHANGE DATE" has the meaning specified in Section 304(b).
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"FOREIGN CURRENCY" means any currency, currency unit or composite
currency, including, without limitation, the ECU, issued by the government of
one or more countries other than the United States or by any recognized
confederation or association of such governments.
"GAAP" means generally accepted accounting principles, as in
effect from time to time, as used in the United States applied on a consistent
basis; provided that solely for purposes of any calculation required by the
financial covenants contained herein, "GAAP" shall mean generally accepted
accounting principles as used in the United States on the date hereof, applied
on a consistent basis.
"GENERAL PARTNER" means Arden Realty, Inc., a Maryland
corporation, as general partner of the Issuer.
"GOVERNMENT OBLIGATIONS" means securities which are (i) direct
obligations of the United States of America or the government which issued the
Foreign Currency in which the Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depositary receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depositary receipt.
"HOLDER" means, in the case of any Registered Security, the
Person in whose name such Security is registered in the Security Register.
"INDENTURE" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms of a particular series of Securities established as
contemplated by Section 301.
"INDEXED SECURITY" means a Security the terms of which provide
that the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"INTERCOMPANY DEBT" means Debt to which the only parties are the
Issuer, the General Partner and any of their Subsidiaries, but only so long as
such Debt is held solely by any of the Issuer, the General Partner and any
Subsidiary and provided that, in the case of Debt owed to Subsidiaries, such
Debt is subordinate in right of payment to the Securities.
"INTEREST," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, shall mean
interest payable after Maturity and, when used with respect to a Security which
provides for the payment of Additional Amounts pursuant to Section 1012,
includes such Additional Amounts.
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"INTEREST PAYMENT DATE," when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"ISSUER" means the Person named as the "Issuer" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter "Issuer"
shall mean such successor Person.
"ISSUER REQUEST" and "ISSUER ORDER" mean, respectively, a written
request or order signed in the name of the Issuer by the General Partner by its
Chairman of the Board of Directors, its President or a Vice President (whether
or not designated by a number or a word or words added before or after the title
"vice president"), and by its Chief Financial Officer, Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, of the General Partner, and
delivered to the Trustee.
"JUDGMENT CURRENCY" has the meaning specified in Section 115.
"LEGAL HOLIDAY" means a day that is not a Business Day.
"MAKE-WHOLE AMOUNT" means, in connection with any optional
redemption or accelerated payment of any Securities, the excess, if any, of: (i)
the aggregate present value as of the date of such redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount of
interest (exclusive of interest accrued to the date of redemption or accelerated
payment) that would have been payable in respect of each such dollar if such
redemption had not been made, determined by discounting, on a semi-annual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date notice of such redemption is given) from the
respective dates on which such principal and interest would have been payable if
such redemption or accelerated payment had not been made, to the date of
redemption or accelerated payment; over (ii) the aggregate principal amount of
the Securities being redeemed or paid.
"MATURITY," when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption or repurchase,
notice of option to elect repayment or otherwise, and includes the Redemption
Date.
"OFFICERS' CERTIFICATE" means a certificate signed by the
Chairman of the Board of Directors, the President or a Vice President (whether
or not designated by a number or a word or words added before or after the title
"vice president") of the General Partner and by the Chief Financial Officer,
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the General Partner, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may
be counsel for the Issuer or the General Partner or who may be an employee of or
other counsel for the Issuer or the General Partner and who shall be reasonably
satisfactory to the Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"OUTSTANDING," when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
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<PAGE> 14
(i) Securities theretofore canceled by the Trustee or the
Security Registrar or delivered to the Trustee or the
Security Registrar for cancellation,
(ii) Securities, or portions thereof, for whose payment or
redemption or repayment at the option of the Holder money
in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the
Issuer) in trust or set aside and segregated in trust by
the Issuer (if the Issuer shall act as its own Paying
Agent) for the Holders of such Securities, provided that,
if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture
or provision therefor satisfactory to the Trustee has been
made;
(iii) Securities, except to the extent provided in Sections 1402
and 1403, with respect to which the Issuer has effected
defeasance and/or covenant defeasance as provided in
Article Fourteen; and
(iv) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid
obligations of the Issuer;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination or calculation, upon a declaration of acceleration of the maturity
thereof pursuant to Section 502, (ii) the principal amount of any Security
denominated in a Foreign Currency that may be counted in making such
determination or calculation and that shall be deemed Outstanding for such
purpose shall be equal to the Dollar equivalent, determined pursuant to Section
301 as of the date such Security is originally issued by the Issuer, of the
principal amount (or, in the case of an Original Issue Discount Security, the
Dollar equivalent as of such date of original issuance of the amount determined
as provided in clause (i) above) of such Security, (iii) the principal amount of
any Indexed Security that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be equal
to the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Security pursuant to Section 301,
and (iv) Securities owned by the Issuer or any other obligor upon the Securities
or any Affiliate of the Issuer or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in making such determination or calculation or in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which a Responsible Officer of the Trustee knows to be
so owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Issuer or any other obligor upon the
Securities or any Affiliate of the Issuer or of such other obligor.
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"PAYING AGENT" means any Person authorized by the Issuer to pay
the principal of (and premium and Additional Amounts, if any) or interest on any
Securities on behalf of the Issuer.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, joint-stock company, trust, unincorporated
organization, real estate investment trust or government or any agency or
political subdivision thereof.
"PLACE OF PAYMENT," when used with respect to any Security, means
the place or places where the principal of (and premium and Additional Amounts,
if any) and interest on such Securities are payable as specified as contemplated
by Sections 301 and 1002.
"PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"RECOURSE INDEBTEDNESS" means Debt, other than Secured Debt as to
which Secured Debt the liability of the obligor thereon is limited to its
interest in the collateral securing such Secured Debt, provided that no such
Secured Debt shall constitute Recourse Indebtedness by reason of provisions
therein for imposition of full recourse liability on the obligor for certain
wrongful acts, environmental liabilities, or other customary exclusions from the
scope of so-called "non-recourse" provisions.
"REDEMPTION DATE," when used with respect to any Security to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture or such Security.
"REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture or such Security.
"REGISTERED SECURITY" shall mean any Security which is registered
in the Security Register.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on any Registered Security of or within any series means the date
specified for that purpose as contemplated by Section 301, whether or not a
Business Day.
"REINVESTMENT RATE" means the yield on Treasury securities at a
constant maturity corresponding to the remaining life (as of the date of
redemption, and rounded to the nearest month) to stated maturity of the
principal being redeemed (the "Treasury Yield"), plus 0.25%. For purposes
hereof, the Treasury Yield shall be equal to the arithmetic mean of the yields
published in the Statistical Release under the heading "Week Ending" for "U.S.
Government Securities--Treasury Constant Maturities" with a maturity equal to
the remaining life; provided, that if no published maturity exactly corresponds
to the remaining life, then the Treasury Yield shall be interpolated or
extrapolated on a straight-line basis from the arithmetic means of the yields
for the next shortest and next longest published maturities. For purposes of
calculating the Reinvestment Rate, the most recent Statistical Release published
prior to the date of determination of the Make-Whole Amount shall be used. If
the format or content of the Statistical Release changes in a manner that
precludes determination of the Treasury Yield in the above manner, then the
Treasury Yield shall be determined in the manner that most closely approximates
the above manner, as reasonably determined by the Issuer.
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"REPAYMENT DATE" means, when used with respect to any Security to
be repaid at the option of the Holder, the date fixed for such repayment by or
pursuant to this Indenture.
"REPAYMENT PRICE" means, when used with respect to any Security
to be repaid at the option of the Holder, the price at which it is to be repaid
by or pursuant to this Indenture.
"RESPONSIBLE OFFICER," when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
"SECURED DEBT" means, without duplication, Debt that is secured
by a mortgage, trust deed, deed of trust, deed to secure Debt, security
agreement, pledge, conditional sale or other title retention agreement,
capitalized lease, or other like agreement granting or conveying security title
to or a security interest in real property or other tangible assets. Secured
Debt shall be deemed to be incurred (i) on the date the Issuer or any Subsidiary
creates, assumes, guarantees or otherwise becomes liable in respect thereof if
it is secured in the manner described in the preceding sentence on such date or
(ii) on the date the Issuer or any Subsidiary first secures such Debt in the
manner described in the preceding sentence if such Debt was not so secured on
the date it was incurred.
"SECURITY" has the meaning stated in the first recital of this
Indenture and, more particularly, means any Security or Securities authenticated
and delivered under this Indenture; provided; however, that, if at any time
there is more than one Person acting as Trustee under this Indenture,
"Securities" with respect to the Indenture as to which such Person is Trustee
shall have the meaning stated in the first recital of this Indenture and shall
more particularly mean Securities authenticated and delivered under this
Indenture, exclusive, however, of Securities of any series as to which such
Person is not Trustee.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary which is a
"significant subsidiary" (as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated under the Securities Act of 1933, as amended) of the Issuer.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest
on the Registered Securities of or within any series means a date fixed by the
Trustee pursuant to Section 307.
"STATED MATURITY," when used with respect to any Security or any
installment of principal thereof or interest thereon or any Additional Amounts
with respect thereto, means the date specified in such Security representing
such installment of interest as the fixed date on which the principal of such
Security or such installment of principal or interest, or such Additional
Amounts are due and payable.
"STATISTICAL RELEASE" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which reports yields on actively traded United States
government securities adjusted to constant maturities, or, if such statistical
release is not published at the time of any determination
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<PAGE> 17
under the Indenture, then such other reasonably comparable index which shall be
designated by the Issuer.
"SUBSIDIARY" means, as to any Person, (i) a corporation,
partnership, limited liability company, trust, real estate investment trust or
other entity a majority of the outstanding voting stock, partnership interests
or membership interests, as the case may be, of which is owned or controlled,
directly or indirectly, by the Issuer or by one or more Subsidiaries of the
Issuer. For the purposes of this definition, "voting stock" means stock having
the voting power for the election of directors, general partners, managers or
trustees, as the case may be, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
"TOTAL ASSETS" as of any date means the sum of (i) the
Undepreciated Real Estate Assets and (ii) all other assets of the Issuer and its
Subsidiaries on a consolidated basis determined in accordance with GAAP (but
excluding intangibles and accounts receivable).
"TOTAL UNENCUMBERED ASSETS" as of any date means the sum of (i)
the Undepreciated Real Estate Assets not securing any portion of Secured Debt
and (ii) all other assets of the Issuer and its Subsidiaries on a consolidated
basis not securing any portion of Secured Debt determined in accordance with
GAAP (but excluding intangibles and accounts receivable).
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of
1939, as amended and as in force at the date as of which this Indenture was
executed, except as provided in Section 905.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
"UNDEPRECIATED REAL ESTATE ASSETS" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Issuer
and its Subsidiaries on such date, before depreciation and amortization,
determined on a consolidated basis in accordance with GAAP.
"UNITED STATES" means, unless otherwise specified with respect to
any Securities pursuant to Section 301, the United States of America (including
the states and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"UNITED STATES PERSON" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source.
"UNSECURED DEBT" means Debt of the Issuer or any Subsidiary that
is not Secured Debt.
"YIELD TO MATURITY" means the yield to maturity, computed at the
time of issuance of a Security (or, if applicable, at the most recent
redetermination of interest on such
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<PAGE> 18
Security) and as set forth in such Security in accordance with generally
accepted United States bond yield computation principles.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Except as
otherwise expressly provided in this Indenture, upon any application or request
by the Issuer to the Trustee to take any action under any provision of this
Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
delivered pursuant to Section 1011) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such
condition or covenant has been complied with; and
(4) a statement as to whether, in the opinion of such individual,
such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion as to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the General Partner
may be based, insofar as it relates to legal matters, upon an Opinion of
Counsel, or a certificate or representations of or by counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
opinion, certificate or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such Opinion of Counsel
or certificate or representations may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the General Partner stating that the information as to such factual
matters is in the possession of the Issuer, unless such counsel knows that the
certificate or opinion or representations as to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
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SECTION 104. ACTS OF HOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by agents duly appointed in writing. If any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders of Securities of such series may,
alternatively, be embodied in and evidenced by the record of Holders of
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in accordance with the provisions of Article
Fifteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Issuer. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent, or
of the holding by any Person of a Security, shall be sufficient for any purpose
of this Indenture and (subject to Section 315 of the TIA) conclusive in favor of
the Trustee and the Issuer and any agent of the Trustee or the Issuer, if made
in the manner provided in this Section. The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 1506.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient and in accordance with such reasonable rules as the Trustee may
determine; and the Trustee may in any instance require further proof with
respect to any of the matters referred to in this Section.
(c) The ownership, principal amount and serial numbers of
Registered Securities held by any Person, and the date of the commencement and
the date of the termination of holding the same, shall be proved by the Security
Register.
(d) If the Issuer shall solicit from the Holders of any
Registered Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Issuer may, at its option, in or pursuant to a
Board Resolution, fix in advance a record date for the determination of Holders
of Registered Securities entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Issuer shall have no
obligation to do so. If such a record date is fixed, notice of such Record Date
shall be delivered to the Trustee and such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of Registered Securities of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date, provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee, any
Security Registrar, any Paying Agent, any Authenticating Agent or the Issuer in
reliance thereon, whether or not notation of such action is made upon such
Security.
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SECTION 105. NOTICES, ETC., TO TRUSTEE AND ISSUER. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with
(A) the Trustee by a Holder or by the Issuer shall be sufficient for
every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office or
if given by facsimile transmission (at the facsimile number
provided by the Trustee in writing for purposes of giving
notices), receipt confirmed by telephone followed by an original
copy delivered by guaranteed overnight courier, or
(B) the Issuer by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid,
to the Issuer addressed to it at the address of its principal
office specified in the first paragraph of this Indenture or at
any other address previously furnished in writing to the Trustee
by the Issuer or if given by facsimile transmission (facsimile
number (310) 966-9494 Attention: Chief Financial Officer or such
other facsimile number as the Issuer shall provide), receipt
confirmed by telephone followed by an original copy delivered by
guaranteed overnight courier.
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture
provides for notice of any event to Holders of Registered Securities by the
Issuer or the Trustee, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to each such Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders of Registered Securities is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders of Registered Securities given as provided herein. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice.
If by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause it shall be impracticable to give
such notice by mail, then such notification to Holders of Registered Securities
as shall be made with the approval of the Trustee shall constitute a sufficient
notification to such Holders for every purpose hereunder.
Any request, demand, authorization, direction, notice, consent,
waiver or Act required or permitted under this Indenture shall be in the English
language, except that, if the Issuer so elects, any published notice may be in
an official language of the country of publication.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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SECTION 108. SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Indenture by the Issuer shall bind its successors and assigns, whether
so expressed or not.
SECTION 109. SEVERABILITY CLAUSE. In case any provision in this
Indenture or in any Security shall be deemed invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE. Nothing in this Indenture or
in the Securities, express or implied, shall give to any Person, other than the
parties hereto, any Security Registrar, any Paying Agent, any Authenticating
Agent and their successors hereunder and the Holders any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW. This Indenture and the Securities
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 112. LEGAL HOLIDAYS. In any case where any Interest
Payment Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Security, or the last date on which a Holder has the
right to exchange Securities of a series that are exchangeable, shall be a Legal
Holiday at any Place of Payment, then (notwithstanding any other provision of
this Indenture or any Security other than a provision in any Security that
specifically states that such provision shall apply in lieu hereof), payment of
interest or any Additional Amounts or principal (and premium or Make-Whole
Amount, if any) need not be made at such Place of Payment on such date and such
Securities need not be exchanged on such date, but such payment may be made and
such Securities may be exchanged on the next succeeding Business Day at such
Place of Payment with the same force and effect as if made on the Interest
Payment Date, Redemption Date, Repayment Date or sinking fund payment date, or
at the Stated Maturity or Maturity or on such last day for exchange, provided
that no interest shall accrue on the amount so payable for the period from and
after such Interest Payment Date, Redemption Date, Repayment Date, sinking fund
payment date, Stated Maturity or Maturity or last day for or exchange, as the
case may be.
SECTION 113. QUALIFICATION UNDER TRUST INDENTURE ACT. In the
event this Indenture is or becomes qualified under the provisions of the TIA,
the provisions hereof shall be subject to the TIA, all provisions which the TIA
provides as automatically deemed to be included in an indenture to be qualified
thereunder shall be included herein, and, in the event of any conflict between
the provisions hereof and the provisions of the TIA, the mandatory provisions of
the TIA shall control.
SECTION 114. COUNTERPARTS. This Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 115. JUDGMENT CURRENCY. The Issuer agrees, to the fullest
extent that it may effectively do so under applicable law, that (a) if for the
purpose of obtaining judgment in any court it is necessary to convert the sum
due in respect of the principal of, or premium or interest, if any, or
Additional Amounts on the Securities of any series (the "Required Currency")
into a currency in which a judgment will be rendered (the "Judgment Currency"),
the rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the New York Banking Day
preceding that on which a final unappealable judgment is given and (b) the
Issuer's obligations under this Indenture to make
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payments in the Required Currency (i) shall not be discharged or satisfied by
any tender, or any recovery pursuant to any judgment (whether or not entered in
accordance with clause (a)), in any currency other than the Required Currency,
except to the extent that such tender or recovery shall result in the actual
receipt, by the payee, of the full amount of the Required Currency expressed to
be payable in respect of such payments, (ii) shall be enforceable as an
alternative or additional cause of action for the purpose of recovering in the
Required Currency the amount, if any, by which such actual receipt shall fall
short of the full amount of the Required Currency so expressed to be payable,
and (iii) shall not be affected by judgment being obtained for any other sum due
under this Indenture. For purposes of the foregoing, "New York Banking Day"
means any day except a Legal Holiday in The City of New York.
SECTION 116. NONRECOURSE. Unless otherwise provided in the Board
Resolution authorizing a particular series of Securities in accordance with
Section 301, no recourse under or upon any obligation, covenant or agreement
contained in this Indenture, in any Security, or because of any Debt evidenced
thereby (including, without limitation, any obligation or indebtedness relating
to the principal of, or premium or Make-Whole Amount, if any, interest or any
other amounts due, or claimed to be due, on any Security issued hereunder), or
for any claim based thereon or otherwise in respect thereof, shall be had (i)
against the General Partner or any other partner, or any Person which owns an
interest, directly or indirectly, in any partner, in the Issuer, or (ii) against
any promoter, as such, or against any past, present or future shareholder,
officer, member, trustee or partner, as such, of the Issuer or the General
Partner or of any successor, either directly or through the Issuer or the
General Partner or any successor, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance of the Securities by the Holders thereof and as
part of the consideration for the issue of the Securities. Unless otherwise
provided in the Board Resolution authorizing a particular series of Securities
in accordance with Section 301, the Holders of the Securities hereunder
acknowledge by the acceptance of the Securities that their sole remedies under
this Indenture for any Default by the Issuer in the payment of the principal of,
or any premium or Make-Whole Amount, if any, interest or any amounts due, or
claimed to be due, on any Security, or otherwise, are limited to claims against
the property of the Issuer as provided in Section 503 hereof.
ARTICLE TWO
SECURITIES FORMS
SECTION 201. FORMS OF SECURITIES. The Registered Securities, if
any, of each series shall be in substantially the forms as shall be established
in one or more indentures supplemental hereto, as set forth in an Officers'
Certificate delivered to the Trustee or approved from time to time by or
pursuant to a Board Resolution in accordance with Section 301, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as the Issuer may
deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Securities may be listed, or to conform to usage.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on a steel engraved
border or steel engraved borders, mechanically reproduced on safety paper or may
be produced in any other manner, all as determined by the officers executing
such Securities, as evidenced by their execution of such Securities.
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SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Subject to Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series
designated therein referred to in the within-mentioned Indenture.
(TRUSTEE)
as Trustee
By:
---------------------------------
Authorized Signatory
SECTION 203. SECURITIES ISSUABLE IN GLOBAL FORM. If Securities of
or within a series are issuable in global form, as specified as contemplated by
Section 301, then, notwithstanding clause (9) of Section 301 and the provisions
of Section 302, any such Security shall represent such of the Outstanding
Securities of such series as shall be specified therein and may provide that it
or any number of such Securities shall represent the aggregate amount of
Outstanding Securities of such series from time to time endorsed thereon and may
also provide that the aggregate amount of Outstanding Securities of such series
represented thereby may from time to time be increased or decreased to reflect
exchanges. Any endorsement of a Security in global form to reflect the amount,
or any increase or decrease in the amount, of Outstanding Securities represented
thereby shall be made in such manner and by such Person or Persons as shall be
specified therein or in the Issuer Order to be delivered pursuant to Section 303
or 304. Subject to the provisions of Section 303 and, if applicable, Section
304, the Trustee shall deliver and redeliver any Security prepared by the Issuer
in permanent global form in the manner and upon instructions given by the Person
or Persons specified therein or in the applicable Issuer Order. If an Issuer
Order pursuant to Section 303 or 304 has been, or simultaneously is, delivered,
any instructions by the Issuer with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not comply
with Section 102 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply to
any Security represented by a Security in global form if such Security was never
issued and sold by the Issuer and the Issuer delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
Notwithstanding the provisions of Section 307, unless otherwise
specified as contemplated by Section 301, payment of principal of, and any
premium and interest on, and any Additional Amounts in respect of, any Security
in temporary or permanent global form shall be made to the Person or Persons
specified therein.
Notwithstanding the provisions of Section 308 and except as
provided in the preceding paragraph, the Issuer, the Trustee and any agent of
the Issuer and the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a global Security the Holder of such
global Security in registered form.
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<PAGE> 24
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series. There shall
be established in one or more Board Resolutions or pursuant to authority granted
by one or more Board Resolutions and, subject to Section 303, set forth, or
determined in the manner provided, in an Officers' Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities of any series, any or all of the following, as applicable (each of
which (except for the matters set forth in clauses (1), (2) and (16) below), if
so provided, may be determined from time to time by the Issuer with respect to
unissued Securities of the series when issued from time to time):
(1) the title of the Securities of the series (which shall
distinguish the Securities of such series from all other series
of Securities);
(2) any limit upon the aggregate principal amount of the Securities
of the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of,
other Securities of the series pursuant to Sections 304, 305,
306, 906, 1107 or 1305);
(3) the percentage of the principal amount at which the Securities of
the series will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon
declaration of acceleration of maturity thereof;
(4) the date or dates, or the method for determining such date or
dates, on which the principal of the Securities of the series
shall be payable;
(5) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which such interest
shall accrue or the method by which such date or dates shall be
determined, the Interest Payment Dates on which such interest
will be payable and the Regular Record Date, if any, for the
interest payable on any Registered Security on any Interest
Payment Date, or the method by which such date shall be
determined, and the basis upon which interest shall be calculated
if other than that of a 360-day year of twelve 30-day months;
(6) the place or places, if any, other than or in addition to the
Borough of Manhattan, New York City, where (i) the principal of
(and premium or Make-Whole Amount, if any), interest, if any, on,
and Additional Amounts, if any, payable in respect of, the
Securities of the series shall be payable, (ii) any Registered
Securities of the series may be surrendered for registration of
transfer or exchange and (iii) notices or demands to or upon the
Issuer in respect of the Securities of the series and this
Indenture may be served;
(7) the period or periods within which, the price or prices at which,
the currency or currencies, currency unit or units or composite
currency or currencies in which, and other terms and conditions
upon which the Securities of the series may be
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redeemed, as a whole or in part, at the option of the Issuer, if
the Issuer is to have such an option;
(8) the obligation, if any, of the Issuer to redeem, repay or
purchase the Securities of the series pursuant to any sinking
fund or analogous provision or at the option of a Holder thereof,
and the period or periods within which or the date or dates on
which, the price or prices at which, the currency or currencies,
currency unit or units or composite currency or currencies in
which, and other terms and conditions upon which the Securities
of the series shall be redeemed, repaid or purchased, as a whole
or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Securities of
the series shall be issuable;
(10) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(11) if other than the principal amount thereof, the portion of the
principal amount of the Securities of the series that shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502 or the method by which such portion shall
be determined;
(12) if other than Dollars, the Foreign Currency or Currencies in
which payment of the principal of (and premium or Make-Whole
Amount, if any) or interest or Additional Amounts, if any, on the
Securities of the series shall be payable or in which the
Securities of the series shall be denominated;
(13) whether the amount of payments of principal of (and premium or
Make-Whole Amount, if any) or interest, if any, on the Securities
of the series may be determined with reference to an index,
formula or other method (which index, formula or method may be
based, without limitation, on one or more currencies, currency
units, composite currencies, commodities, equity indices or other
indices), and the manner in which such amounts shall be
determined;
(14) whether the principal of (and premium or Make-Whole Amount, if
any) or interest or Additional Amounts, if any, on the Securities
of the series are to be payable, at the election of the Issuer or
a Holder thereof, in a currency or currencies, currency unit or
units or composite currency or currencies other than that in
which such Securities are denominated or stated to be payable,
the period or periods within which, and the terms and conditions
upon which, such election may be made, and the time and manner
of, and identity of the exchange rate agent with responsibility
for, determining the exchange rate between the currency or
currencies, currency unit or units or composite currency or
currencies in which such Securities are denominated or stated to
be payable and the currency or currencies, currency unit or units
or composite currency or currencies in which such Securities are
to be so payable;
(15) provisions, if any, granting special rights to the Holders of the
Securities of the series upon the occurrence of such events as
may be specified;
(16) any deletions from, modifications of or additions to the Events
of Default or covenants of the Issuer with respect to the
Securities of the series, whether or not such Events of Default
or covenants are consistent with the Events of Default or
covenants set forth herein;
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(17) whether the Securities of the series will be in certificated or
book-entry form and, if certificated, whether Securities of the
series are to be issuable as Registered Securities, whether any
Securities of the series are to be issuable initially in
temporary global form and whether any Securities of the series
are to be issuable in permanent global form with or without
coupons and, if so, whether beneficial owners of interests in any
such permanent global Security may exchange such interests for
Securities of such series and of like tenor of any authorized
form and denomination and the circumstances under which any such
exchanges may occur, if other than in the manner provided in
Section 305, and, if Registered Securities of the series are to
be issuable as a global Security, the identity of the depositary
for such series;
(18) the date as of which any temporary global Security representing
Outstanding Securities of the series shall be dated if other than
the date of original issuance of the first Security of the series
to be issued;
(19) the Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name
that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date
for such interest, and the extent to which, or the manner in
which, any interest payable on a temporary global Security on an
Interest Payment Date will be paid if other than in the manner
provided in Section 304;
(20) the applicability, if any, of Sections 1402 and/or 1403 to the
Securities of the series and any provisions in modification of,
in addition to or in lieu of, any of the provisions of Article
Fourteen;
(21) if the Securities of such series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary
Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other
conditions, then the form and/or terms of such certificates,
documents or conditions;
(22) whether and under what circumstances the Issuer will pay
Additional Amounts on the Securities of the series to any Holder
who is not a United States Person (including any modification to
the definition of such term) in respect of any tax, assessment or
governmental charge and, if so, whether the Issuer will have the
option to redeem such Securities rather than pay such Additional
Amounts (and the terms of any such option);
(23) with respect to any Securities that provide for optional
redemption or prepayment upon the occurrence of certain events
(such as a change of control of the Issuer), (i) the possible
effects of such provisions on the market price of the Issuer's or
the General Partner's securities or in deterring certain mergers,
tender offers or other takeover attempts, and the intention of
the Issuer to comply with the requirements of Rule 14e-1 under
the Exchange Act and any other applicable securities laws in
connection with such provisions; (ii) whether the occurrence of
the specified events may give rise to cross-defaults on other
indebtedness such that payment on such Securities may be
effectively subordinated; and (iii) the existence of any
limitations on the Issuer's financial or legal ability to
repurchase such Securities upon the occurrence of such an event
(including, if true, the lack of assurance that such a repurchase
can be effected) and the impact, if any, under the Indenture of
such a failure, including
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whether and under what circumstances such a failure may
constitute an Event of Default;
(24) with respect to any Securities that may be issued in a private
offering, the restrictions on transfer and legends relating to
such Securities of the series and whether Securities of the
series are entitled to registration or exchange rights; and
(25) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical
except, in the case of Registered Securities, as to denomination and except as
may otherwise be provided in or pursuant to the Board Resolution establishing
the series (subject to Section 303 and the second paragraph of this Section 301)
and set forth in an Officers' Certificate or in any indenture supplemental
hereto. All Securities of any one series need not be issued at the same time
and, unless otherwise provided, a series may be reopened, without the consent of
the Holders, for issuances of additional Securities of such series.
If any of the terms of the Securities of any series are
established by action taken pursuant to one or more Board Resolutions, a copy of
an appropriate record of such action(s) shall be certified by the Secretary or
an Assistant Secretary of the General Partner and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth the terms of
the Securities of such series.
SECTION 302. CURRENCY, DENOMINATIONS. Unless otherwise provided
as contemplated by Section 301, the principal of, any premium and interest on
and any Additional Amounts with respect to the Securities shall be payable in
Dollars. Unless otherwise provided as contemplated by Section 301, Registered
Securities denominated in Dollars (other than Registered Securities issued in
global form, which may be of any denomination) shall be issuable in
denominations of $1,000 and any integral multiple thereof. Securities not
denominated in Dollars shall be issuable in such denominations as are
established with respect to such Securities in or pursuant to this Indenture.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Securities shall be executed on behalf of the Issuer by the General Partner by
its Chairman of the Board, its President or one of its Vice Presidents (whether
or not designated by a number or word or words added before or after the title
"vice president"), under its corporate seal reproduced thereon, and attested by
its Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile signatures of the present
or any future such authorized officer and may be imprinted or otherwise
reproduced on the Securities.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the General Partner
shall bind the Issuer, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver the Securities of any series,
executed by the Issuer to the Trustee for authentication, together with an
Issuer Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Issuer Order shall authenticate and deliver such
Securities.
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If all the Securities of any series are not to be issued at one
time and if the Board Resolution or supplemental indenture establishing such
series shall so permit, such Issuer Order may set forth procedures acceptable to
the Trustee for the issuance of such Securities and determining the terms of
particular Securities of such series, such as interest rate or formula, maturity
date, date of issuance and date from which interest shall accrue. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to TIA Section 315(a) through 315(d)) shall be
fully protected in relying upon:
(a) an Opinion of Counsel stating that:
(1) the terms and the form or forms of such
Securities have been established in
conformity with the provisions of this
Indenture; and
(2) such Securities, when completed by
appropriate insertions and executed and
delivered by the Issuer to the Trustee for
authentication in accordance with this
Indenture, authenticated and delivered by
the Trustee in accordance with this
Indenture and issued by the Issuer in the
manner and subject to any conditions
specified in such Opinion of Counsel, will
constitute legal, valid and binding
obligations of the Issuer, enforceable in
accordance with their terms, subject to
applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization and
other similar laws of general applicability
relating to or affecting the enforcement of
creditors' rights generally and to general
equitable principles and will entitle the
Holders thereof to the benefits of this
Indenture; and
(b) an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to
the issuance of the Securities have been complied with and that,
to the best of the knowledge of the signers of such certificate,
no Event of Default with respect to any of the Securities shall
have occurred and be continuing.
If such form or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties,
obligations or immunities under the Securities and this Indenture or otherwise
in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Officers' Certificate
otherwise required pursuant to Section 301 or an Issuer Order, or an Opinion of
Counsel or an Officers' Certificate otherwise required pursuant to the preceding
paragraph at the time of issuance of each Security of such series, but such
order, opinion and certificates, with appropriate modifications to cover such
future issuances, shall be delivered at or before the time of issuance of the
first Security of such series.
Each Registered Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
a certificate of authentication
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<PAGE> 29
substantially in the form provided for herein duly executed by the Trustee by
manual signature of an authorized signatory, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the
Issuer, and the Issuer shall deliver such Security to the Trustee for
cancellation as provided in Section 309 together with a written statement (which
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Issuer, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES. (a) Pending the preparation of
definitive Securities of any series, the Issuer may execute, and upon Issuer
Order the Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities
in lieu of which they are issued, in registered form, and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as conclusively evidenced by their
execution of such Securities. Such temporary Securities may be in global form.
Except in the case of temporary Securities in global form (which
shall be exchanged in accordance with Section 304(b) or as otherwise provided in
or pursuant to a Board Resolution), if temporary Securities of any series are
issued, the Issuer will cause definitive Securities of that series to be
prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Issuer in a
Place of Payment for that series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities of any series, the
Issuer shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of the same series of
authorized denominations. Until so exchanged, the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series.
(b) Unless otherwise provided in or pursuant to a Board
Resolution, this Section 304(b) shall govern the exchange of temporary
Securities issued in global form other than through the facilities of The
Depository Trust Company ("DTC"). If any such temporary Security is issued in
global form, then such temporary global Security shall, unless otherwise
provided therein, be delivered to the London office of a depositary or common
depositary (the "Common Depositary"), for the benefit of Euroclear and
Clearstream, for credit to the respective accounts of the beneficial owners of
such Securities (or to such other accounts as they may direct).
Without unnecessary delay, but in any event not later than the
date specified in, or determined pursuant to the terms of, any such temporary
global Security (the "Exchange Date"), the Issuer shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Issuer. On or after
the Exchange Date, such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Issuer's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge, and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such temporary global Security
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to be exchanged. The definitive Securities to be delivered in exchange for any
such temporary global Security shall be in registered form or permanent global
registered form, or any combination thereof, as specified as contemplated by
Section 301, and, if any combination thereof is so specified, as requested by
the beneficial owner thereof; provided, however, that, unless otherwise
specified in such temporary global Security, upon such presentation by the
Common Depositary, such temporary global Security is accompanied by a
certificate dated the Exchange Date or a subsequent date and signed by Euroclear
as to the portion of such temporary global Security held for its account then to
be exchanged and a certificate dated the Exchange Date or a subsequent date and
signed by Clearstream as to the portion of such temporary global Security held
for its account then to be exchanged, each in the form set forth in Exhibit A-2
to this Indenture or in such other form as may be established pursuant to
Section 301.
Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a temporary global
Security shall be exchanged for definitive Securities of the same series and of
like tenor following the Exchange Date when the account holder instructs
Euroclear or Clearstream, as the case may be, to request such exchange on his
behalf and delivers to Euroclear or Clearstream, as the case may be, a
certificate in the form set forth in Exhibit A-1 to this Indenture (or in such
other form as may be established pursuant to Section 301), dated no earlier than
15 days prior to the Exchange Date, copies of which certificate shall be
available from the offices of Euroclear and Clearstream, the Trustee, any
Authenticating Agent appointed for such series of Securities and each Paying
Agent. Unless otherwise specified in such temporary global Security, any such
exchange shall be made free of charge to the beneficial owners of such temporary
global Security, except that a Person receiving definitive Securities must bear
the cost of insurance, postage, transportation and the like unless such Person
takes delivery of such definitive Securities in person at the offices of
Euroclear or Clearstream.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary global
Security on an Interest Payment Date for Securities of such series occurring
prior to the applicable Exchange Date shall be payable to Euroclear and
Clearstream on such Interest Payment Date upon delivery by Euroclear and
Clearstream to the Trustee of a certificate or certificates in the form set
forth in Exhibit A-2 to this Indenture (or in such other forms as may be
established pursuant to Section 301), for credit without further interest on or
after such Interest Payment Date to the respective accounts of Persons who are
the beneficial owners of such temporary global Security on such Interest Payment
Date and who have each delivered to Euroclear or Clearstream, as the case may
be, a certificate dated no earlier than 15 days prior to the Interest Payment
Date occurring prior to such Exchange Date in the form set forth as Exhibit A-1
to this Indenture (or in such other forms as may be established pursuant to
Section 301). Notwithstanding anything to the contrary herein contained, the
certifications made pursuant to this paragraph shall satisfy the certification
requirements of the preceding two paragraphs of this Section 304(b) and of the
third paragraph of Section 303 of this Indenture and the interests of the
Persons who are the beneficial owners of the temporary global Security with
respect to which such certification was made will be exchanged for definitive
Securities of the same series and of like tenor on the Exchange Date or the date
of certification if such date occurs after the Exchange Date, without further
act or deed by such beneficial owners. Except as otherwise provided in this
paragraph, no payments of principal or interest owing with respect to a
beneficial interest in a temporary global Security will be made unless and until
such interest in such temporary global Security shall have been exchanged for an
interest in a definitive Security. Any interest so received by Euroclear and
Clearstream and
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not paid as herein provided shall be returned to the Trustee prior to the
expiration of two years after such Interest Payment Date in order to be repaid
to the Issuer.
(c) This Section 304(c) shall govern the exchange of temporary
Securities issued in global form through the facilities of DTC. If any such
temporary Security is issued in global form, then such temporary global security
shall, unless otherwise provided therein, be delivered to DTC for credit to the
respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).
Without unnecessary delay, but in any event not later than the
Exchange Date, the Issuer shall deliver to the Trustee definitive Securities, in
aggregate principal amount equal to the principal amount of such temporary
global Security, executed by the Issuer. On or after the Exchange Date, such
temporary global Security shall be surrendered by DTC to the Trustee, as the
Issuer's agent for such purpose, to be exchanged, in whole or from time to time
in part, for definitive Securities without charge, and the Trustee shall
authenticate and deliver, in exchange for each portion of such temporary global
Security, an equal aggregate principal amount of definitive Securities of the
same series of authorized denominations and of like tenor as the portion of such
temporary global Security to be exchanged. The definitive Securities to be
delivered in exchange for any such temporary global Security shall be in
registered form, permanent global registered form, or any combination thereof,
as specified as contemplated by Section 301, and, if any combination thereof is
so specified, as requested by the beneficial owner thereof.
Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a temporary global
Security shall be exchanged for definitive Securities of the same series and of
like tenor following the Exchange Date when the account holder instructs DTC to
request such exchange on his behalf. Unless otherwise specified in such
temporary global Security, any such exchange shall be made free of charge to the
beneficial owners of such temporary global Security, except that a Person
receiving definitive Securities must bear the cost of insurance, postage,
transportation and the like unless such Person takes delivery of such definitive
Securities in person.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary global
Security on an Interest Payment Date for Securities for such series occurring
prior to the applicable Exchange Date shall be payable to DTC on such Interest
Payment Date, for credit without further interest on or after such Interest
Payment Date to the respective accounts of Persons who are the beneficial owners
of such temporary global Security on such Interest Payment Date.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Issuer shall cause to be kept at the Corporate Trust Office of the Trustee
or in any office or agency of the Issuer in a Place of Payment a register for
each series of Securities (the registers maintained in such office or in any
such office or agency of the Issuer in a Place of Payment being herein sometimes
referred to collectively as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall provide for the
registration of Registered Securities and of transfers of Registered Securities.
The Security Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. The Trustee, at its
Corporate Trust Office, is hereby appointed "Security Registrar" for the purpose
of registering Registered Securities and transfers of Registered Securities on
such Security Register as herein provided. The Issuer shall have the right to
remove and replace from time to time the Security Registrar for any series of
Securities;
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provided that no such removal or replacement shall be effective until a
successor Security Registrar with respect to such series of Securities shall
have been appointed by the Issuer and shall have accepted such appointment by
the Issuer. In the event that the Trustee shall cease to be Security Registrar,
it shall have the right to examine the Security Register at all reasonable
times.
Subject to the provisions of this Section 305, upon surrender for
registration of transfer of any Registered Security of any series at any office
or agency of the Issuer in a Place of Payment for that series, the Issuer shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Registered Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount, bearing a number not contemporaneously outstanding, and
containing identical terms and provisions. Whenever any such Registered
Securities are so surrendered for exchange, the Issuer shall execute, and the
Trustee shall authenticate and deliver, the Registered Securities which the
Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be exchangeable
only as provided in this paragraph. If the depositary for any permanent global
Security is DTC, then unless the terms of such global Security expressly permit
such global Security to be exchanged in whole or in part for definitive
Securities, a global Security may be transferred, in whole but not in part, only
to a nominee of DTC, or by a nominee of DTC to DTC, or to a successor to DTC for
such global Security elected or approved by the Issuer or to a nominee of such
successor to DTC. If at any time DTC notifies the Issuer that it is unwilling or
unable to continue as depositary for the applicable global Security or
Securities or if at any time DTC ceases to be a clearing agency registered under
the Exchange Act if so required by applicable law or regulation, the Issuer
shall appoint a successor depositary with respect to such global Security or
Securities. If (x) a successor depositary for such global Security or Securities
is not appointed by the Issuer within 90 days after the Issuer receives such
notice or becomes aware of such unwillingness, inability or ineligibility, (y)
an Event of Default has occurred and is continuing and the beneficial owners
representing a majority in principal amount of the applicable series of
Securities represented by such global Security or Securities advise DTC to cease
acting as depositary for such global Security or Securities or (z) the Issuer,
in its sole discretion, determines at any time that all Outstanding Securities
(but not less than all) of any series issued or issuable in the form of one or
more global Securities shall no longer be represented by such global Security or
Securities, then the Issuer shall prepare and execute, and the Trustee shall
authenticate and deliver definitive Securities of like series, rank, tenor and
terms in definitive form in an aggregate principal amount equal to the principal
amount of such global Security or Securities. The Issuer and the Trustee shall
be entitled to rely conclusively on information provided by DTC as to the names
of the beneficial holders and the amounts owned by such holders. If any
beneficial owner of an interest in a permanent global Security is otherwise
entitled to exchange such interest for Securities of such series and of like
tenor and principal amount of another authorized form and denomination, as
specified as contemplated by Section 301 and provided that any applicable notice
provided in the permanent global Security shall have been given, then without
unnecessary delay but in any event not later than the earliest day on which such
interest may be so exchanged, the Issuer shall execute, and the Trustee shall
authenticate and deliver definitive Securities in aggregate principal amount
equal to the principal amount of such beneficial owner's interest in such
permanent global Security. On or after the earliest date on which such interests
may be so exchanged, such permanent global Security shall be surrendered for
exchange by DTC or such other depositary as shall be specified in the Issuer
Order with respect thereto to the Trustee, as the Issuer's agent for such
purpose, provided, however, that no such exchanges may occur during a period
beginning at the opening of business 15 days before any selection of Securities
to be redeemed and ending on the relevant Redemption Date if the Security for
which exchange is requested may be among those selected for redemption. If a
Registered Security is issued in exchange for any portion of
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a permanent global Security after the close of business at the office or agency
where such exchange occurs on (i) any Regular Record Date and before the opening
of business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, interest
or Defaulted Interest, as the case may be, will not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of
such Registered Security, but will be payable on such Interest Payment Date or
proposed date for payment, as the case may be, only to the Person to whom
interest in respect of such portion of such permanent global Security is payable
in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Issuer, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange or redemption shall (if so required by
the Issuer or the Security Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Issuer and the
Security Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Securities, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Sections 304, 906, 1107 or 1305 not involving any
transfer.
Except as otherwise provided in or pursuant to this Indenture,
the Issuer or the Trustee, as applicable, shall not be required (i) to issue,
register the transfer of or exchange any Security if such Security may be among
those selected for redemption during a period beginning at the opening of
business 15 days before selection of the Securities to be redeemed under Section
1103 and ending at the close of business on the day of the mailing of the
relevant notice of redemption or (ii) to register the transfer of or exchange
any Registered Security so selected for redemption in whole or in part, except,
in the case of any Registered Security to be redeemed in part, the portion
thereof not to be redeemed, or (iii) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Security not to be so repaid.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If
any mutilated Security is surrendered to the Trustee or the Issuer, together
with, in proper cases, such security or indemnity as may be required by the
Issuer or the Trustee to save each of them and any agent of either of them
harmless, the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of the same series and principal
amount, containing identical terms and provisions and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Issuer and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Issuer or the Trustee that such Security has been acquired by a
bona fide purchaser, the Issuer shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security
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of the same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously outstanding.
Notwithstanding the provisions of the previous two paragraphs, in
case any such mutilated, destroyed, lost or stolen Security has become or is
about to become due and payable, the Issuer in its discretion may, by advising
the Trustee in writing, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Issuer may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Security of any series issued pursuant to this Section
in lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Issuer, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued thereunder.
The provisions of this Section, as amended or supplemented, are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS RESERVED.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, interest on and Additional
Amounts with respect to any Registered Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest at the office or agency of the Issuer maintained for such
purpose pursuant to Section 1002; provided, however, that each installment of
interest on any Registered Security may at the Issuer's option be paid by (i)
mailing a check for such interest, payable to or upon the written order of the
Person entitled thereto pursuant to Section 308, to the address of such Person
as it appears on the Security Register or (ii) transfer to an account maintained
by the payee located inside the United States.
Unless otherwise provided as contemplated by Section 301, every
permanent global Security will provide that interest, if any, payable on any
Interest Payment Date will be paid to DTC, Euroclear and/or Clearstream, as the
case may be, with respect to that portion of such permanent global Security held
for its account by Cede & Co. or the Common Depositary, as the case may be, for
the purpose of permitting such party to credit the interest received by it in
respect of such permanent global Security to the accounts of the beneficial
owners thereof.
Except as otherwise specified with respect to a series of
Securities in accordance with the provisions of Section 301, any interest on any
Registered Security of any series that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder thereof
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Issuer, at its election in each case,
as provided in clause (A) or (B) below:
(A) The Issuer may elect to make payment of any
Defaulted Interest to the Persons in whose names the Registered
Securities of such series (or their respective Predecessor
Securities) are registered at the close of business
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on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Issuer shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Registered
Security of such series and the date of the proposed payment
(which shall not be less than 20 days after such notice is
received by the Trustee), and the Issuer shall deposit with the
Trustee an amount of money in the currency or currencies,
currency unit or units or composite currency or currencies in
which the Securities of such series are payable on the date of
the proposed payment (except as otherwise specified pursuant to
Section 301 for the Securities of such series) equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as
provided in this clause. Thereupon the Issuer shall fix a Special
Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment.
The Issuer shall promptly notify the Trustee of such Special
Record Date and, in the name and at the expense of the Issuer,
shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first
class postage prepaid, to each Holder of Registered Securities of
such series at his address as it appears in the Security Register
not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the
Special Record Date therefore having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons in whose
names the Registered Securities of such series (or their
respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be
payable pursuant to the following clause (B).
(B) The Issuer may make payment of any Defaulted
Interest on the Registered Securities of any series in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and
upon such notice as may be required by such exchange, if, after
notice given by the Issuer to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section
305, each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment of a
Registered Security for registration of transfer, the Issuer, the Trustee and
any agent of the Issuer or the Trustee may treat the Person in whose name such
Registered Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium or Make-Whole Amount, if any),
and (subject to Sections 305 and 307) interest on and any Additional Amounts
with respect to such Registered Security and for all other purposes whatsoever,
whether or not such Registered Security be overdue, and neither the Issuer, the
Trustee nor any agent of the Issuer or the Trustee shall be affected by notice
to the contrary.
No Holder of any beneficial interest in any global Security held
on its behalf by a depositary shall have any rights under this Indenture with
respect to such global Security, and such depositary may be treated by the
Issuer, the Trustee, and any agent of the Issuer or the
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Trustee as the owner of such global Security for all purposes whatsoever. None
of the Issuer, the Trustee, any Paying Agent or the Security Registrar will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Security in
global form or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global
Security, nothing herein shall prevent the Issuer, the Trustee, or any agent of
the Issuer or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by any depositary, as a Holder, with
respect to such global Security or impair, as between such depositary and owners
of beneficial interests in such global Security, the operation of customary
practices governing the exercise of the rights of such depositary (or its
nominee) as Holder of such global Security.
SECTION 309. CANCELLATION. All Securities surrendered for
payment, redemption, repayment at the option of the Holder, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Securities surrendered directly to the Trustee for any such purpose
shall be promptly canceled by it; provided, however, where the Place of Payment
is located outside of the United States, the Paying Agent at such Place of
Payment may cancel the Securities surrendered to it for such purposes prior to
delivering the Securities to the Trustee. The Issuer may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and may deliver to the Trustee (or to any other Person for delivery to the
Trustee) for cancellation any Securities previously authenticated hereunder
which the Issuer has not issued and sold, and all Securities so delivered shall
be promptly canceled by the Trustee. If the Issuer shall so acquire any of the
Securities, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and until
the same are surrendered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. Canceled
Securities held by the Trustee shall be disposed of by the Trustee in its
customary manner.
SECTION 310. COMPUTATION OF INTEREST. Except as otherwise
specified as contemplated by Section 301 with respect to Securities of any
series, interest on the Securities shall be computed on the basis of a 360-day
year consisting of twelve 30-day months.
SECTION 311. CUSIP NUMBERS. The Issuer in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, that any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Issuer will promptly notify the Trustee of any change in the "CUSIP"
numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall upon Issuer Request cease to be of further effect with respect to any
series of Securities specified in such Issuer Request (except as to any
surviving rights of registration of transfer or
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exchange of Securities of such series herein expressly provided for and any
right to receive Additional Amounts, as provided in Section 1012), and the
Trustee, upon receipt of an Issuer Order, and at the expense of the Issuer,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture as to such series when
(a) either
(1) all Securities of such series theretofore authenticated
and delivered whose surrender is not required or has been
waived as provided in Section 305, (ii) Securities of such
series which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306, and
(iii) Securities of such series for whose payment money
has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such Trust (as provided in
Section 1003), have been delivered to the Trustee for
cancellation; or
(2) all Securities of such series
(A) have become due and payable, or
(B) will become due and payable at their Stated
Maturity within one year, or
(C) if redeemable at the option of the Issuer, are to
be called for redemption within one year under
arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in
the name, and at the expense, of the Issuer,
and the Issuer, in the case of (A), (B) or (C) above, has
irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for such purpose an amount
in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities
of such series are payable, sufficient to pay and
discharge the entire indebtedness on such Securities for
cancellation, for principal (and premium or Make-Whole
Amount, if any) and interest, and any Additional Amounts
with respect thereto, to the date of such deposit (in the
case of Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may
be,
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(c) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture as to such series have been complied
with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Issuer to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Issuer to any Authenticating Agent under
Section 611 and, if money shall have been deposited with and held by the Trustee
pursuant to subclause (B) of clause (1) of this Section, the obligations of the
Trustee under Section 402 and the last paragraph of Section 1003 shall survive.
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SECTION 402. APPLICATION OF TRUST FUNDS. Subject to the
provisions of the last paragraph of Section 1003, all money and Government
Obligations deposited with the Trustee pursuant to Section 401 or Article 14
shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Issuer acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium or Make-Whole Amount, if any), and any interest and Additional Amounts
for whose payment such money has or Government Obligations have been deposited
with or received by the Trustee, but such money and Government Obligations need
not be segregated from other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT. "Event of Default," wherever used
herein with respect to any particular series of Securities, means any one of the
following events (whatever the reason for such Event of Default and whether or
not it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body) unless such event is
specifically deleted or modified in or pursuant to the supplemental indenture,
Board Resolution or Officers' Certificate establishing the terms of such series
pursuant to this Indenture:
(a) default in the payment of any interest upon or any Additional
Amounts payable in respect of any Security of that series, when
such interest or Additional Amounts becomes due and payable, and
continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of (or premium or
Make-Whole Amount, if any, on) any Security of that series when
it becomes due and payable at its Maturity; or
(c) default in the deposit of any sinking fund payment, when and as
due by the terms of any Security of that series; or
(d) default in the performance, or breach, of any covenant or
warranty of the Issuer in this Indenture with respect to any
Security of that series (other than a covenant or warranty a
default in the performance or the breach of which is elsewhere in
this Section specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been
given, by registered or certified mail, to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities of
that series, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(e) a default under any evidence of Recourse Indebtedness of the
Issuer, or under any mortgage, indenture or other instrument of
the Issuer (including a default with respect to Securities of any
series other than that series) under which there may be issued or
by which there may be secured any Recourse Indebtedness of the
Issuer (or by any Subsidiary, the repayment of which the Issuer
has guaranteed or for which the Issuer is directly responsible or
liable as obligor or guarantor), whether such Recourse Debt now
exists or shall hereafter be created, which default shall
constitute a failure to pay an aggregate principal
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amount exceeding $15,000,000 of such indebtedness when due and
payable after the expiration of any applicable grace period with
respect thereto and shall have resulted in such indebtedness in
an aggregate principal amount exceeding $15,000,000 becoming or
being declared due and payable prior to the date on which it
would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having
been rescinded or annulled, within a period of 10 days after
there shall have been given, by registered or certified mail, to
the Issuer by the Trustee or to the Issuer and the Trustee by the
Holders of at least 10% in principal amount of the Outstanding
Securities of that series of a written notice specifying such
default and requiring the Issuer to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled
and stating that such notice is a "Notice of Default" hereunder;
or
(f) the Issuer or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(1) commences a voluntary case;
(2) consents to the entry of an order for relief against it in
an involuntary case;
(3) consents to the appointment of a Custodian of it or for
all or substantially all of its property; or
(4) makes a general assignment for the benefit of its
creditors; or
(g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(1) is for relief against the Issuer or any Significant
Subsidiary in an involuntary case,
(2) appoints a Custodian of the Issuer or any Significant
Subsidiary or for all or substantially all of either of
its property, or
(3) orders the liquidation of the Issuer or any Significant
Subsidiary,
and the order or decree remains unstayed and in effect for 90 days; or
(h) any other Event of Default provided in or pursuant to this
Indenture with respect to Securities of that series.
As used in this Section 501, the term "Bankruptcy Law" means title 11, U.S. Code
or any similar Federal or state law for the relief of debtors and the term
"Custodian" means any receiver, trustee, assignee, liquidator or other similar
official under any Bankruptcy Law.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal and premium or Make-Whole
Amount, if any, and accrued interest (or, if any Securities are Original Issue
Discount Securities or Indexed Securities, such portion of the principal as may
be specified in the terms thereof) of all the Securities of that series to be
due
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and payable immediately, by a notice in writing to the Issuer (and to the
Trustee if given by the Holders), and upon any such declaration such principal
and premium or Make-Whole Amount, if any, and accrued interest or such lesser
amount shall become immediately due and payable.
At any time after such a declaration of acceleration with respect
to Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of not less than a majority in principal amount of
the Outstanding Securities of that series, by written notice to the Issuer and
the Trustee, may rescind and annul such declaration and its consequences if:
(a) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay in the currency or currency unit or composite
currency in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the
Securities of such series):
(1) all overdue installments of interest on and any Additional
Amounts payable in respect of all Outstanding Securities
of that series,
(2) the principal of (and premium or Make-Whole Amount, if
any, on) any Outstanding Securities of that series which
have become due otherwise than by such declaration of
acceleration and interest thereon and any Additional
Amounts with respect thereto at the rate or rates borne by
or provided for in such Securities,
(3) to the extent that payment of such interest or Additional
Amounts is lawful, interest upon overdue installments of
interest and any Additional Amounts at the rate or rates
borne by or provided for in such Securities, and
(4) all sums paid by the Trustee hereunder and the reasonable
compensation, expenses and disbursements of the Trustee,
its agents and counsel; and
(b) all Events of Default with respect to Securities of that series,
other than the nonpayment of the principal of (or premium or
Make-Whole Amount, if any) or interest on, and any Additional
Amounts with respect to Securities of that series which have
become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Issuer covenants that if:
(a) default is made in the payment of any installment of interest or
Additional Amounts, if any, on any Security of any series when
such interest or Additional Amount becomes due and payable and
such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium or
Make-Whole Amount, if any, on) any Security of any series at its
Maturity,
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then the Issuer will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities of such series, the whole amount then
due and payable on such Securities for principal (and premium or Make-Whole
Amount, if any) and interest and Additional Amounts, with interest upon any
overdue principal (and premium or Make-Whole Amount, if any) and, to the extent
that payment of such interest shall be legally enforceable, upon any overdue
installments of interest or Additional Amounts, if any, at the rate or rates
borne by or provided for in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses and disbursements of
the Trustee, its agents and counsel.
If the Issuer fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Issuer or any other obligor upon such Securities
and collect the monies adjudged or decreed to be payable in the manner provided
by law out of the property of the Issuer or any other obligor upon such
Securities wherever situated.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein or therein, or to enforce any other proper
remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Issuer or any other obligor upon the Securities or
the property of the Issuer or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities of any series
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Issuer for the payment of overdue principal, premium or Make-Whole Amount,
if any, or interest or Additional Amounts) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Securities of
such series, of principal (and premium or Make-Whole
Amount, if any) and interest and Additional Amounts, if
any, owing and unpaid in respect of the Securities and to
file such other claims of the Trustee (including any claim
for the reasonable compensation, expenses and
disbursements of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any monies of other property
payable or deliverable on any such claims and to
distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder of the Securities of such series to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses and disbursements of the Trustee and any
predecessor Trustee, their agents and counsel, and any other amounts due the
Trustee or any predecessor Trustee under Section 606.
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Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder of a
Security any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder of a Security in any
such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES . All rights of action and claims under this Indenture or any of the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses and
disbursements of the Trustee, its agents and counsel, be for the ratable benefit
of the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED. Any money collected
by the Trustee pursuant to this Article shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal (or premium or Make-Whole Amount, if any) or
interest and any Additional Amounts, upon presentation of the Securities, as the
case may be, and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
SECOND: To the payment of the amounts then due and unpaid upon
the Securities for principal (and premium or Make-Whole Amount, if any)
and interest and any Additional Amounts payable, in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the aggregate amounts
due and payable on such Securities for principal (and premium or
Make-Whole Amount, if any), interest and Additional Amounts,
respectively; and
THIRD: The balance, if any, to the Issuer.
SECTION 507. LIMITATION ON SUITS. No Holder of any Security of
any series shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of
that series;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such
request;
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(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Securities of
that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Security to affect, disturb or prejudice the rights of
any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM OR MAKE-WHOLE AMOUNT, IF ANY, INTEREST AND ADDITIONAL AMOUNTS.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium or Make-Whole Amount, if any) and
(subject to Sections 305 and 307) interest on, and any Additional Amounts in
respect of, such Security on the respective Stated Maturity or Maturities
specified in such Security (or, in the case of redemption, on the Redemption
Date or, in the case of repayment, on the Repayment Date) and to institute suit
for the enforcement of any such payment and such rights shall not be impaired
without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee
or any Holder of a Security has instituted any proceeding to enforce any right
or remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, the Issuer, the Trustee and the
Holders of Securities shall, subject to any determination in such proceeding, be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in the last paragraph of Section 306, no right or
remedy herein conferred upon or reserved to the Trustee or to each Holder of
Securities is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or omission
of the Trustee or of any Holder of any Security to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to any
Holder may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by such Holder of Securities, as the case may be.
SECTION 512. CONTROL BY HOLDERS OF SECURITIES. The Holders of not
less than a majority in principal amount of the Outstanding Securities of any
series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy
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available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Securities of such series, provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or with the Securities of any series,
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(c) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders of
Securities of such series not joining therein.
SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less
than a majority in principal amount of the Outstanding Securities of any series
may on behalf of the Holders of all the Securities of such series waive any past
default hereunder with respect to such series and its consequences, except a
default
(a) in the payment of the principal of (or premium or Make-Whole
Amount, if any) or interest on or Additional Amounts payable in
respect of any Security of such series, or
(b) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 515. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of any undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 25% in principal
amount of the Outstanding Securities, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of (or premium or Make-Whole
Amount, if any) or interest or Additional Amounts, if any on any Security on or
after the respective Stated
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Maturities expressed in such Security (or, in the case of redemption, on or
after the Redemption Date or, in the case of repayment, on or after the
Repayment Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS. Within 90 days after the
occurrence of any default hereunder with respect to the Securities of any series
for which it is acting as trustee, the Trustee shall transmit in the manner and
to the extent provided in TIA Section 313(c), notice of such default hereunder
known to the Trustee, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the
principal of (or premium or Make-Whole Amount, if any) or interest on or any
Additional Amounts with respect to any Security of such series, or in the
payment of any sinking fund installment with respect to the Securities of such
series, the Trustee shall be protected in withholding such notice if and so long
as Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the best interests of the Holders of the
Securities of such series; and provided further that in the case of any default
or breach of the character specified in Section 501(d) with respect to the
Securities of such series, no such notice to Holders shall be given until at
least 60 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to the Securities of such
series.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions
of TIA Section 315(a) through 315(d):
(a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note or
other paper or document (whether in its original or facsimile
form) believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order
(other than delivery of any Security to the Trustee for
authentication and delivery pursuant to Section 303 which shall
be sufficiently evidenced as provided therein) and any resolution
of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed)
may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate and an Opinion of
Counsel;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities of any series
pursuant to this Indenture, unless such Holders shall
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have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note or other paper
or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Issuer, personally or by
agent or attorney following reasonable notice to the Issuer at
the sole expense of the Issuer and shall incur no liability or
additional liability of any kind by reason of such inquiry or
investigation;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents or counsel and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or counsel
appointed with due care by it hereunder; and
(h) subject to Sections 315(a) through 315(d) of the TIA, the Trustee
shall not be charged with knowledge of any Event of Default
described in Section 501(d), (e), (f), (g) or (h) hereof unless a
Responsible Officer of the Trustee shall have received written
notice of such Event of Default.
The Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers.
Except during the continuance of an Event of Default, the Trustee
undertakes to perform only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, shall be taken as the statements of the
Issuer, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities, except that
the Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its obligations hereunder and
that the statements made by it in a Statement of Eligibility and Qualification
on Form T-1 supplied to the Issuer are true and correct, subject to the
qualifications set forth therein. Neither the Trustee nor any Authenticating
Agent shall be accountable for the use or application by the Issuer of
Securities or the proceeds thereof.
SECTION 604. MAY HOLD SECURITIES. The Trustee, any Paying Agent,
Security Registrar, Authenticating Agent or any other agent of the Trustee or
the Issuer, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to TIA Sections 310(b) and 311, may otherwise
deal with the Issuer with the same rights it would have if it were not Trustee,
Paying Agent, Security Registrar, Authenticating Agent or such other agent.
SECTION 605. MONEY HELD IN TRUST. Except as provided in Section
402 and Section 1003, money held by the Trustee in trust hereunder need not be
segregated from
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other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Issuer.
SECTION 606. COMPENSATION AND REIMBURSEMENT. The Issuer agrees:
(a) to pay to the Trustee from time to time such compensation as
shall be agreed upon from time to time in writing for all
services rendered by the Trustee hereunder (which compensation
shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse each
of the Trustee and any predecessor Trustee upon its request for
all reasonable expenses and disbursements incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the reasonable
expenses and disbursements of its agents and counsel), except any
such expense or disbursement as may be attributable to its
negligence or willful misconduct; and
(c) to fully indemnify each of the Trustee and any predecessor
Trustee for, and to hold it harmless against, any and all losses,
liabilities, claims, damages or expenses (including reasonable
legal fees and expenses) incurred without negligence or willful
misconduct on its own part, arising out of or in connection with
the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself
against any claim or liability (whether asserted by the Issuer,
the Holders or any other Person) in connection with the exercise
or performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(f) or Section
501(g), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
As security for the performance of the obligations of the Issuer
under this Section, the Trustee shall have a lien prior to the Securities upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the payment of principal of (or premium or Make-Whole Amount,
if any) or interest or any Additional Amounts on particular Securities.
The provisions of this Section shall survive the termination of
this Indenture or the resignation or removal of the Trustee.
SECTION 607. CORPORATE TRUSTEE REQUIRED ELIGIBILITY; CONFLICTING
INTERESTS. There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have or be
wholly owned by an entity having a combined capital and surplus of at least
$50,000,000. If such corporation publishes reports of condition at least
annually, pursuant to law or the requirements of Federal, state, territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
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SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the Issuer.
If any instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition, at the expense of the Issuer,
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the Trustee and to the
Issuer. If any instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after such removal, the removed
Trustee may petition, at the expense of the Issuer, any court of competent
jurisdiction for the appointment of a successor Trustee with respect to such
series.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of TIA Section 310(b) after written
request therefor by the Issuer or by any Holder of
a Security who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 607 and shall fail to resign after written
request therefor by the Issuer or by any Holder of
a Security who has been a bona fide Holder of a
Security for at least six months, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge
or control of the Trustee or of its property or
affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Issuer by or pursuant to a Board Resolution may
remove the Trustee and appoint a successor Trustee with respect to all
Securities, or (B) subject to TIA Section 315(e), any Holder of a Security who
has been a bona fide Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities of
such series and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause
with respect to the Securities of one or more series, the Issuer, by or pursuant
to a Board Resolution, shall promptly appoint a successor Trustee or Trustees
with respect to the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the Securities of
one or more or all of such series and that at any time there shall be only one
Trustee with respect to the Securities of any particular series) and shall
comply with the applicable
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requirements of Section 609. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Issuer and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 609, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Issuer. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Issuer or
the Holders of Securities and accepted appointment in the manner provided in
Section 609, any Holder of a Security who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to Securities of such
series.
(f) The Issuer shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
in the manner provided for notices to the Holders of Securities in Section 106.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee shall execute,
acknowledge and deliver to the Issuer and to the retiring Trustee, an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the Issuer
or the successor Trustee, such retiring Trustee shall, upon, payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder, subject nevertheless to its
claim, if any, provided for in Section 606.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the Issuer,
the retiring Trustee and each successor Trustee with respect to the Securities
of one or more series shall execute and deliver an indenture supplemental
hereto, pursuant to Article Nine hereof, wherein each successor Trustee shall
accept such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustee's co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each
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such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates; but, on request of the Issuer or
any successor Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Issuer shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any Corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any Corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
Corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities. In
case any Securities shall not have been authenticated by such predecessor
Trustee, any such successor Trustee may authenticate and deliver such
Securities, in either its own name or that of its predecessor Trustee, with the
full force and effect which this Indenture provides for the certificate of
authentication of the Trustee.
SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT. At any time
when any of the Securities remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents with respect to one or more series of Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities of such series or pursuant to Section 306 issued upon original issue,
exchange, registration of transfer or partial redemption or repayment thereof,
and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Any such appointment shall be evidenced by an
instrument in writing signed by a Responsible Officer of the Trustee, a copy of
which instrument shall be promptly furnished to the Issuer. Wherever reference
is made in this Indenture to the authentication and delivery of Securities by
the Trustee or the Trustee's certification of authentication, such reference
shall be deemed to include authentication and delivery on behalf of the Trustee
by an Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Issuer and
shall at all times be a bank or trust company or corporation organized and doing
business and in good standing under the laws of the United States of America or
of any State or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having or be wholly owned by an entity having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authorities. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or the
requirements of
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the aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any Corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such Corporation shall be otherwise eligible
under this Section without the execution or filing of any paper or further act
on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at any
time resign by giving written notice of resignation to the Trustee for such
series and to the Issuer. The Trustee for any series of Securities may at any
time terminate the agency of an Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Issuer. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and shall give
notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve in the manner set forth in
Section 106. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Issuer agrees to pay to each Authenticating Agent from time
to time reasonable compensation including reimbursement of its reasonable
expenses for its services under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to or in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication substantially in the
following form:
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This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
(TRUSTEE)
as Trustee
By:
-----------------------------------------
as Authenticating Agent
By:
-----------------------------------------
Authorized Signatory
If all of the Securities of any series may not be originally
issued at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Issuer wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested in writing (which writing need
not be accompanied by or contained in an Officers' Certificate by the Issuer),
shall appoint in accordance with this Section an Authenticating Agent having an
office in a Place of Payment designated by the Issuer with respect to such
series of Securities.
SECTION 612. TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE
ISSUER. Any application by the Trustee for written instructions from the Issuer
may, at the option of the Trustee, set forth in writing any action proposed to
be taken or omitted by the Trustee under this Indenture and the date on and/or
after which such action shall be taken or such omission shall be effective. The
Trustee shall not be liable for any action taken by, or omission of, the Trustee
in accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than three Business
Days after the date any officer of the Issuer actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE SEVEN
HOLDERS' LIST AND REPORTS BY TRUSTEE AND ISSUER
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS. Every
Holder of Securities, by receiving and holding the same, agrees with the Issuer
and the Trustee that neither the Issuer nor the Trustee nor an Authenticating
Agent nor any Paying Agent nor any Security Registrar shall be held accountable
by reason of the disclosure of any information as to the names and addresses of
the Holders of Securities in accordance with TIA Section 312(c), regardless of
the source from which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material pursuant to a request
made under TIA Section 312(b).
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SECTION 702. REPORTS BY TRUSTEE. Upon qualification of this
Indenture under the TIA:
(a) Within 60 days after December 31 of each year commencing with
the first December 31 following the first issuance of Securities pursuant to
Section 301, if required by Section 313(a) of the TIA, the Trustee shall
transmit, pursuant to Section 313(c) of the TIA, a brief report dated as of such
December 31 with respect to any of the events specified in said Section 313(a)
which may have occurred since the later of the immediately preceding December 31
and the date of this Indenture.
(b) The Trustee shall transmit the reports required by Section
313(a) of the TIA at the times specified therein.
(c) Reports pursuant to this Section shall be transmitted in the
manner and to the Persons required by Sections 313(c) and 313(d) of the TIA.
SECTION 703. REPORTS BY ISSUER. Upon qualification of this
Indenture under the TIA, the Issuer will, pursuant to TIA Section 314(a):
(a) file with the Trustee, within 15 days after the Issuer is required
to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time
by rules and regulations prescribe) which the Issuer may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Issuer is not required to file information,
documents or reports pursuant to either of said Sections, then it shall
file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange as may
be prescribed from time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Issuer with the conditions and covenants of this Indenture as may
be required from time to time by such rules and regulations;
(c) transmit by mail to the Holders of Securities, within 30 days after
the filing thereof with the Trustee, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to
Section 1010 and paragraphs (a) and (b) of this Section as may be
required by rules and regulations prescribed from time to time by the
Commission; and
(d) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including
the Issuer's compliance with any of its covenants hereunder (as to which
the Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 704. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS. The Issuer will furnish or cause to be furnished to the Trustee:
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(a) semiannually, not later than 15 days after the Regular Record
Date for interest of each series of Securities, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders of
Registered Securities of such series as of such Regular Record Date, or if there
is no Regular Record Date for interest for such series of Securities,
semiannually, upon such dates as are set forth in the Board Resolution or
indenture supplemental hereto authorizing such series, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished,
provided however, that, so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. CONSOLIDATIONS AND MERGERS OF ISSUER AND SALES,
LEASES AND CONVEYANCE PERMITTED SUBJECT TO CERTAIN CONDITIONS. The Issuer may
consolidate with, or sell, lease or convey all or substantially all of its
assets to, or merge with or into, any other Corporation, provided that (a) the
Issuer shall be the continuing Corporation, or the successor Corporation or its
transferees or assignees of such assets (if other than the Issuer) formed by or
resulting from any such consolidation or merger or which shall have received the
transfer of such assets by lease (subject to the continuing obligations of
Issuer set forth in Section 802) or otherwise, either directly or indirectly,
shall expressly assume the due and punctual payment of the principal of (and
premium or Make-Whole Amount, if any) and interest on all the Securities, and
the due and punctual performance and observance of all of the covenants and
conditions in this Indenture; (b) the successor Corporation formed by or
resulting from any such consolidation or merger or which shall have received the
transfer of assets pursuant to this Section 801 shall be a United States
Corporation; and (c) immediately after giving effect to such transaction and
treating any Debt which becomes an obligation of the Issuer or any Subsidiary as
a result thereof as having been incurred by the Issuer or such Subsidiary at the
time of such transaction, no Event of Default, and no event which, after notice
or the lapse of time, or both, would become such an Event of Default, shall have
occurred and be continuing.
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In case
of any such consolidation, merger, sale, lease or conveyance and upon any such
assumption by the successor Corporation, such successor Corporation shall
succeed to and be substituted for the Issuer with the same effect as if it had
been named herein as the party of the first part, and the predecessor
Corporation, except in the event of a lease, shall be relieved of any further
obligation under this Indenture and the Securities. Such successor Corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name of the Issuer, any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Issuer and delivered to the
Trustee; and, upon the order of such successor Corporation, instead of the
Issuer, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Issuer to the Trustee for authentication, and any Securities which such
successor Corporation thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Securities had been issued at the date of the execution
hereof.
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In case of any such consolidation, merger, sale, lease or
conveyance, such changes in phraseology and form (but not in substance) may be
made in the Securities thereafter to be issued as may be appropriate.
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL. Any
consolidation, merger, sale, lease or conveyance permitted under Section 801 is
also subject to the condition that the Trustee receive an Officers' Certificate
and an Opinion of Counsel to the effect that any such consolidation, merger,
sale, lease or conveyance, and the assumption by any successor Corporation,
complies with the provisions of this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Securities, the Issuer, when authorized by
or pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Issuer or
the addition of another Person and the assumption by any such successor
or additional Person of the covenants of the Issuer herein and in the
Securities; or
(b) to add to the covenants of the Issuer for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of securities, stating that
such covenants are expressly being included solely for the benefit of
such series) or to surrender any right or power herein conferred upon
the Issuer; or
(c) to add any additional Events of Default for the benefit of
the Holders of all or any series of Securities (and if such Events of
Default are to be for the benefit of less than all series of Securities,
stating that such Events of Default are expressly being included solely
for the benefit of such series); provided, however, that in respect of
any such additional Events of Default such supplemental indenture may
provide for a particular period of grace after default (which period may
be shorter or longer than that allowed in the case of other defaults) or
may provide for an immediate enforcement upon such default or may limit
the remedies available to the Trustee upon such default or may limit the
right of the Holders of a majority in aggregate principal amount of that
or those series of Securities to which such additional Events of Default
apply to waive such default; or
(d) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or
(e) to secure the Securities; or
(f) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
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(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee; or
(h) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture, provided such provisions shall
not adversely affect the interests of the Holders of Securities of any
series in any material respect;
(i) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Sections 401, 1402 and
1403, provided that any such action shall not adversely affect the
interests of the Holders of Securities of such series or any other
series of Securities in any material respect; or
(j) to add to or change any provisions of this Indenture to
comply with any requirements of the Commission in connection with (i)
qualification of the Indenture under the TIA and (ii) any registration
of the Securities pursuant to the requirements of the Securities Act of
1933, as amended.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal amount
of all Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Issuer and the Trustee, the
Issuer, when authorized by or pursuant to a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of (or premium or
Make-Whole Amount, if any, on) or any installment of principal of or
interest on or any Additional Amounts with respect to, any Security, or
reduce the principal amount thereof or the rate or amount of interest
thereon or any Additional Amounts payable in respect thereof, or any
premium payable upon the redemption thereof, or change any obligation of
the Issuer to pay Additional Amounts pursuant to Section 1012 (except as
contemplated by Section 801(a) and permitted by Section 901(a)), or
reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502 or the
amount thereof provable in bankruptcy pursuant to Section 504, or
adversely affect any right of repayment at the option of the Holder of
any Security, or change any Place of Payment where, or the currency or
currencies, currency unit or units or composite currency or currencies
in which the principal of, any premium or interest on, or any Additional
Amounts with respect to any Security is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption or repayment at
the option of the Holder, on or after the Redemption Date or the
Repayment Date, as the case may be), or
(b) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for
any such supplemental
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indenture, or the consent of whose Holders is required for any waiver
with respect to such series (or compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or reduce the requirements of Section
1504 for quorum or voting, or
(c) modify any of the provisions of this Section, Section 513 or
Section 1013, except to increase the required percentage to effect such
action or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or eliminates any covenant
or other provision of this Indenture which has expressly been included solely
for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. As a condition
to executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modification thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to TIA Section 315) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article following the
qualification of the Indenture under the provisions of the TIA, shall conform to
the requirements of the TIA as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article shall bear a notation as to any
matter provided for in such supplemental indenture. If the Issuer shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES. Promptly after
the execution by the Issuer and the Trustee of any supplemental indenture
pursuant to the provisions of Section 902, the Issuer shall give notice thereof
to the Holders of each Outstanding Security affected, in the manner provided for
in Section 106, setting forth in general terms the substance of such
supplemental indenture.
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ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM OR MAKE-WHOLE AMOUNT,
IF ANY, INTEREST AND ADDITIONAL AMOUNTS. The Issuer covenants and agrees for the
benefit of the Holders of each series of Securities that it will duly and
punctually pay the principal of (and premium or Make-Whole Amount, if any) and
interest on and any Additional Amounts payable in respect of the Securities of
that series in accordance with the terms of such series of Securities and this
Indenture. Unless otherwise specified with respect to Securities of any series
pursuant to Section 301, all payments of principal may be paid by wire transfer
to the registered Holder of the Registered Security or other person entitled
thereto against surrender of such Security. If so requested by the Holder, the
Trustee may make payments of principal by check.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. If Securities of a
series are issuable only as Registered Securities, the Issuer shall maintain in
each Place of Payment for any series of Securities an office or agency where
Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Issuer in respect of the
Securities of that series and this Indenture may be served, provided, however,
that if the Securities of that series are listed on the Luxembourg Stock
Exchange or any other stock exchange located outside the United States and such
stock exchange shall so require, the Issuer will maintain a Paying Agent for the
Securities of that series in Luxembourg or any other required city located
outside the United States, as the case may be, so long as the Securities of that
series are listed on such exchange and (C) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series located outside the
United States an office or agency where any Registered Securities of that series
may be surrendered for registration of transfer, where Securities of that series
may be surrendered for exchange and where notices and demands to or upon the
Issuer in respect of the Securities of that series and this Indenture may be
served. The Issuer will give prompt written notice to the Trustee of the
location, and any change in the location, of each such office or agency. If at
any time the Issuer shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Issuer hereby appoints the same as its agent to
receive such respective presentations, surrenders, notices and demands, and the
Issuer hereby appoints the Trustee its agent to receive all such presentations,
surrenders, notices and demands.
The Issuer may from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all of such purposes, and may from time to time
rescind such designations, provided, however, that no such designations or
rescission shall in any manner relieve the Issuer of its obligation to maintain
an office or agency in accordance with the requirements set forth above for
Securities of any series for such purposes. The Issuer will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. Unless otherwise specified with
respect to any Securities pursuant to Section 301 with respect to a series of
Securities, the Issuer hereby designates as a Place of Payment for each series
of Securities the office or agency of the Issuer in the Borough of Manhattan,
New York City, and initially appoints the Trustee at its Corporate Trust Office
as Paying Agent in such city and as its agent to receive all such presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, if and so long as the Securities of any series (i) are
denominated in a Foreign
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Currency or (ii) may be payable in a Foreign Currency, or so long as it is
required under any other provision of the Indenture, then the Issuer will
maintain with respect to each such series of Securities, or as so required, at
least one exchange rate agent and will notify the Trustee in writing of any such
appointment or any subsequent appointment.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Issuer shall at any time act as its own Paying Agent with respect to any
series of any Securities, it will, on or before each due date of the principal
of (and premium or Make-Whole Amount, if any), or interest on or Additional
Amounts in respect of, any of the Securities of that series, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum in the currency
or currencies, currency unit or units or composite currency or currencies in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay the
principal (and premium or Make-Whole Amount, if any) or interest or Additional
Amounts so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Issuer shall have one or more Paying Agents for any
series of Securities, it will, before each due date of the principal of (and
premium or Make-Whole Amount, if any), or interest on or Additional Amounts in
respect of, any Securities of that series, deposit with a Paying Agent by 10:00
a.m. a sum (in the currency or currencies, currency unit or units or composite
currency or currencies described in the preceding paragraph) sufficient to pay
the principal (and premium or Make-Whole Amount, if any) or interest or
Additional Amounts, so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal, premium or interest or
Additional Amounts and (unless such Paying Agent is the Trustee) the Issuer will
promptly notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of principal of (and
premium or Make-Whole Amount, if any) or interest on Securities
or Additional Amounts in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Issuer (or any
other obligor upon the Securities) in the making of any such
payment of principal (and premium or Make-Whole Amount, if any)
or interest or Additional Amounts; and
(3) at any time during the continuance of any such default upon the
written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Issuer or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Issuer or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
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Except as otherwise provided in the Securities of any series, any
money deposited with the Trustee or any Paying Agent, or then held by the
Issuer, in trust for the payment of the principal of (and premium or Make-Whole
Amount, if any) or interest on, or any Additional Amounts in respect of, any
Security of any series and remaining unclaimed for two years after such
principal (and premium or Make-Whole Amount, if any), interest or Additional
Amounts have become due and payable shall be paid to the Issuer upon Issuer
Request or (if then held by the Issuer) shall be discharged from such trust; and
the Holder of such Security shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment of such principal of (and premium or
Make-Whole Amount, if any) or interest on, or any Additional Amounts in respect
of, any Security, without interest thereon, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Issuer as trustee thereof, shall thereupon cease, provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuer cause to be published once, in an Authorized
Newspaper, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Issuer.
SECTION 1004. LIMITATIONS ON INCURRENCE OF DEBT.
(a) The Issuer will not, and will not permit any Subsidiary to,
incur any Debt other than Intercompany Debt, if, immediately after
giving effect to the incurrence of such additional Debt and the
application of the net proceeds thereof, the aggregate principal amount
of all outstanding Debt of the Issuer and its Subsidiaries on a
consolidated basis determined in accordance with GAAP is greater than
60% of the sum of (i) Total Assets as of the end of the fiscal quarter
covered in the Issuer's most recent quarterly or annual financial
statements, as the case may be, most recently required to be delivered
to the Holders pursuant to Section 1010, prior to the incurrence of such
additional Debt and (ii) the increase or decrease in Total Assets from
the end of such quarter including, without limitation, any increase in
Total Assets resulting from the incurrence of such additional Debt (such
increase or decrease together with the Total Assets is referred to as
the "Adjusted Total Assets"); and
(b) The Issuer will not, and will not permit any Subsidiary to,
incur any Secured Debt of the Issuer or any Subsidiary if, immediately
after giving effect to the incurrence of such additional Secured Debt
and the application of the net proceeds thereof, the aggregate principal
amount of all outstanding Secured Debt of the Issuer and its
Subsidiaries determined on a consolidated basis in accordance with GAAP
is greater than 40% of the Adjusted Total Assets; and
(c) The Issuer will not, and will not permit any Subsidiary to,
incur any Debt other than Intercompany Debt, if the ratio of the
Consolidated Income Available for Debt Service to the Annual Debt
Service Charge for the period consisting of the four consecutive fiscal
quarters most recently ended prior to the date on which such additional
Debt is to be incurred shall have been less than 1.5 to 1 on a pro forma
basis after giving effect to the incurrence of such Debt and to the
application of the net proceeds therefrom, and calculated on the
assumption that (i) such Debt and any other Debt incurred by the Issuer
or its Subsidiaries since the first day of such four-quarter period,
which was outstanding at the end of such period, had been incurred at
the beginning of such period and continued to be outstanding throughout
such period, and the application of the proceeds of such Debt, including
to refinance other Debt, had occurred at the beginning of such period,
(ii) the repayment or retirement of any other Debt by the Issuer or its
Subsidiaries since the first day of such four-quarter period had been
repaid or retired at the beginning of such period (except that, in
determining the
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amount of Debt so repaid or retired, the amount of Debt under any
revolving credit facility shall be computed based upon the average daily
balance of such Debt during such period), (iii) in the case of Acquired
Indebtedness or Debt incurred in connection with any acquisition since
the first day of the four-quarter period, the related acquisition had
occurred as of the first day of the period with the appropriate
adjustments with respect to the acquisition being included in the pro
forma calculation, and (iv) in the case of any increase or decrease in
Total Assets, or any other acquisition or disposition by the Issuer or
any Subsidiary of any asset or group of assets, since the first day of
such four-quarter period, including, without limitation, by merger,
stock purchase or sale, or asset purchase or sale, such increase,
decrease, or other acquisition or disposition or any related repayment
of Debt had occurred as of the first day of such period with the
appropriate adjustments to revenues, expenses and Debt levels with
respect to such increase, decrease or other acquisition or disposition
being included in such pro forma calculation; and
(d) The Issuer will at all times maintain Total Unencumbered
Assets of not less than 150% of the aggregate outstanding principal
amount of all outstanding Unsecured Debt of the Issuer and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
SECTION 1005. [INTENTIONALLY OMITTED].
SECTION 1006. EXISTENCE. Subject to Article Eight, the Issuer
will do or cause to be done all things necessary to preserve and keep in full
force and effect its existence, rights and franchises; provided, however, that
the Issuer shall not be required to preserve any right or franchise if the Board
of Directors of the General Partner shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Issuer and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 1007. MAINTENANCE OF PROPERTIES. The Issuer will cause
all of its material properties used or useful in the conduct of its business or
the business of any Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the reasonable judgment of the Issuer may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that the
Issuer and its Subsidiaries shall not be prevented from selling or otherwise
disposing of for value any of such properties in the ordinary course of
business.
SECTION 1008. INSURANCE. The Issuer will, and will cause each of
its Subsidiaries to, keep in force upon all of its properties and operations
insurance policies carried with responsible companies in customary amounts and
covering customary risks in accordance with prevailing market conditions and
availability.
SECTION 1009. PAYMENT OF TAXES AND OTHER CLAIMS. The Issuer will
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or property of the
Issuer or any Subsidiary, and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Issuer or any Subsidiary; provided, however, that the Issuer shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings or for which the Issuer has
set apart and maintains an adequate reserve in accordance with GAAP.
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SECTION 1010. PROVISION OF FINANCIAL INFORMATION. Whether or not
the Issuer is subject to Section 13 or 15(d) of the Exchange Act, and for so
long as any Securities are outstanding, the Issuer will, to the extent permitted
under the Exchange Act, file with the Commission the annual reports, quarterly
reports and other documents which the Issuer would have been required to file
with the Commission pursuant to such Section 13 or 15(d) (the "Financial
Statements") if the Issuer were so subject, such documents to be filed with the
Commission on or prior to the respective dates (the "Required Filing Dates") by
which the Issuer would have been required so to file such documents if the
Issuer were so subject.
The Issuer will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders, copies
of the annual reports and quarterly reports which the Issuer would have been
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act if the Issuer were subject to such Sections, and (ii) file with the
Trustee copies of the annual reports, quarterly reports and other documents
which the Issuer would have been required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act if the Issuer were subject to such
Sections, and (y) if filing such documents by the Issuer with the Commission is
not made under the Exchange Act, promptly upon written request and payment of
the reasonable cost of duplication and delivery, supply copies of such documents
to any prospective Holder.
Once the Issuer becomes subject to the Exchange Act, the
quarterly and annual consolidated financial statements referred to above will be
deemed to refer to the Issuer's quarterly reports on Form 10-Q, annual reports
on Form 10-K or current reports on Form 8-K, respectively.
SECTION 1011. STATEMENT AS TO COMPLIANCE. The Issuer shall
deliver to the Trustee, within 120 days after the end of each fiscal year (which
is currently December 31), a written statement (which need not be contained in
or accompanied by an Officers' Certificate) signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the General Partner acting in its capacity as the sole general partner of the
Issuer, stating that:
(a) a review of the activities of the Issuer during such year and
of its performance under this Indenture has been made under his or her
supervision, and
(b) to the best of his or her knowledge, based on such review,
(i) the Issuer has complied with all the conditions and covenants imposed on it
under this Indenture throughout such year, or, if there has been a default in
the fulfillment of any such condition or covenant, specifying each such default
known to him or her and the nature and status thereof, and (ii) no event has
occurred and is continuing which is, or after notice or lapse of time or both
would become, an Event of Default, or, if such an event has occurred and is
continuing, specifying each such event known to him and the nature and status
thereof.
SECTION 1012. ADDITIONAL AMOUNTS. If any Securities of a series
provide for the payment of Additional Amounts, the Issuer will pay to the Holder
of any Security of such series Additional Amounts as may be specified as
contemplated by Section 301. Whenever in this Indenture there is mentioned, in
any context except in the case of Section 502(a), the payment of the principal
of or any premium or interest on, or in respect of, any Security of any series
or the net proceeds received on the sale or exchange of any Security of any
series, such mention shall be deemed to include mention of the payment of
Additional Amounts provided by the terms of such series established pursuant to
Section 301 to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof pursuant to such terms and express mention
of the payment of Additional Amounts (if applicable) in any
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provisions hereof shall not be construed as excluding Additional Amounts in
those provisions hereof where such express mention is not made.
Except as otherwise specified as contemplated by Section 301, if
the Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest Payment Date with respect to that
series of Securities (or if the Securities of that series will not bear interest
prior to Maturity, the first day on which a payment of principal and any premium
is made), and at least 10 days prior to each date of payment of principal and
any premium or interest if there has been any change with respect to the matters
set forth in the below-mentioned Officers' Certificate, the Issuer shall furnish
to the Trustee and the Paying Agent, if other than the Trustee, an Officers'
Certificate instructing the Trustee and such Paying Agent or Paying Agents
whether such payment of principal of and any premium or interest on the
Securities of that series shall be made to Holders of Securities of that series
who are not United States persons without withholding for or on account of any
tax, assessment or other governmental charge described in the Securities of the
series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders of Securities of that series and the Issuer
will pay to the Trustee or such Paying Agent the Additional Amounts required by
the terms of such Securities. If the Trustee or any Paying Agent, as the case
may be, shall not so receive the above-mentioned certificate, then the Trustee
or such Paying Agent shall be entitled (i) to assume that no such withholding or
deduction is required with respect to any payment of principal or interest with
respect to any Securities of a series until it shall have received a certificate
advising otherwise and (ii) to make all payments of principal and interest with
respect to the Securities of a series without withholding or deductions until
otherwise advised. The Issuer covenants to indemnify the Trustee and any Paying
Agent for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by any of them or in reliance on
any Officers' Certificate furnished pursuant to this Section or in reliance on
the Issuer's not furnishing such an Officers' Certificate.
SECTION 1013. WAIVER OF CERTAIN COVENANTS. The Issuer may omit in
any particular instance to comply with any term, provision or condition set
forth in Sections 1004 to 1011, inclusive, if before or after the time for such
compliance the Holders of at least a majority in principal amount of all
Outstanding Securities of each series affected by such omission, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Issuer and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
SECTION 1014. DELIVERY OF CERTAIN INFORMATION. At any time when
the Issuer is not subject to Section 13 or 15(d) of the Exchange Act, upon the
request of a Holder of a Security, the Issuer will promptly furnish or cause to
be furnished Rule 144A Information (as defined below) to such Holder, or to a
prospective purchaser of any such Security designated by any such Holder, as the
case may be, to the extent required to permit compliance by such Holder with
Rule 144A under the Securities Act (or any successor provision thereto) in
connection with the resale of any such Security; provided, however, that the
Issuer shall not be required to furnish such information in connection with any
request made on or after the date which is two years from the later of (i) the
date such a Security (or any such predecessor security) was last acquired from
the Issuer or (ii) the date such a Security (or any such predecessor security)
was last acquired from an "affiliate" of the Issuer within the meaning of Rule
144 under the Securities Act (or any successor provision thereto). "Rule 144A
Information" shall be such information as is specified pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision thereto).
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SECTION 1015. OFFICERS' CERTIFICATE AS TO AN EVENT OF DEFAULT.
The Issuer shall deliver to the Trustee, as soon as possible and in any event
within five days after the Issuer becomes aware of the occurrence of any Event
of Default or an event which, with notice or the lapse of time or both, would
constitute an Event of Default, an Officers' Certificate setting forth the
details of such Event of Default or default and the action which the Issuer
proposes to take with respect thereto.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE. Securities of any series
which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 301 for Securities of any series) in accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election
of the Issuer to redeem any Securities shall be evidenced by or pursuant to a
Board Resolution. In case of any redemption at the election of the Issuer of
less than all of the Securities of any series, the Issuer shall, at least 45
days prior to the giving of notice of redemption in Section 1104 (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date, the Record Date for such redemption and of the principal amount
of Securities of such series to be redeemed (including the "CUSIP" numbers
relating thereto). In the case of any redemption of Securities prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities or elsewhere in this Indenture, the Issuer shall furnish the Trustee
with an Officers' Certificate evidencing compliance with such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series issued on the same day with the
same terms are to be redeemed, the particular Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of such series issued on such date with the same
terms not previously called for redemption, by such method as the Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series.
The Trustee shall promptly notify the Issuer and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 1104. NOTICE OF REDEMPTION. Notice of redemption shall be
given in the manner provided in Section 106, not less than 30 days nor more than
60 days prior to the Redemption Date as is consented to by the Trustee (such
consent not to be unreasonably withheld), unless a shorter period is specified
by the terms of such series established pursuant to Section 301, to each Holder
of Securities to be redeemed. Failure to give such notice in the manner herein
provided to the Holder of any Security designated for
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redemption as a whole or in part, or any defect in the notice to any such
Holder, shall not affect the validity of the proceedings for the redemption of
any other such Security or portion thereof. Any notice that is mailed to the
Holders of Registered Securities in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder;
receives the notice.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price, accrued interest to the Redemption
Date payable as provided in Section 1106, if any, and
Additional Amounts, if any,
(c) if less than all Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of
partial redemption, the principal amount) of the
particular Security or Securities to be redeemed,
(d) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on
and after the Redemption Date, upon surrender of such
Security, the holder will receive, without a charge, a new
Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed,
(e) that on the Redemption Date the Redemption Price and
accrued interest to the Redemption Date payable as
provided in Section 1106, if any, will become due and
payable upon each such Security, or the portion thereof,
to be redeemed and, if applicable, that interest thereon
shall cease to accrue on and after said date,
(f) the Place or Places of Payment where such Securities
maturing after the Redemption Date, are to be surrendered
for payment of the Redemption Price and accrued interest,
if any,
(g) that the redemption is for a sinking fund, if such is the
case,
(h) the CUSIP number or the Euroclear or Clearstream reference
numbers of such Security, if any (provided that the notice
may contain a disclaimer as to the accuracy of such
numbers), and
(i) if applicable, that a Holder of Securities who desires to
convert Securities for redemption must satisfy the
requirements for conversion contained in such Securities,
the then existing conversion price or rate, and the date
and time when the option to convert shall expire.
Notice of redemption of Securities to be redeemed shall be given
by the Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE. At least one Business
Day prior to any Redemption Date, the Issuer shall deposit with the Trustee or
with a Paying Agent (or, if the Issuer is acting as its own Paying Agent, which
it may not do in the case of a sinking fund payment under Article Twelve,
segregate and hold in trust as provided in Section 1003) an amount of money in
the currency or currencies, currency unit or units or composite currency or
currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series)
sufficient to pay
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on the Redemption Date the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on and Additional
Amounts with respect thereto, all the Securities or portions thereof which are
to be redeemed on that date.
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Issuer shall default
in the payment of the Redemption Price and accrued interest) such Securities
shall, if the same were interest-bearing, cease to bear interest. Upon surrender
of any such Security for redemption; in accordance with said notice, such
Security shall be paid by the Issuer at the Redemption Price, together with
accrued interest and Additional Amounts, if any, to the Redemption Date.
Installments of interest on Registered Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium or Make-Whole
Amount, if any) shall, until paid, bear interest from the Redemption Date at the
rate borne by the Security.
SECTION 1107. SECURITIES REDEEMED IN PART. Any Registered
Security which is to be redeemed only in part (pursuant to the provisions of
this Article) shall be surrendered at a Place of Payment therefor (with, if the
Issuer or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Issuer and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing) and the Issuer
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge a new Registered Security or Securities of
the same series, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered. If a Security in global form is
so surrendered, the Issuer shall execute, and the Trustee shall authenticate and
deliver to the depositary for such Security in global form as shall be specified
in the Issuer Order to the Trustee with respect thereto, without service charge,
a new Security in global form in a denomination equal to and in exchange for the
unredeemed portion of the principal of the Security in global form so
surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this
Article shall be applicable to any sinking fund for the retirement of Securities
of a series except as otherwise specified as contemplated by Section 301 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of such Securities of any series is herein referred to as an
"optional sinking fund payment." If provided for by the terms of any Securities
of any series, the cash amount of any mandatory sinking fund payment may be
subject to reduction as provided in Section 1202. Each sinking fund payment
shall be
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applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENT WITH
SECURITIES. The Issuer may, in satisfaction of all or any part of any mandatory
sinking fund payment with respect to the Securities of a series, (1) deliver
Outstanding Securities of such series (other than any Securities previously
called for redemption) and (2) apply as a credit Securities of such series which
have been redeemed either at the election of the Issuer pursuant to the terms of
such Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, or which have otherwise been
acquired by the Issuer; provided that such Securities so delivered or applied as
a credit have not been previously so credited. Such Securities shall be received
and credited for such purpose by the Trustee at the applicable Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such mandatory sinking fund payment shall be reduced
accordingly.
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND. Not less
than 60 days prior to each sinking fund payment date for Securities of any
series, the Issuer will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202, and the optional amount, if any, to be added in cash
to the next ensuing mandatory sinking fund payment, and will also deliver to the
Trustee any Securities to be so delivered and credited. If such Officers'
Certificate shall specify an optional amount to be added in cash to the next
ensuing mandatory sinking fund payment, the Issuer shall thereupon be obligated
to pay the amount therein specified. Not less than 30 days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Issuer in the manner provided in Section 1104. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. APPLICABILITY OF ARTICLE. Repayment of Securities
of any series before their Stated Maturity at the option of Holders thereof
shall be made in accordance with the terms of such Securities, if any, and
(except as otherwise specified by the terms of such series established pursuant
to Section 301) in accordance with this Article.
SECTION 1302. REPAYMENT OF SECURITIES. Securities of any series
subject to repayment in whole or in part at the option of the Holders thereof
will, unless otherwise provided in the terms of such Securities, be repaid at a
price equal to the principal amount thereof, together with interest, if any,
thereon accrued to the Repayment Date specified in or pursuant to the terms of
such Securities. The Issuer covenants that at least one Business Day prior to
the Repayment Date it will deposit with the Trustee or with a Paying Agent (or,
if the Issuer is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money in currency or currencies, currency
unit or units or composite currency or currencies in which the Securities of
such series are payable (except as
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otherwise specified pursuant to Section 301 for the Securities of such series)
sufficient to pay the principal (or, if so provided by the terms of the
Securities of any series, a percentage of the principal) of, and (except if the
Repayment Date shall be an Interest Payment Date) accrued interest on, all the
Securities or portions thereof, as the case may be, to be repaid on such date.
SECTION 1303. EXERCISE OF OPTION. Securities of any series
subject to repayment at the option of the Holders thereof will contain an
"Option to Elect Repayment" form on the reverse of such Securities. In order for
any Security to be repaid at the option of the Holder, the Trustee must receive
at the Place of Payment therefor specified in the terms of such Security (or at
such other place or places of which the Issuer shall from time to time notify
the Holders of such Securities) not earlier than 60 days nor later than 30 days
prior to the Repayment Date (1) the Security so providing for such repayment
together with the "Option to Elect Repayment" form on the reverse thereof duly
completed by the Holder (or by the Holder's attorney duly authorized in writing)
or (2) a telegram, telex, facsimile transmission or a letter from a member of a
national securities exchange, or the National Association of Securities Dealers,
Inc., or a commercial bank or trust company in the United States setting forth
the name of the Holder of the Security, the principal amount of the Security,
the principal amount of the Security to be repaid, the CUSIP number, if any, or
a description of the tenor and terms of the Security, a statement that the
option to elect repayment is being exercised thereby and a guarantee that the
Security to be repaid, together with the duly completed form entitled "Option to
Elect Repayment" on the reverse of the Security will be received by the Trustee
not later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, however, that such telegram, telex,
facsimile transmission or letter shall only be effective if such Security and
form duly completed are received by the Trustee by such fifth Business Day. If
less than the entire principal amount of such Security is to be repaid in
accordance with the terms of such Security, the principal amount of such
Security to be repaid, in increments of the minimum denominations for Securities
of such series, and the denomination or denominations of the Security or
Securities to be issued to the Holder for the portion of the principal amount of
such Security surrendered that is not to be repaid, must be specified on the
"Option to Elect Repayment" form. The principal amount of any Security providing
for repayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would be
less than the minimum authorized denomination of Securities of the series of
which such Security to be repaid is a part. Except as otherwise may be provided
by the terms of any Security providing for repayment at the option of the Holder
thereof, exercise of the repayment option by the Holder shall be irrevocable
unless waived by the Issuer.
SECTION 1304. WHEN SECURITIES PRESENTED FOR REPAYMENT BECOME DUE
AND PAYABLE. If Securities of any series providing for repayment at the option
of the Holders thereof shall have been surrendered as provided in this Article
and as provided by or pursuant to the terms of such Securities, such Securities
or the portions thereof, as the case may be, to be repaid shall become due and
payable and shall be paid by the Issuer on the Repayment Date therein specified,
and on and after such Repayment Date (unless the Issuer shall default in the
payment of such Securities on such Repayment Date) such Securities shall, if the
same were interest-bearing, cease to bear interest. Upon surrender of any such
Security for repayment in accordance with such provisions maturing after the
Repayment Date, the principal amount of such Security so to be repaid shall be
paid by the Issuer, together with accrued interest, if any, to the Repayment
Date. In the case of Registered Securities, installments of interest, if any,
whose Stated Maturity is on or prior to the Repayment Date shall be payable (but
without interest thereon, unless the Issuer shall default in the payment
thereof) to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
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If the principal amount of any Security surrendered for repayment
shall not be so repaid upon surrender thereof, such principal amount (together
with interest, if any, thereon, accrued to such Repayment Date) shall, until
paid, bear interest from the Repayment Date at the rate of, interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
SECTION 1305. SECURITIES REPAID IN PART. Upon surrender of any
Registered Security which is to be repaid in part only, the Issuer shall execute
and the Trustee shall authenticate and deliver to the Holder of such Security,
without service charge and at the expense of the Issuer, a new Registered
Security or Securities of the same series, of any authorized denomination
specified by the Holder, in an aggregate principal amount equal to and in
exchange for the portion of the principal of such Security so surrendered which
is not to be repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. APPLICABILITY OF ARTICLE; ISSUER'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE. If, pursuant to Section 301, provision is
made for either or both of (a) defeasance of the Securities of or within a
series under Section 1402 or (b) covenant defeasance of the Securities of or
within a series under Section 1403, then the provisions of such Section or
Sections, as the case may be, together with the other provisions of this Article
(with such modifications thereto as may be specified pursuant to Section 301
with respect to any Securities), shall be applicable to such Securities and the
Issuer may at its option by Board Resolution, at any time, with respect to such
Securities elect to have Section 1402 (if applicable) or Section 1403 (if
applicable) be applied to such Outstanding Securities upon compliance with the
conditions set forth below in this Article.
SECTION 1402. DEFEASANCE AND DISCHARGE. Upon the Issuer's
exercise of the above option applicable to this Section with respect to any
Securities of or within a series, the Issuer shall be deemed to have been
discharged from its obligations with respect to such Outstanding Securities on
the date the conditions set forth in Section 1404 are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Issuer shall be
deemed to have paid and discharged the entire indebtedness represented by such
Outstanding Securities, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Section 1405 and the other Sections of this Indenture
referred to in clauses (A) and (B) below, and to have satisfied all of its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Issuer, shall execute
proper instruments prepared by the Issuer acknowledging the same), except for
the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of such Outstanding Securities receive,
solely from the trust fund described in Section 1404 and as more fully set forth
in such Section, payments in respect of the principal of (and premium or
Make-Whole Amount, if any) and interest and Additional Amounts, if any, on such
Securities when such payments are due and any right of such Holder to exchange
such Securities for other Securities, (B) the Issuer's obligations with respect
to such Securities under Sections 305, 306, 1002 and 1003 and with respect to
the payment of Additional Amounts, if any, on such Securities as contemplated by
Section 1012 (but only to the extent that the Additional Amounts payable with
respect to such Securities exceed the amount deposited in respect of such
Additional Amounts pursuant to Section 1404 below), (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (D) this Article.
Subject to compliance with this Article Fourteen, the Issuer may exercise its
option under this
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Section notwithstanding the prior exercise of its option under Section 1403 with
respect to such Securities.
SECTION 1403. COVENANT DEFEASANCE. Upon the Issuer's exercise of
the above option applicable to this Section with respect to any Securities of or
within a series, the Issuer shall be released from its obligations under
Sections 1004 to 1011, inclusive, and, if specified pursuant to Section 301, its
obligations under any other covenant, with respect to such Outstanding
Securities on and after the date the conditions set forth in Section 1404 are
satisfied (hereinafter, "covenant defeasance"), and such Securities shall
thereafter be deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with any such covenant, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to such Outstanding Securities, the Issuer
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section or such other covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such Section or such other covenant or by reason of reference in any such
Section or such other covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a default or an Event
of Default under Section 501(d) or 501(h) or otherwise, as the case may be, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby.
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of Section 1402 or Section
1403 to any Outstanding Securities of or within a series:
(a) The Issuer shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 607 who shall agree to comply with the provisions of this Article
Fourteen applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (1) an amount in such
currency, currencies or currency unit in which such Securities are then
specified as payable at Stated Maturity, or (2) Government Obligations
applicable to such Securities (determined on the basis of the currency,
currencies or currency unit in which such Securities are then specified as
payable at Stated Maturity) which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment of principal of (and
premium or Make-Whole Amount, if any) and interest, if any, on such Securities,
money in an amount, or (3) a combination thereof, any case, in an amount,
sufficient, without consideration of any reinvestment of such principal and
interest, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof at the expense of the
Issuer and addressed and delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge, (i) the principal of (and premium or Make-Whole Amount, if any) and
interest, if any, on such Outstanding Securities on the Stated Maturity of such
principal or installment of principal or interest and (ii) any mandatory sinking
fund payments or analogous payments applicable to such Outstanding Securities on
the day on which such payments are due and payable in accordance with the terms
of this Indenture and of such Securities.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Issuer is a party or by
which it is bound.
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(c) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default with respect to such Securities
shall have occurred and be continuing on the date of such deposit and, with
respect to defeasance only, at any time during the period ending on the 91st day
after the date of such deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such period).
(d) In the case of an election under Section 1402, the Issuer
shall have delivered to the Trustee an Opinion of Counsel stating that (i) the
Issuer has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of execution of this Indenture, there
has been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the Holders
of such Outstanding Securities will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred.
(e) In the case of an election under Section 1403, the Issuer
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Securities will not recognize income, gain or loss
for Federal income tax purposes as a result of such covenant defeasance and will
be subject to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had not
occurred.
(f) The Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance under Section 1402 or the covenant defeasance under
Section 1403 (as the case may be) have been complied with.
(g) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations which may be imposed
on the Issuer in connection therewith pursuant to Section 301.
SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the
last paragraph of Section 1003, all money and Government Obligations (or other
property as may be provided pursuant to Section 301) (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 1405, the "Trustee") pursuant to Section 1404 in
respect of any Outstanding Securities of any series shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal (and premium or Make-Whole Amount, if any) and
interest and Additional Amounts, if any, but such money need not be segregated
from other funds except to the extent required by law.
Unless otherwise specified with respect to any Security pursuant
to Section 301, in or pursuant to this Indenture or any Security if, after a
deposit referred to in Section 1404(a) has been made, (a) the Holder of a
Security in respect of which such deposit was made is entitled to, and does,
elect pursuant to Section 301 or the terms of such Security to receive payment
in a currency or currency unit other than that in which the deposit pursuant to
Section 1404(a) has been made in respect of such Security, or (b) a Conversion
Event occurs in respect of the Foreign Currency in which the deposit pursuant to
Section 1404(a) has been made, the indebtedness represented by such Security
shall be deemed to have been, and will
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be, fully discharged and satisfied through the payment of the principal of (and
premium or Make-Whole Amount, if any), and interest, if any, on and Additional
Amounts, if any, with respect to such Security as the same becomes due out of
the proceeds yielded by converting (from time to time as specified below in the
case of any such election) the amount or other property deposited in respect of
such Security into the currency or currency unit in which such Security becomes
payable as a result of such election or Conversion Event based on the applicable
market exchange rate for such currency or currency unit in effect on the second
Business Day prior to each payment date, except, with respect to a Conversion
Event, for such Foreign Currency in effect (as nearly as feasible) at the time
of the Conversion Event.
The Issuer shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the Government Obligations
deposit pursuant to Section 1404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of such Outstanding Securities.
Anything in this Article to the contrary notwithstanding, subject
to Section 606, the Trustee shall deliver or pay to the Issuer from time to time
upon Issuer Request any money or Government Obligations (or other property and
any proceeds therefrom) held by it as provided in Section 1404 which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof addressed and delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect a defeasance or covenant defeasance, as applicable, in
accordance with this Article.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A
meeting of Holders of Securities of any series may be called at any time and
from time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Securities
of such series.
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be held
at such time and at such place in the Borough of Manhattan, New York City, or in
London as the Trustee shall determine. Notice of every meeting of Holders of
Securities of any series, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such meeting, shall be
given, in the manner provided in Section 106, not less than 21 nor more than 180
days prior to the date fixed for the meeting.
(b) In case at any time the Issuer, pursuant to a Board
Resolution, or any Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified in
Section 1501, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first publication of the notice of such meeting within 21 days after receipt of
such request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Issuer or the Holders of Securities of such series in
the amount above specified, as the case may be, may determine the time and the
place in the Borough of Manhattan, New York City, or in London for
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such meeting and may call such meeting for such purposes by giving notice
thereof as provided in subsection (a) of this Section.
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS. To be
entitled to vote at any meeting of Holders of Securities of any series, a Person
shall be (1) a Holder of one or more Outstanding Securities of such series, or
(2) a Person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Securities of such series by such Holder or
Holders. The only Persons who shall be entitled to be present or to speak at any
meeting of Holders of Securities of any series shall be the Persons entitled to
vote at such meeting and their counsel, any representatives of the Trustee and
its counsel and any representatives of the Issuer and its counsel.
SECTION 1504. QUORUM; ACTION. The Persons entitled to vote a
majority in principal amount of the Outstanding Securities of a series shall
constitute a quorum for a meeting of Holders of Securities of such series;
provided, however, that if any action is to be taken at such meeting with
respect to a consent or waiver which this Indenture expressly provides may be
given by the Holders of not less than a specified percentage in principal amount
of the Outstanding Securities of a series, the Persons entitled to vote such
specified percentage in principal amount of the Outstanding Securities of such
series shall constitute a quorum. In the absence of a quorum within 30 minutes
after the time appointed for any such meeting, the meeting shall, if convened at
the request of Holders of Securities of such series, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at the reconvening of any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 1502(a), except that
such notice need to be given only once not less than five days prior to the date
on which the meeting is scheduled to be reconvened. Notice of the reconvening of
any adjournment meeting shall state expressly the percentage, as provided above,
of the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.
Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the persons
entitled to vote a majority in aggregate principal amount of the Outstanding
Securities represented at such meeting; provided, however, that, except as
limited by the proviso to Section 902, any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action which this Indenture expressly provides may be made, given or taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of the Outstanding Securities of a series may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid by the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of Holders
of Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series, whether or not present
or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if
any action is to be taken at a meeting of Holders of Securities of any series
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage in principal amount of all
Outstanding Securities affected thereby, or of the Holders of such series and
one or more additional series:
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(a) there shall be no minimum quorum requirement for such
meeting; and
(b) the principal amount of the Outstanding Securities of such
series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether
such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or
taken under this Indenture.
SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND
ADJOURNMENT OF MEETINGS.
(a) Notwithstanding any provisions of this Indenture, the Trustee
may make such reasonable regulations not inconsistent with this Indenture as it
may deem advisable for any meeting of Holders of Securities of a series in
regard to proof of the holding of Securities of such series and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be presumed
valid and genuine without the proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing appoint a
temporary chairman of the meeting, unless the meeting shall have been canceled
by the Issuer or by Holders of Securities as provided in Section 1502(b), in
which case the Issuer or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount of the
Outstanding Securities of such series held or represented by him; provided,
however that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not Outstanding and ruled by the chairman of the meeting
to be not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 1502 at which a quorum is present may be adjourned
from time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting, and the
meeting may be held as so adjourned without further notice.
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of Securities
of any series shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities of such series or of their
representatives by proxy and the principal amounts and identification numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Securities of any
Series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by
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ballot taken thereat and affidavits by one or more persons having knowledge of
the fact, setting forth a copy of the notice of the meeting and showing that
said notice was given as provided in Section 1502 and, if applicable, Section
1504. Each copy shall be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one such copy shall be delivered to
the Issuer and another to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting. Any record so signed
and verified shall be conclusive evidence of the matters therein stated.
SECTION 1507. EVIDENCE OF ACTION TAKEN BY HOLDERS. Any request,
demand, authorization, direction, notice consent, waiver or other action
provided by this Indenture to be given or taken by a specified percentage in
principal amount of the Holders of any or all series may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such specified percentage of Holders in person or by agent duly appointed in
writing, and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee. Proof and execution of any instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and (subject to
Article Six) conclusive in favor of the Trustee and the Issuer, if made in the
manner provided in this Article.
SECTION 1508. PROOF OF EXECUTION OF INSTRUMENTS. Subject to
Article Six, the execution of any instrument by a Holder or his agent or proxy
may be proved in accordance with such reasonable rules and regulations as may be
prescribed by the Trustee or in such manner as shall be satisfactory to the
Trustee.
ARTICLE SIXTEEN
SECURITIES IN FOREIGN CURRENCIES
SECTION 1601. APPLICABILITY OF ARTICLE. Whenever this Indenture provides
for (a) any action by, or the determination of any of the rights of Holders of
Securities of any series in which not all of such Securities are denominated in
the same currency, or (b) any distribution to Holders of Securities, in the
absence of any provision to the contrary in the form of Security of any
particular series or pursuant to this Indenture or the Securities, any amount in
respect of any Security denominated in a currency other than Dollars shall be
treated for any such action or distribution as that amount of Dollars that could
be obtained for such amount on such reasonable basis of exchange and as of the
record date with respect to Registered Securities of such series (if any) for
such action, determination of rights for distribution (or, if there shall be no
applicable record date, such other date reasonably proximate to the date of such
action, determination of rights or distribution) as the Issuer shall specify in
a written notice to the Trustee.
* * * * *
-68-
<PAGE> 76
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
ARDEN REALTY LIMITED PARTNERSHIP
By: Arden Realty, Inc., as General Partner
By: /s/ DIANA M. LAING
-----------------------------------
Name: Diana M. Laing
Title: Executive Vice President
and Chief Financial Officer
Attest:
/s/ RICHARD S. DAVIS
-------------------------
Title: Senior Vice President
and Chief Accounting
Officer
THE BANK OF NEW YORK, as Trustee
By: /s/ JOANN MANIERI
----------------------------------
Name: JoAnn Manieri
Title: Assistant Vice President
-69-
<PAGE> 77
STATE OF _______________ )
) ss:
COUNTY OF _____________ )
On the _____ day of ____________, 2000, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is ______ ___________________________________ of ARDEN REALTY, INC., the
general partner of ARDEN REALTY LIMITED PARTNERSHIP, one of the parties
described in and which executed the foregoing instrument, and that he signed his
name thereto by authority of the Board of Directors.
{Notarial Seal}
_______________________________________
Notary Public
COMMISSION EXPIRES
-70-
<PAGE> 78
EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
{Insert title or sufficient description of Securities to be delivered}
This is to certify that, as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate the income of which is subject
to United States federal income taxation regardless of its source, or any 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 ("United States person(s)"), (ii)
are owned by United States person(s) that are (a) foreign branches of United
States financial institutions (financial institutions, as defined in United
States Treasury Regulations Section 1.165-12(c)(1)(v) are herein referred to a
"financial institutions") purchasing for their own account or for resale, or (b)
United States person(s) who acquired the Securities through foreign branches of
United States financial institutions and who hold the Securities through such
United States financial institutions on the date hereof (and in either case (a)
or (b), each such United States financial institution hereby agrees, on its own
behalf or through its agent, that you may advise Arden Realty Limited
Partnership or its agent that such financial institution will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the United States Internal
Revenue Code of 1986, amended, and the regulations thereunder), or (iii) are
owned by United States or foreign financial institution(s) for purposes of
resale during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a
United States or foreign financial institution described in clause (iii) above
(whether or not also described in clause (i) or (ii)), this is to further
certify that such financial institution has not acquired the Securities for
purposes of resale directly or indirectly to a United States person or to a
person within the United States or its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia), and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We undertake to advise your promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
above-captioned Securities held by you for our account in accordance with your
Operating Procedures if any applicable statement herein is not correct on such
date, and in the absence of any such notification it may be assumed that this
certification applies as of such date.
This certificate excepts and does not relate to U.S. $ ____ of such
interest in the above-captioned Securities in respect of which we are not able
to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or
A-1
<PAGE> 79
threatened in connection with which this certificate is or would be relevant, we
irrevocably authorize you to produce this certificate or a copy thereof to any
interested party in such proceedings.
Dated: _____________________________________ , 20__
(To be dated no earlier than the 15th day prior
to (i) the Exchange Date or (ii) the relevant
Interest Payment Date occurring prior to the
Exchange Date, as applicable)
(Name of Person Making Certification)
_______________________________________
(Authorized Signatory)
Name:
Title:
A-2
<PAGE> 80
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CLEARSTREAM S.A.A IN CONNECTION WITH THE
EXCHANGE OF A PORTION OF A TEMPORARY
GLOBAL SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
{Insert title or sufficient description of Securities to be delivered}
This is to certify that, based solely on written certifications that we
have received in writing, by tested telex or by electronic transmission from
each of the persons appearing in our records as persons entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, {U.S.} ____________________
principal amount of the above-captioned Securities (i) is owned by person(s)
that are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate the income of which is subject to United
States Federal income taxation regardless of its source, or any 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 ("United States person(s)"), (ii)
is owned by United States person(s) that are (a) foreign branches of United
States financial institutions (financial institutions, as defined in the U.S.
Treasury Regulations Section 1.165-12(c)(1)(v) are herein referred to as
"financial institutions") purchasing for their own account or for resale, or (b)
United States person(s) who acquired the Securities through foreign branches of
United States financial institutions and who hold the Securities through such
United States financial institutions on the date hereof (and in either case (a)
or (b), each such financial institution has agreed, on its own behalf or through
its agent, that we may advise Arden Realty Limited Partnership or its agent that
such financial institution will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder), or (iii) is owned by United States or foreign
financial institution(s) for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and, to the further effect, that financial institutions described in clause
(iii) above (whether or not also described in clause (i) or (ii)) have certified
that they have not acquired the Securities for purposes of resale directly or
indirectly to a United States person or to a person within the United States or
its possessions.
As used herein "United States" means the United States of America
(including the States and the District of Columbia), and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
A-3
<PAGE> 81
Dated: ______________________________________ , 20__
(To be dated no earlier than the Exchange
Date or the relevant Interest Payment Date
occurring prior to the Exchange Date, as
applicable)
{Morgan Guaranty Trust Company of
New York, Brussels Office}, as
Operator of the Euroclear System
{Clearstream}
By: ________________________________
A-4
<PAGE> 1
Exhibit 4.2
FORM OF EXCHANGE NOTE
ARDEN REALTY LIMITED PARTNERSHIP
8.875% Senior Note due 2005
No. 001 $200,000,000
CUSIP No. 03979GAC9
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC") (55 WATER STREET, NEW YORK, NEW
YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND SUCH NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY PAYMENT
IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO
A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY
DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 17, 2000,
BETWEEN ARDEN REALTY LIMITED PARTNERSHIP AND THE INITIAL PURCHASERS RELATING TO
THE NOTE.
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
(herein referred to as the "Issuer," which term includes any successor issuer
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of Two
Hundred Million Dollars on March 1, 2005 (the "Stated Maturity Date") or the
date fixed for earlier redemption (the "Redemption Date," and together with the
Stated Maturity Date with respect to principal repayable on such date, the
"Maturity Date"), and to pay interest thereon from March 17, 2000, or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually in arrears on March 1 and September 1 of each year
(each, an "Interest Payment Date"), commencing September 1, 2000, and on the
Maturity Date at the rate of 8.875% per annum, until the principal hereof is
paid or duly provided for.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date and on the Maturity Date will, as provided in
such Indenture, be paid to the
<PAGE> 2
Holder in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such payment,
which shall be the date 15 calendar days (regardless of whether such day is a
Business Day), next preceding such Interest Payment Date or the Maturity Date at
the office or agency of the Issuer maintained for such purpose. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date, and may be paid to the Holder
in whose name this Note (or one or more Predecessor Securities) is registered at
the close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee hereinafter referred to, notice whereof
shall be given to Holders of Notes of this series not less than 10 days prior to
such Special Record Date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Notes of this series may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture. Interest on this
Note will be computed on the basis of a 360-day year of twelve 30-day months.
The principal of this Note payable on the Maturity Date will be
paid against presentation and surrender of this Note at the Corporate Trust
Office of the Trustee maintained for that purpose in the Borough of Manhattan,
the City of New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
Interest payable on this Note on any Interest Payment Date and on
the Maturity Date, as the case may be, will be the amount of interest accrued
during the applicable Interest Period (as defined below).
An "Interest Period" is each period from and including the
immediately preceding Interest Payment Date in respect of which interest has
been paid or duly provided for (or from and including March 17, 2000, if no
interest has been paid on this Note) to but excluding such Interest Payment Date
or the Maturity Date, as the case may be. If any Interest Payment Date or
Maturity Date falls on a day that is not a Business Day, as defined below,
principal and interest payable with respect to such Interest Payment Date or
Maturity Date, as the case may be, will be paid on the next succeeding Business
Day with the same force and effect as if it were paid on the date such payment
was due, and no interest shall accrue on the amount so payable for the period
from and after such Interest Payment Date or Maturity Date, as the case may be.
"Business Day" means any day, other than a Saturday or Sunday that is neither a
legal holiday nor a day on which banking institutions in the City of New York
are authorized or required by law, regulation or executive order to close.
Payments of principal and interest in respect of this Note will
be made by U.S. dollar check or by wire transfer (such a wire transfer to be
made only to a Holder of an aggregate principal amount of Securities in excess
of $5,000,000, and only if such Holder shall have furnished wire instructions in
writing to the Trustee no later than 15 days prior to the relevant payment date
and acknowledged that a wire transfer fee shall be payable) of immediately
available funds in such coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and private debts.
2
<PAGE> 3
The Holder of this Security is entitled to the benefits of and is
subject to the obligations contained in a Registration Rights Agreement (subject
to the provisions thereof), dated as of March 17, 2000, between the Issuer and
the Initial Purchasers (the "Registration Rights Agreement").
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Issuer (herein called the
"Securities") of the series hereafter specified, all issued or to be issued
under an Indenture, dated as of March 14, 2000 (herein called the "Indenture"),
duly executed and delivered by the Issuer to The Bank of New York, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture with respect to the series of Securities of which this Note is a
part), to which Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Issuer, the Trustee and the Holders of
the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. The Securities may be issued in one or more series,
which different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may be
subject to different redemption provisions (if any), and may otherwise vary as
provided in the Indenture. This Note is one of a series of Securities designated
as the 8.875% Senior Notes due 2005 (the "Notes"), and the aggregate principal
amount of the Notes to be issued under such series is unlimited.
In case an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal hereof and the Make-Whole Amount (if
any) may be declared, and upon such declaration shall become, due and payable,
in the manner, with the effect, and subject to the conditions provided in the
Indenture.
The Issuer may redeem the Securities at any time, in whole or in
part, at the election of the Issuer, at a redemption price equal to the sum of
(1) the principal amount of the Securities being redeemed plus accrued interest
thereon to the Redemption Date, and (2) the Make-Whole Amount, if any, with
respect to such Securities (the "Redemption Price"). Notice of optional
redemption of any Securities will be given to Holders at their addresses, as
shown in the security register for the Notes, not less than 30 nor more than 60
days prior to the Redemption Date. The notice of redemption will specify, among
other items, the Redemption Price and the principal amount of the Securities
held by such Holder to be redeemed. If less than all the Notes are to be
redeemed at the option of the Issuer, the Issuer will notify the Trustee at
least 45 days prior to giving notice of redemption to the Holders (or such
shorter period as is satisfactory to the Trustee) of the aggregate principal
amount of Notes to be redeemed and their redemption date. The Trustee shall
select, in such manner as it shall deem fair and appropriate, Notes to be
redeemed in whole or in part.
Subject to certain limitations in the Indenture, at any time when
the Issuer is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Restricted
Security (as defined in the Registration Rights Agreement) the Issuer will
promptly furnish or cause to be furnished Rule 144A Information (as defined in
the Registration Rights Agreement) to such Holder of Restricted Securities, or
to a prospective purchaser of any security designated by any such Holder to the
extent required to
3
<PAGE> 4
permit compliance by such Holder with Rule 144A under the Securities Act in
connection with the resale of any such security.
In the event of redemption of this Note in part only, a new Note
or Notes for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
The Indenture contains provisions permitting the Issuer and the
Trustee, with the consent of the Holders of not less than a majority of the
aggregate principal amount of the Securities at the time Outstanding of each
series to be affected, evidenced as provided in the Indenture, to execute
supplemental Indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
Indenture or modifying in any manner the rights of the Holders of the Securities
of each series; provided, however, that no such supplemental Indenture shall,
without the consent of the Holder of each Security so affected, (i) change the
final maturity of any Security, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of any
interest thereon, or impair or affect the rights of any Holder to institute suit
for the payment on any Security, or (ii) reduce the aforesaid percentage of
Securities, the Holders of which are required to consent to any such
supplemental Indenture, or (iii) reduce the percentage of Securities, the
Holders of which are required to consent to any waiver of compliance with
certain provisions of the Indenture or any waiver of certain defaults
thereunder. It is also provided in the Indenture that, with respect to certain
defaults or Events of Default regarding the Securities of any series, the
Holders of a majority in aggregate principal amount outstanding of the
Securities of such series (or, in the case of certain defaults or Events of
Default, all series of Securities) may on behalf of the Holders of all the
Securities of such series (or all of the Securities, as the case may be) waive
any such past default or Event of Default and its consequences, prior to any
declaration accelerating the maturity of such Securities, or, subject to certain
conditions, may rescind a declaration of acceleration and its consequences with
respect to such Securities. The preceding sentence shall not, however, apply to
a default in the payment of the principal of or premium, if any, or interest on
any of the Securities. Any such consent or waiver by the Holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Security and any
securities that may be issued in exchange or substitution hereof, irrespective
of whether or not any notation thereof is made upon this Security or such other
securities.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and any Make-Whole
Amount and interest on this Note in the manner, at the respective times, places
and rate, and in the coin or currency, herein prescribed.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder unless (a) such Holder shall have previously
given the Trustee written notice of a continuing Event of Default, (b) the
Holders of not less than 25% in aggregate principal amount of the Securities
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have
4
<PAGE> 5
received from the Holders of a majority in aggregate principal amount of the
Securities Outstanding a direction inconsistent with such request, and (c) the
Trustee shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof, Make-Whole Amount, if any, or interest
hereon on or after the respective due dates expressed herein.
This Security is not subject to a sinking fund requirement.
The Indenture contains provisions for defeasance at any time of
(i) the entire indebtedness of this Security (ii) certain restrictive covenants
with respect to this Security, in each case upon compliance with certain
conditions set forth therein.
No recourse under or upon any obligation, covenant or agreement
contained in the Indenture, in any Security or coupon appertaining thereto, or
because of any indebtedness evidenced hereby or thereby (including, without
limitation, any obligation or indebtedness relating to the principal of, or
premium or Make-Whole Amount, if any, interest or any other amounts due, or
claimed to be due, on this Security), or for any claim based thereon or
otherwise in respect thereof, shall be had (i) against the General Partner or
any other partner, or any Person which owns an interest, directly or indirectly,
in any partner, in the Issuer, or (ii) against any promoter, as such, or against
any past, present or future shareholder, officer, trustee or partner, as such,
of the Issuer or the General Partner or of any successor, either directly or
through the Issuer or the General Partner or any successor, under any rule of
law, statute or constitutional provision or by the enforcement of any assessment
or by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.
The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the Holder hereof surrendering the
same. No service charge shall be made for any such registration of transfer or
exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
deem and treat the Person in whose name this Security is registered as the
absolute owner of this Security (whether or not this Security shall be overdue
and notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment of, or on account of, the principal hereof and
Make-Whole Amount, if any, and subject to the provisions herein and on the face
hereof; interest hereon and for all other purposes, and neither the Issuer, the
Trustee nor any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5
<PAGE> 6
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers
to be printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the correctness or accuracy of such CUSIP numbers
as printed on the Notes, and reliance may be placed only on the other
identification numbers printed hereon.
Capitalized terms used herein and not defined herein shall have
the respective meanings given to such terms in the Indenture.
Unless the Certificate of Authentication hereon has been executed
by the Trustee by one of its authorized signatories, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
6
<PAGE> 7
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed manually or by facsimile by its duly authorized officers.
Dated: __________, 2000
ARDEN REALTY LIMITED PARTNERSHIP
By: Arden Realty, Inc., its sole general
partner
By:
-------------------------------------
Diana M. Laing
Executive Vice President
Chief Financial Officer
Attest:
- --------------------------------
David A. Swartz
General Counsel and Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series designated herein referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK
as Trustee
By:
-------------------------------------
Authorized Signatory
7
<PAGE> 8
ASSIGNMENT FORM AND CERTIFICATE OF TRANSFER
To assign this Security fill in the form below:
(I) or (we) assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number, if any)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
Your signature:
---------------------------------------------------------
(Sign exactly as your name appears on this Security)
Date:
----------
Signature Guarantee:*
----------------
In connection with any transfer of any of the Securities evidenced by
this certificate occurring prior to the date that is two years (or such shorter
period as may then be applicable under Rule 144(k) of the United States
Securities Act of 1933, as amended (the "Securities Act") (or any successor
provision)) after the later of the date of original issuance of such Securities
and the last date, if any, on which such Securities were owned by the Issuer or
any Affiliate of the Issuer, the undersigned confirms that such Securities are
being transferred:
CHECK ONE BOX BELOW
(1) [ ] to the Issuer or a Subsidiary thereof; or
(2) [ ] pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) [ ] pursuant to Rule 144 under the Securities Act; or
(4) [ ] pursuant to an effective registration statement under the
Securities Act; or
(5) [ ] pursuant to another available exemption from the
registration requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any person
other than the registered holder thereof; provided, however, that if box (2),
(3), (4) or (5) is checked, the Trustee (as instructed by the Issuer) and the
Issuer may require, prior to registering any such transfer of the Securities,
such certifications, legal opinions or other information as the Issuer has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.
- ----------
* Signature must be guaranteed by a commercial bank, trust company or
member firm or a major stock exchange
<PAGE> 1
Exhibit 4.3
FORM OF EXCHANGE NOTE
ARDEN REALTY LIMITED PARTNERSHIP
9.150% Senior Note due 2010
No. 001 $50,000,000
CUSIP No. 03979GAF2
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC") (55 WATER STREET, NEW YORK, NEW
YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND SUCH NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY PAYMENT
IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO
A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY
DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 17, 2000,
BETWEEN ARDEN REALTY LIMITED PARTNERSHIP AND THE INITIAL PURCHASERS RELATING TO
THE NOTE.
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
(herein referred to as the "Issuer," which term includes any successor issuer
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of Fifty
Million Dollars on March 1, 2010 (the "Stated Maturity Date") or the date fixed
for earlier redemption (the "Redemption Date," and together with the Stated
Maturity Date with respect to principal repayable on such date, the "Maturity
Date"), and to pay interest thereon from March 17, 2000, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears on March 1 and September 1 of each year (each, an
"Interest Payment Date"), commencing September 1, 2000, and on the Maturity Date
at the rate of 9.150% per annum, until the principal hereof is paid or duly
provided for.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date and on the Maturity Date will, as provided in
such Indenture, be paid to the
<PAGE> 2
Holder in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such payment,
which shall be the date 15 calendar days (regardless of whether such day is a
Business Day), next preceding such Interest Payment Date or the Maturity Date at
the office or agency of the Issuer maintained for such purpose. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date, and may be paid to the Holder
in whose name this Note (or one or more Predecessor Securities) is registered at
the close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee hereinafter referred to, notice whereof
shall be given to Holders of Notes of this series not less than 10 days prior to
such Special Record Date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Notes of this series may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture. Interest on this
Note will be computed on the basis of a 360-day year of twelve 30-day months.
The principal of this Note payable on the Maturity Date will be
paid against presentation and surrender of this Note at the Corporate Trust
Office of the Trustee maintained for that purpose in the Borough of Manhattan,
the City of New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
Interest payable on this Note on any Interest Payment Date and on
the Maturity Date, as the case may be, will be the amount of interest accrued
during the applicable Interest Period (as defined below).
An "Interest Period" is each period from and including the
immediately preceding Interest Payment Date in respect of which interest has
been paid or duly provided for (or from and including March 17, 2000, if no
interest has been paid on this Note) to but excluding such Interest Payment Date
or the Maturity Date, as the case may be. If any Interest Payment Date or
Maturity Date falls on a day that is not a Business Day, as defined below,
principal and interest payable with respect to such Interest Payment Date or
Maturity Date, as the case may be, will be paid on the next succeeding Business
Day with the same force and effect as if it were paid on the date such payment
was due, and no interest shall accrue on the amount so payable for the period
from and after such Interest Payment Date or Maturity Date, as the case may be.
"Business Day" means any day, other than a Saturday or Sunday that is neither a
legal holiday nor a day on which banking institutions in the City of New York
are authorized or required by law, regulation or executive order to close.
Payments of principal and interest in respect of this Note will
be made by U.S. dollar check or by wire transfer (such a wire transfer to be
made only to a Holder of an aggregate principal amount of Securities in excess
of $5,000,000, and only if such Holder shall have furnished wire instructions in
writing to the Trustee no later than 15 days prior to the relevant payment date
and acknowledged that a wire transfer fee shall be payable) of immediately
available funds in such coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and private debts.
2
<PAGE> 3
The Holder of this Security is entitled to the benefits of and is
subject to the obligations contained in a Registration Rights Agreement (subject
to the provisions thereof), dated as of March 17, 2000, between the Issuer and
the Initial Purchasers (the "Registration Rights Agreement").
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Issuer (herein called the
"Securities") of the series hereafter specified, all issued or to be issued
under an Indenture, dated as of March 14, 2000 (herein called the "Indenture"),
duly executed and delivered by the Issuer to The Bank of New York, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture with respect to the series of Securities of which this Note is a
part), to which Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Issuer, the Trustee and the Holders of
the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. The Securities may be issued in one or more series,
which different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may be
subject to different redemption provisions (if any), and may otherwise vary as
provided in the Indenture. This Note is one of a series of Securities designated
as the 9.150% Senior Notes due 2010 (the "Notes"), and the aggregate principal
amount of the Notes to be issued under such series is unlimited.
In case an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal hereof and the Make-Whole Amount (if
any) may be declared, and upon such declaration shall become, due and payable,
in the manner, with the effect, and subject to the conditions provided in the
Indenture.
The Issuer may redeem the Securities at any time, in whole or in
part, at the election of the Issuer, at a redemption price equal to the sum of
(1) the principal amount of the Securities being redeemed plus accrued interest
thereon to the Redemption Date, and (2) the Make-Whole Amount, if any, with
respect to such Securities (the "Redemption Price"). Notice of optional
redemption of any Securities will be given to Holders at their addresses, as
shown in the security register for the Notes, not less than 30 nor more than 60
days prior to the Redemption Date. The notice of redemption will specify, among
other items, the Redemption Price and the principal amount of the Securities
held by such Holder to be redeemed. If less than all the Notes are to be
redeemed at the option of the Issuer, the Issuer will notify the Trustee at
least 45 days prior to giving notice of redemption to the Holders (or such
shorter period as is satisfactory to the Trustee) of the aggregate principal
amount of Notes to be redeemed and their redemption date. The Trustee shall
select, in such manner as it shall deem fair and appropriate, Notes to be
redeemed in whole or in part.
Subject to certain limitations in the Indenture, at any time when
the Issuer is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Restricted
Security (as defined in the Registration Rights Agreement) the Issuer will
promptly furnish or cause to be furnished Rule 144A Information (as defined in
the Registration Rights Agreement) to such Holder of Restricted Securities, or
to a prospective purchaser of any security designated by any such Holder to the
extent required to
3
<PAGE> 4
permit compliance by such Holder with Rule 144A under the Securities Act in
connection with the resale of any such security.
In the event of redemption of this Note in part only, a new Note
or Notes for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
The Indenture contains provisions permitting the Issuer and the
Trustee, with the consent of the Holders of not less than a majority of the
aggregate principal amount of the Securities at the time Outstanding of each
series to be affected, evidenced as provided in the Indenture, to execute
supplemental Indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
Indenture or modifying in any manner the rights of the Holders of the Securities
of each series; provided, however, that no such supplemental Indenture shall,
without the consent of the Holder of each Security so affected, (i) change the
final maturity of any Security, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of any
interest thereon, or impair or affect the rights of any Holder to institute suit
for the payment on any Security, or (ii) reduce the aforesaid percentage of
Securities, the Holders of which are required to consent to any such
supplemental Indenture, or (iii) reduce the percentage of Securities, the
Holders of which are required to consent to any waiver of compliance with
certain provisions of the Indenture or any waiver of certain defaults
thereunder. It is also provided in the Indenture that, with respect to certain
defaults or Events of Default regarding the Securities of any series, the
Holders of a majority in aggregate principal amount outstanding of the
Securities of such series (or, in the case of certain defaults or Events of
Default, all series of Securities) may on behalf of the Holders of all the
Securities of such series (or all of the Securities, as the case may be) waive
any such past default or Event of Default and its consequences, prior to any
declaration accelerating the maturity of such Securities, or, subject to certain
conditions, may rescind a declaration of acceleration and its consequences with
respect to such Securities. The preceding sentence shall not, however, apply to
a default in the payment of the principal of or premium, if any, or interest on
any of the Securities. Any such consent or waiver by the Holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Security and any
securities that may be issued in exchange or substitution hereof, irrespective
of whether or not any notation thereof is made upon this Security or such other
securities.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and any Make-Whole
Amount and interest on this Note in the manner, at the respective times, places
and rate, and in the coin or currency, herein prescribed.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder unless (a) such Holder shall have previously
given the Trustee written notice of a continuing Event of Default, (b) the
Holders of not less than 25% in aggregate principal amount of the Securities
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have
4
<PAGE> 5
received from the Holders of a majority in aggregate principal amount of the
Securities Outstanding a direction inconsistent with such request, and (c) the
Trustee shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof, Make-Whole Amount, if any, or interest
hereon on or after the respective due dates expressed herein.
This Security is not subject to a sinking fund requirement.
The Indenture contains provisions for defeasance at any time of
(i) the entire indebtedness of this Security (ii) certain restrictive covenants
with respect to this Security, in each case upon compliance with certain
conditions set forth therein.
No recourse under or upon any obligation, covenant or agreement
contained in the Indenture, in any Security or coupon appertaining thereto, or
because of any indebtedness evidenced hereby or thereby (including, without
limitation, any obligation or indebtedness relating to the principal of, or
premium or Make-Whole Amount, if any, interest or any other amounts due, or
claimed to be due, on this Security), or for any claim based thereon or
otherwise in respect thereof, shall be had (i) against the General Partner or
any other partner, or any Person which owns an interest, directly or indirectly,
in any partner, in the Issuer, or (ii) against any promoter, as such, or against
any past, present or future shareholder, officer, trustee or partner, as such,
of the Issuer or the General Partner or of any successor, either directly or
through the Issuer or the General Partner or any successor, under any rule of
law, statute or constitutional provision or by the enforcement of any assessment
or by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.
The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the Holder hereof surrendering the
same. No service charge shall be made for any such registration of transfer or
exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
deem and treat the Person in whose name this Security is registered as the
absolute owner of this Security (whether or not this Security shall be overdue
and notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment of, or on account of, the principal hereof and
Make-Whole Amount, if any, and subject to the provisions herein and on the face
hereof; interest hereon and for all other purposes, and neither the Issuer, the
Trustee nor any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5
<PAGE> 6
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers
to be printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the correctness or accuracy of such CUSIP numbers
as printed on the Notes, and reliance may be placed only on the other
identification numbers printed hereon.
Capitalized terms used herein and not defined herein shall have
the respective meanings given to such terms in the Indenture.
Unless the Certificate of Authentication hereon has been executed
by the Trustee by one of its authorized signatories, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
6
<PAGE> 7
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed
manually or by facsimile by its duly authorized officers.
Dated: __________, 2000
ARDEN REALTY LIMITED PARTNERSHIP
By: Arden Realty, Inc., its sole general
partner
By:
-------------------------------------
Diana M. Laing
Executive Vice President and
Chief Financial Officer
Attest:
- ----------------------------------
David A. Swartz
General Counsel and Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series designated herein referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK
as Trustee
By:
-------------------------------------
Authorized Signatory
7
<PAGE> 8
ASSIGNMENT FORM AND CERTIFICATE OF TRANSFER
To assign this Security fill in the form below:
(I) or (we) assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number, if any)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
Your signature:
---------------------------------------------------------
(Sign exactly as your name appears on this Security)
Date:
----------
Signature Guarantee:*
----------------
In connection with any transfer of any of the Securities evidenced by
this certificate occurring prior to the date that is two years (or such shorter
period as may then be applicable under Rule 144(k) of the United States
Securities Act of 1933, as amended (the "Securities Act") (or any successor
provision)) after the later of the date of original issuance of such Securities
and the last date, if any, on which such Securities were owned by the Issuer or
any Affiliate of the Issuer, the undersigned confirms that such Securities are
being transferred:
CHECK ONE BOX BELOW
(1) [ ] to the Issuer or a Subsidiary thereof; or
(2) [ ] pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) [ ] pursuant to Rule 144 under the Securities Act; or
(4) [ ] pursuant to an effective registration statement under the
Securities Act; or
(5) [ ] pursuant to another available exemption from the
registration requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any person
other than the registered holder thereof; provided, however, that if box (2),
(3), (4) or (5) is checked, the Trustee (as instructed by the Issuer) and the
Issuer may require, prior to registering any such transfer of the Securities,
such certifications, legal opinions or other information as the Issuer has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.
- ----------
* Signature must be guaranteed by a commercial bank, trust company or
member firm or a major stock exchange
<PAGE> 1
Exhibit 5.1
[Ballard Spahr Andrews & Ingersoll, LLP]
April 21, 2000
Arden Realty Limited Partnership
Fourth Floor
11601 Wilshire Boulevard
Los Angeles, California 90025
Re: Registration Statement on Form S-4
8.875% Senior Notes due 2005
9.150% Senior Notes due 2010
Ladies and Gentlemen:
We have served as Maryland counsel to Arden Realty Limited Partnership, a
Maryland limited partnership (the "Partnership"), in connection with certain
matters of Maryland law arising out of the Partnership's registration statement
on Form S-4 for the exchange of $200,000,000 in principal amount of its 8.875%
Senior Notes due 2005 (the "2005 Notes"), and $50,000,000 in principal amount of
its 9.150% Senior Notes due 2010 (the "2010 Notes," and together with the 2005
Notes, collectively, the "Notes") and all amendments thereto (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "1933 Act"),
relating to the exchange of the Notes for unregistered notes of the Partnership
in the same principal amounts and substantially identical terms as the Notes, as
set forth in the prospectus which forms a part of the Registration Statement
(the "Prospectus"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Registration Statement.
In connection with our representation of the Partnership, 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 (hereinafter collectively referred to as the "Documents"):
1. The Registration Statement and the related form of Prospectus in the
form in which it was transmitted to the Securities and Exchange Commission,
under the 1933 Act, certified as of a recent date by an officer of Arden Realty,
Inc., a Maryland corporation and the sole general partner of the Partnership
("Arden Realty");
2. The Certificate of Limited Partnership of the Partnership, certified as
of a recent date by the State Department of Assessments and Taxation of Maryland
(the "SDAT");
<PAGE> 2
Arden Realty, Inc.
April 21, 2000
Page 2
3. The Limited Partnership Agreement of the Partnership, as amended (the
"Partnership Agreement"), certified as of a recent date by an officer of Arden
Realty;
4. The Charter of Arden Realty, certified as of a recent date by the SDAT;
5. The Bylaws of Arden Realty, certified as of a recent date by an officer
of Arden Realty;
6. Forms of the 2005 Notes and the 2010 Notes, each certified as of a
recent date by an officer of Arden Realty;
7. Resolutions (the "Board Resolutions") adopted by the Board of Directors
of Arden Realty, in its capacity as general partner of the Partnership, relating
to (i) the registration, issuance and exchange of the Notes and (ii) the
creation of a Pricing Committee of the Board of Directors of Arden Realty (the
"Pricing Committee") to approve certain matters with respect to the Notes and
the appointment of members of the Pricing Committee, certified as of a recent
date by an officer of Arden Realty;
8. Resolutions of the Pricing Committee (the "Pricing Committee
Resolutions") approving certain matters with respect to the Notes.
9. A certificate of the SDAT as to the good standing of the Partnership,
dated as of a recent date;
10. A certificate executed by an officer of Arden Realty, dated as of a
recent date;
11. An indenture, dated as of March 14, 2000 (the "Indenture"), between the
Partnership and The Bank of New York, as Trustee, certified as of a recent date
by an officer of Arden Realty;
12. An Officer's Certificate of Arden Realty, pursuant to Section 303 of
the Indenture, certified as of a recent date by an officer of Arden Realty; and
13. Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth below, subject to the assumptions,
limitations and qualifications stated herein.
<PAGE> 3
Arden Realty, Inc.
April 21, 2000
Page 3
In expressing the opinion set forth below, we have assumed 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 Partnership) is duly authorized to do so.
3. Each of the parties (other than the Partnership) executing any of the
Documents has duly and validly executed and delivered each of the Documents to
which such party is a signatory, and such party's obligations set forth therein
are legal, valid and binding and are enforceable in accordance with all stated
terms.
4. All Documents submitted to us as originals are authentic. The form and
content of the 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. All Documents submitted to us as certified or
photostatic copies conform to the original documents. All signatures on all such
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 oral or written
modification 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.
5. The form and content of the 2005 Notes and the 2010 Notes as executed,
authenticated and delivered will not differ in any respect relevant to this
opinion from the form and content of the forms of the Notes referred to in
Paragraph 6 above.
6. 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:
<PAGE> 4
1. The Partnership is a limited partnership duly formed and existing under
and by virtue of the laws of the State of Maryland and is in good standing to
transact business.
2. The Notes have been duly authorized and, upon the due execution,
countersignature and delivery of the Notes in accordance with the Indenture, the
Board Resolutions and the Pricing Committee Resolutions, the Notes will be duly
and validly issued.
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 your submission to the
Commission as an exhibit to the Registration Statement and, accordingly, may not
be relied upon by, quoted in any manner to, or delivered to any other person or
entity (other than Latham & Watkins, counsel to the Partnership, and The Bank of
New York, as Trustee under the Indenture and Exchange Agent for the exchange of
the Notes) without, in each instance, our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein. In giving
this consent, we do not admit that we are 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 5.2
[LATHAM & WATKINS LETTERHEAD]
April 21, 2000
Arden Realty Limited Partnership
11601 Wilshire Boulevard, 4th Floor
Los Angeles, California 90025
Re: Registration Statement on Form S-4;
$200,000,000 8.875% Senior Notes due 2005
$ 50,000,000 9.150% Senior Notes due 2010
Ladies and Gentlemen:
In connection with the registration of (i) $200,000,000 8.875% Senior
Notes due 2005 and (ii) $50,000,000 9.150% Senior Notes due 2010 (collectively,
the "Securities") by Arden Realty Limited Partnership (the "Partnership") under
the Securities Act of 1933, as amended, on Form S-4 filed with the Securities
and Exchange Commission (the "Commission") on April 21, 2000 (the "Registration
Statement"), you have requested our opinion with respect to the matters set
forth below.
In our capacity as your special counsel in connection with such
registration, we are familiar with the proceedings taken and proposed to be
taken by the Partnership in connection with the authorization and issuance of
the Securities, and for the purposes of this opinion, have assumed such
proceedings will be timely completed in the manner presently proposed. In
addition, 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
instruments, as we have deemed necessary or appropriate for purposes of this
opinion. As to facts material to the opinions, statements and assumptions
expressed herein, we have, with your consent, relied upon oral or written
statements and representations of officers and other representatives of the
Partnership and others.
<PAGE> 2
Arden Realty Limited Partnership
April 21, 2000
Page 2
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, 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 internal laws of the State of New York, and we express no opinion with
respect to the applicability thereto, or the effect thereon, of the laws of any
other jurisdiction or as to any matters of municipal law or the laws of any
local agencies within any state.
Capitalized terms used herein without definition have the meanings
ascribed to them in the Registration Statement.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that as of the date hereof, when the Securities have been duly
authorized, executed, issued, authenticated and delivered by or on behalf of the
Partnership, the Securities will constitute legally valid and binding
obligations of the Partnership, enforceable against the Partnership in
accordance with their terms.
The opinions rendered in the preceding paragraph are subject to the
following exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors; (ii) the effect of general principles of equity, whether enforcement
is considered in a proceeding in equity or law, and the discretion of the court
before which any proceeding therefor may be brought, (iii) the unenforceability
under certain circumstances under law or court decisions of provisions providing
for the indemnification of or contribution to a party with respect to a
liability where such indemnification or contribution is contrary to public
policy; and (iv) we express no opinion concerning the enforceability of the
waiver of rights or defenses contained in Section 514 of the Indenture.
We have not been requested to express and, with your knowledge and
consent, do not render any opinion as to the applicability to the obligations of
the Partnership under the Indenture and the Securities of Section 548 of the
United State Bankruptcy Code or applicable state law (including, without
limitation, Article 10 of the New York Debtor and Creditor Law) relating to
fraudulent transfers and obligations.
To the extent that the obligations of the Partnership under the
Securities or the Indenture may be dependent upon such matters, we have assumed
for purposes of this opinion that (i) the Trustee (a) is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization; (b) has the requisite organizational and legal power and authority
to perform its obligations under each of the Securities and Indenture,
respectively; (c) is duly qualified to engage in the activities contemplated by
the Securities and Indenture, respectively; and (d) has duly authorized,
executed and delivered each of the Securities and Indenture, respectively; (ii)
each of the Securities and Indenture, respectively, constitutes a legally valid
and binding agreement, of the Trustee enforceable against the Trustee in
accordance with its terms;
<PAGE> 3
Arden Realty Limited Partnership
April 21, 2000
Page 3
and (iii) that the Trustee is in compliance, generally and with respect to
acting as trustee under the Indenture, with all applicable laws and regulations.
We have also assumed that the choice of law provisions in each of the Securities
and Indenture would be enforced by any court in which enforcement thereof might
be sought.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the heading "Legal
Matters."
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE> 1
EXHIBIT 8.1
[Latham & Watkins Letterhead]
April 21, 2000
ARDEN REALTY LIMITED PARTNERSHIP
11601 Wilshire Blvd.,
4th Floor
Los Angeles, California 90025-1740
Re: Federal Income Tax Consequences
-------------------------------
Ladies and Gentlemen:
We have acted as tax counsel to Arden Realty Limited Partnership, a
Maryland limited partnership (the "Partnership"), in connection with its
proposed exchange of $200 Million of its 8.875% Senior Notes due 2005 and $50
Million of its 9.150% Senior Notes due 2010 (collectively, the "Securities") for
Senior Notes of like principal amount on substantially identical terms pursuant
to the registration statement filed with the Securities and Exchange Commission
(the "Commission") on Form S-4 on April 21, 2000 (together with all exhibits
thereto and documents incorporated by reference therein, the "Registration
Statement").
You have requested our opinion concerning certain of the federal income tax
consequences to holders of the Securities in connection with the Registration
Statement. This opinion is based on various factual assumptions, including the
facts set forth in the Registration Statement concerning the business,
properties and governing documents of the Partnership, Arden Realty, Inc., a
Maryland corporation, and their subsidiaries.
In our capacity as tax counsel to the Partnership, 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. For the purposes of our opinion, we
have not made an independent investigation or audit of the facts set forth in
the above referenced documents. In our examination, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures thereon, 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 within any state.
<PAGE> 2
Based on such facts, assumptions and representations, it is our opinion
that the statements in the Registration Statement set forth under the caption
"Federal Income Tax Consequences" are, subject to the limitations set forth
therein, the material United States federal income tax consequences relevant to
holders of the Partnership's Securities pursuant to the Registration Statement.
No opinion is expressed as to any matter not discussed herein.
This opinion is 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 may affect the
conclusions stated herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the captions "Federal
Income Tax Consequences" and "Legal Matters" in the Registration Statement. In
giving this consent, we do not hereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933
or the rules or regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE> 1
EXHIBIT 10.40
================================================================================
ARDEN REALTY LIMITED PARTNERSHIP
--------------------------------
$200,000,000 8.875% SENIOR NOTES DUE 2005
$50,000,000 9.150% SENIOR NOTES DUE 2010
of ARDEN REALTY LIMITED PARTNERSHIP
--------------------------------
--------------------------------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF MARCH 17, 2000
--------------------------------
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY
CHASE SECURITIES INC.
BANC ONE CAPITAL MARKETS, INC.
A. G. EDWARDS & SONS, INC.
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of March 17, 2000, by and between Arden Realty Limited
Partnership, a Maryland limited partnership (the "PARTNERSHIP"), and Lehman
Brothers Inc., Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc.,
Chase Securities Inc., Banc One Capital Markets, Inc. and A. G. Edwards & Sons,
Inc. (collectively, the "INITIAL PURCHASERS"), which have agreed to purchase the
Partnership's 8.875% Senior Notes due 2005 and 9.150% Senior Notes due 2010
(together, the "SENIOR NOTES"), pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated March
14, 2000, (the "PURCHASE AGREEMENT"), by and among the Partnership and the
Initial Purchasers. To induce the Initial Purchasers to purchase the Senior
Notes, the Partnership has agreed to provide the registration rights relating to
the Senior Notes set forth in this Agreement. The execution and delivery of this
Agreement is a condition to the obligations of the Initial Purchasers set forth
in Section 7 of the Purchase Agreement. Capitalized terms used herein and not
otherwise defined shall have the meaning assigned to them in the Indenture,
dated the Closing Date, between the Partnership and The Bank of New York, as
Trustee, relating to the Notes, as such indenture is amended or supplemented
from time to time (the "INDENTURE").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
BUSINESS DAY: Any day other than a Saturday, Sunday or day on which
commercial banks in the City of New York are authorized or required by law,
regulation or executive order to remain closed.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the New Senior
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) the delivery by the Partnership to the Registrar
under the
1
<PAGE> 3
Indenture of New Senior Notes in the same aggregate principal amount as the
aggregate principal amount of Senior Notes tendered by Holders thereof pursuant
to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Partnership of a
principal amount of New Senior Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of Senior Notes that are tendered by such Holders in connection with such
exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers propose
to sell the Senior Notes to (i) certain "qualified institutional buyers," as
such term is defined in Rule 144A under the Act, (ii) outside the United States
to "non-U.S. persons," as such term is defined under Regulation S of the Act in
transactions meeting the requirements of Rule 904 of Regulation S under the Act
and (iii) a limited number of "institutional accredited investors," as defined
in Rule 501(a)(1), (2), (3) or (7) of the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
GENERAL PARTNER: Arden Realty, Inc., a Maryland corporation.
HOLDERS: As defined in Section 2 hereof.
NEW SENIOR NOTES: The Partnership's new 8.875% Senior Notes due 2005 and
9.150% Senior Notes due 2010 to be issued pursuant to the Indenture: (i) in the
Exchange Offer or (ii) as contemplated by Section 4 hereof.
NOTES: The Senior Notes and the New Senior Notes.
PERSON: An individual, partnership, limited liability company,
corporation, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
2
<PAGE> 4
REGISTRATION STATEMENT: Any registration statement of the Partnership
relating to (a) an offering of New Senior Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) that is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
RULE 144: Rule 144 promulgated under the Act.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each (A) Senior Note, until the earliest
to occur of (i) the date on which such Senior Note is exchanged in the Exchange
Offer for a New Senior Note which is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (ii) the date on which such Senior Note has been disposed of in
accordance with a Shelf Registration Statement (and the purchasers thereof have
been issued New Senior Notes), or (iii) the date on which such Senior Note is
distributed to the public pursuant to Rule 144 under the Act and each (B) New
Senior Note held by a Broker-Dealer until the date on which such New Senior Note
is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law or policy of the Commission (after the procedures set forth in
Section 6(a)(i) below have been complied with), the Partnership shall (i) cause
the Exchange Offer Registration Statement to be filed with the Commission as
soon as practicable after the Closing Date, but in no event later than 90 days
after the Closing Date (such 90th day being the "FILING DEADLINE"), (ii) use its
best efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 180 days
after the Closing Date (such 180th day being the "EFFECTIVENESS DEADLINE"),
(iii) in connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
it to become effective, (B) file, if applicable, a post-effective amendment to
such Exchange Offer Registration Statement pursuant to Rule 430A under the Act,
(C) file the appropriate forms under the Exchange Act to register the New Senior
Notes under the Exchange Act and (D) cause all necessary filings, if any, in
connection with the registration and qualification of the New Senior Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange
3
<PAGE> 5
Offer, and (iv) upon the effectiveness of such Exchange Offer Registration
Statement, use its best efforts to commence and Consummate the Exchange Offer.
The Exchange Offer shall be on the appropriate form permitting (i) registration
of the New Senior Notes to be offered in exchange for the Senior Notes that are
Transfer Restricted Securities and (ii) resales of New Senior Notes by
Broker-Dealers that tendered into the Exchange Offer Senior Notes that such
Broker-Dealers acquired for their own account as a result of market making
activities or other trading activities (other than Senior Notes acquired
directly from the Partnership or any of its Affiliates) as contemplated by
Section 3(c) below and shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required to be filed therewith.
(b) The Partnership shall use its best efforts to cause the Exchange
Offer Registration Statement to be effective continuously, and shall keep the
Exchange Offer open for a period of not less than the minimum period required
under applicable federal and state securities laws to Consummate the Exchange
Offer; provided, however, that in no event shall such period be less than 20
Business Days. The Partnership shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the New
Senior Notes shall be included in the Exchange Offer Registration Statement. The
Partnership shall use its best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter (such 30th day being the "CONSUMMATION DEADLINE").
(c) The Partnership shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Broker-Dealer who holds Transfer Restricted Securities
that were acquired for the account of such Broker-Dealer as a result of
market-making activities or other trading activities (other than Senior Notes
acquired directly from the Partnership or any Affiliate of the Partnership), may
exchange such Transfer Restricted Securities pursuant to the Exchange Offer;
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any New Senior
Notes received by such Broker-Dealer in the Exchange Offer, and the Partnership
shall permit the use of the Prospectus contained in the Exchange Offer
Registration Statement by such Broker-Dealer to satisfy such prospectus delivery
requirement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales by such Broker-Dealers that the
Commission may require in order to permit such sales pursuant thereto, but such
"Plan of Distribution" shall not name any such Broker-Dealer or disclose the
amount of Transfer Restricted Securities held by any such Broker-Dealer, except
to the extent required by the Commission as a result of a change in policy,
rules or regulations after the date of this Agreement. See the Shearman &
Sterling no-action letter (available July 2, 1993).
To the extent necessary to ensure that the prospectus contained in the
Exchange Offer Registration Statement is available for sales of New Senior Notes
by Broker-Dealers, the Partnership agrees to use its best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented,
amended and current as required by and subject to the provisions of Section 6(a)
and (c) hereof and in conformity with the requirements of this Agreement, the
Act and the policies, rules and regulations of the Commission as announced from
time to time, for a period of one year from the Consummation Deadline or such
shorter period as
4
<PAGE> 6
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. The Partnership shall
provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, and in no event later than one day after
such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law or policy of the Commission (after the Partnership has complied
with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Partnership within 20 days
following the Consummation of the Exchange Offer that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) such Holder may not resell the New Senior Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a Broker-Dealer
and holds Senior Notes acquired directly from the Partnership or any of its
Affiliates, then the Partnership shall:
(x) cause to be filed, on or prior to 30 days after the earlier of (i) the
date on which the Partnership determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Partnership receives the notice specified in clause (a)(ii) above,
(such earlier date, the "FILING DEADLINE"), a shelf registration statement
pursuant to Rule 415 under the Act (which may be an amendment to the Exchange
Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating to
all Transfer Restricted Securities, and
(y) shall use its best efforts to cause such Shelf Registration Statement to
become effective on or prior to 90 days after the Filing Deadline (such 90th day
the "EFFECTIVENESS DEADLINE").
If, after the Partnership has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Partnership
is required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law or
policy of the Commission (i.e., clause (a)(i) above), then the filing of the
Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above; provided that, in such event, the Partnership
shall remain obligated to meet the Effectiveness Deadline set forth in clause
(y).
To the extent necessary to ensure that the Shelf Registration Statement
is available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Partnership
shall use its best efforts to keep any Shelf Registration Statement required by
this Section 4(a) continuously effective, supplemented, amended and current as
required by and subject to the provisions of Sections 6(b) and (c) hereof and in
conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i)) following
the Closing Date, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto or become eligible for resale pursuant to Rule 144 without
volume restrictions.
5
<PAGE> 7
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Partnership in writing, within 20 days after receipt of a request therefor,
the information specified in Item 507 or 508 of Regulation S-K, as applicable,
of the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to (i) notify the Partnership as
promptly as practicable of any inaccuracy or change in information previously
furnished by such Holder to the Partnership and (ii) promptly furnish additional
information required to correct and update any previously furnished information
or any other information required to be disclosed in order to make the
information previously furnished to the Partnership by such Holder not
materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within 2 days by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective within 5 days of filing such
post-effective amendment to such Registration Statement (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the
Partnership hereby agrees to pay to each Holder of Transfer Restricted
Securities affected thereby liquidated damages in an amount equal to $.05 per
week per $1,000 in principal amount of Transfer Restricted Securities held by
such Holder for each week or portion thereof that the Registration Default
continues for the first 90-day period immediately following the occurrence of
such Registration Default. The amount of the liquidated damages shall increase
by an additional $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of liquidated
damages of $.25 per week per $1,000 in principal amount of Transfer Restricted
Securities; provided that the Partnership shall in no event be required to pay
liquidated damages for more than one Registration Default at any given time.
Notwithstanding anything to the contrary set forth herein, (1) upon filing of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (i) above, (2) upon the effectiveness of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon Consummation of the
Exchange Offer, in the case of (iii) above, or (4) upon the filing of a
post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of (iv) above, the liquidated damages
payable with respect to the Transfer Restricted Securities as a result of such
clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully
6
<PAGE> 8
set forth in the Indenture and the Notes. Notwithstanding the fact that any
securities for which liquidated damages are due cease to be Transfer Restricted
Securities, all obligations of the Partnership to pay liquidated damages with
respect to such securities shall survive until such time as such obligations
with respect to such securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Partnership shall (x) comply with all applicable provisions
of Section 6(c) below, (y) use its best efforts to effect such exchange and to
permit the resale of New Senior Notes by Broker-Dealers that tendered in the
Exchange Offer Senior Notes that such Broker-Dealers acquired for their own
accounts as a result of their market making activities or other trading
activities (other than Senior Notes acquired directly from the Partnership or
any of its Affiliates) being sold in accordance with the intended method or
methods of distribution thereof, and (z) comply with all of the following
provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange Offer,
that in the reasonable opinion of counsel to the Partnership or counsel to the
Initial Purchasers raises a substantial question as to whether the Exchange
Offer is permitted by applicable federal law, the Partnership hereby agrees to
seek a no-action letter or other favorable decision from the Commission allowing
the Partnership to Consummate an Exchange Offer for such Transfer Restricted
Securities. The Partnership hereby agrees to pursue the issuance of such a
decision to the Commission staff level. In connection with the foregoing, the
Partnership hereby agrees to take all such other actions as may be requested by
the Commission or otherwise required in connection with the issuance of such
decision, including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the Commission staff an
analysis prepared by counsel to the Partnership setting forth the legal bases,
if any, upon which such counsel has concluded that such an Exchange Offer should
be permitted and (C) diligently pursuing a resolution (which need not be
favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation, any
Holder who is a Broker-Dealer) shall furnish, upon the request of the
Partnership, prior to the Consummation of the Exchange Offer, a written
representation to the Partnership (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an Affiliate of the Partnership, (B) it is not engaged
in, and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the New Senior Notes to be
issued in the Exchange Offer and (C) it is acquiring the New Senior Notes in its
ordinary course of business. As a condition to its participation in the Exchange
Offer, each Holder using the Exchange Offer to participate in a distribution of
the New Senior Notes shall acknowledge and agree that, if the resales are of New
Senior Notes obtained by such Holder in exchange for Senior Notes acquired
directly from the Partnership or an Affiliate thereof, it (1) could not, under
Commission policy as in effect on the date of this Agreement, rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc. (available
June 5,
7
<PAGE> 9
1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
1993, and similar no-action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Act in connection with
a secondary resale transaction and that such a secondary resale transaction must
be covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Partnership shall provide a supplemental letter to the Commission
(A) stating that the Partnership is registering the Exchange Offer in reliance
on the position of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available
June 5, 1991) as interpreted in the Commission's letter to Shearman & Sterling
dated July 2, 1993, and, if applicable, any no-action letter obtained pursuant
to clause (i) above, (B) including a representation that the Partnership has not
entered into any arrangement or understanding with any Person to distribute the
New Senior Notes to be received in the Exchange Offer and that, to the best of
the Partnership's information and belief, each Holder participating in the
Exchange Offer is acquiring the New Senior Notes in its ordinary course of
business and has no arrangement or understanding with any Person to participate
in the distribution of the New Senior Notes received in the Exchange Offer and
(C) any other undertaking or representation required by the Commission as set
forth in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Partnership shall:
(i) comply with all the provisions of Section 6(c) below and use its
best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Partnership pursuant to Section 4(b) hereof), and pursuant thereto the
Partnership will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required to be filed
therewith and be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of Senior
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, New Senior Notes having an aggregate principal amount equal to the
aggregate principal amount of Senior Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Partnership for cancellation; the
Partnership shall register New Senior Notes on the Shelf Registration Statement
for this purpose and issue the New Senior Notes to the purchaser(s) of
securities subject to the Shelf Registration Statement in the names as such
purchaser(s) shall designate.
8
<PAGE> 10
(c) General Provisions. In connection with any Registration Statement
and any related Prospectus required by this Agreement, the Partnership shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for the
period specified in Section 3 or 4 of this Agreement, as applicable. Upon the
occurrence of any event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain an untrue statement of material fact
or omit to state any material fact necessary to make the statements therein not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Partnership shall file promptly an appropriate amendment to such Registration
Statement curing such defect, and, if Commission review is required, use its
best efforts to cause such amendment to be declared effective as soon as
practicable. Notwithstanding the foregoing, at any time after Consummation of
the Exchange Offer, the Partnership may allow the Shelf Registration Statement
to cease to become effective and usable if (x) the General Partner of the
Partnership determines in good faith that it is in the best interests of the
Partnership not to disclose the existence of or facts surrounding any proposed
or pending material events involving the Partnership, and the Partnership
notifies the Holders within two Business Days after the Board of Directors of
the General Partner makes such determination, or (y) the Prospectus contained in
the Shelf Registration Statement contains an untrue statement of material fact
or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that the two-year period referred to in Section 4(a) hereof
during which the Shelf Registration Statement is required to be effective and
usable shall be extended by the number of days during which such Registration
Statement was not effective or usable pursuant to the foregoing provisions;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully
with Rules 424, 430A and 462, as applicable, under the Act in a timely manner;
and comply with the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement to the
Prospectus;
(iii) advise each selling Holder promptly and confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any applicable Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement
under the Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or sale in
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any jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, (D) of the existence of any fact or the happening of any event that
makes any statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any additions to or
changes in the Registration Statement in order to make the statements therein
not misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Partnership shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement
or post-effective amendment to the Registration Statement or related Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(v) furnish to each selling Holder, their counsel and the managing
underwriters, if any, in connection with such exchange or sale, if any, before
filing with the Commission, copies of any Registration Statement or any
Prospectus included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents incorporated by
reference), which documents will be subject to the review and comment of such
Holders, their counsel and the managing underwriters, if any, in connection with
such sale, if any, for a period of at least five Business Days, and the
Partnership will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which such selling
Holders of the Transfer Restricted Securities, their counsel and the managing
underwriters, if any, covered by such Registration Statement in connection with
such exchange or sale, if any, shall reasonably object within five Business Days
after the receipt thereof;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus, provide
copies of such document to each selling Holder, their counsel and the managing
underwriters, if any, in connection with such exchange or sale, if any, make the
Partnership's representatives available for discussion of such document and
other customary due diligence matters, and include such information in such
document prior to the filing thereof as such selling Holders, their counsel and
the managing underwriters, if any, may reasonably request;
(vii) make available, at reasonable times, for inspection by each
selling Holder and managing underwriter, if any, and any attorney or accountant
retained by such
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selling Holders or managing underwriters, if any, all financial and other
records, pertinent corporate documents of the Partnership and cause the
Partnership's officers, directors and employees to supply all information
reasonably requested by any such selling Holder, managing underwriter, attorney
or accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and prior to
its effectiveness; provided, however, that each such party shall be required to
maintain in confidence and not to disclose to any other person any information
or records reasonably designated by the Partnership as being confidential, until
such time as (A) such information becomes a matter of public record (whether by
virtue of its inclusion in such Registration Statement or otherwise), or (B)
such person shall be required to disclose such information pursuant to the
subpoena or order of any court or governmental agency or body having
jurisdiction over the matter (subject to the requirements of such subpoena or
order, and only after such person shall have given the Partnership prompt prior
written notice of such requirement), or (C) such information is required to be
set forth in such Registration Statement or the Prospectus included therein or
in an amendment to such Registration Statement or an amendment or supplement to
such Prospectus in order that such Registration Statement, Prospectus, amendment
or supplement, as the case may be, does not contain an untrue statement of
material fact or omit to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(viii) if requested by any selling Holders, their counsel and the
managing underwriters, if any, in connection with such exchange or sale, if any,
promptly include in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as such
selling Holders, their counsel and the managing underwriters, if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer Restricted
Securities, and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Partnership is
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(ix) furnish to each selling Holder and managing underwriter, if
any, in connection with such exchange or sale, if any, without charge, at least
one copy of the Registration Statement, as first filed with the Commission, and
of each amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by reference);
(x) deliver to each selling Holder and managing underwriter, if any,
without charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such Holders or managing
underwriters reasonably may request; the Partnership hereby consents to the use
(in accordance with law) of the Prospectus and any amendment or supplement
thereto by each selling Holder in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(xi) upon the request of any selling Holder or managing
underwriters, if any, (A) make such representations and warranties as may be
reasonably requested by any Holder or managing underwriter in connection with
any sale or resale pursuant to any
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applicable Registration Statement, (B) obtain opinions of counsel to the
Partnership and updates thereof (which may be in the form of a reliance letter)
in form and substance reasonably satisfactory to the managing underwriters, if
any, and the selling Holders, addressed to each selling Holder and the
underwriters, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such underwriters, (C) obtain "cold comfort" letters and updates
thereof in form and substance reasonably satisfactory to the managing
underwriters or selling Holders from the independent certified public
accountants of the Partnership (and, if necessary, any other independent
certified public accountants of any business acquired by the Partnership for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the selling
Holders and each underwriter, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings and such other matters as reasonably requested by
such selling Holders or managing underwriters in accordance with Statement on
Auditing Standards No. 72 and (D) take all such other actions in connection
therewith in order to expedite or facilitate the disposition of the Transfer
Restricted Securities pursuant to any applicable Registration Statement
contemplated by this Agreement. In such connection, the Partnership shall, upon
request of any selling Holder, furnish (or in the case of paragraphs (B) and
(C), use its best efforts to cause to be furnished) to each selling Holder, upon
Consummation of the Exchange Offer or upon the effectiveness of the Shelf
Registration Statement, as the case may be, a certificate, dated such date,
signed on behalf of the Partnership by (x) the President or any Vice President
of its General Partner and (y) a principal financial or accounting officer of
the Partnership's General Partner, confirming, as of the date thereof, the
matters set forth in Section 7(i) of the Purchase Agreement and such other
similar matters as such Holders may reasonably request;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in connection
with the registration and qualification of the Transfer Restricted Securities
under the securities or Blue Sky laws of such jurisdictions as the selling
Holders may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that the Partnership shall not be required to register or
qualify as a foreign corporation where it is not now so qualified or to take any
action that would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to register
such Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
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(xiv) use its best efforts to cause the disposition of the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the disposition
of such Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture with
printed certificates for the Transfer Restricted Securities which are in a form
eligible for deposit with the Depository Trust Company, Euroclear or
Clearstream, as applicable;
(xvi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to any applicable Registration Statement, as soon
as practicable, a consolidated earnings statement meeting the requirements of
Rule 158 (which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is defined
in paragraph (c) of Rule 158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and
(xviii) provide promptly to each Holder each document filed with the
Commission pursuant to the requirements of Section 13 or Section 15(d) of the
Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Partnership of the existence of any
fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Partnership that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus (in each case, the
"RECOMMENCEMENT DATE"). Each Holder receiving a Suspension Notice hereby agrees
that it will either (i) destroy any Prospectuses, other than permanent file
copies, then in such Holder's possession which have been replaced by the
Partnership with more recently dated Prospectuses or (ii) deliver to the
Partnership (at the Partnership's expense) all copies, other than permanent file
copies, then in such Holder's possession of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of the
Suspension Notice. The time period regarding the effectiveness of such
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Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by a number of days equal to the number of days in the period from
and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Partnership's performance of or
compliance with this Agreement will be borne by the Partnership, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing certificates for the
New Senior Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Partnership and the Holders of Transfer
Restricted Securities; (v) all application and filing fees in connection with
listing the New Senior Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Partnership
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Partnership will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Partnership.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Partnership will reimburse
the Initial Purchasers and the Holders of Transfer Restricted Securities who are
tendering Senior Notes in the Exchange Offer and/or selling or reselling Senior
Notes or New Senior Notes pursuant to the "Plan of Distribution" contained in
the Exchange Offer Registration Statement or the Shelf Registration Statement,
as applicable, for the reasonable fees and disbursements of not more than one
counsel, who shall be Hogan & Hartson L.L.P., unless another firm shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared. Such Holders shall be responsible for any and all other out-of-pocket
expenses of the Holders incurred in connection with the registration of the
Notes.
SECTION 8. INDEMNIFICATION
(a) The Partnership agrees to indemnify and hold harmless each Holder,
its directors, officers and each Person, if any, who controls such Holder
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act),
from and against any and all losses, claims, damages, liabilities, judgments,
(including without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action that
could give rise to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto) provided by the Partnership to any
Holder or any prospective purchaser of New Senior Notes, or caused by any
omission or
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alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the
Partnership by any of the Holders; provided, however, that (i) the Partnership
will not be liable in any case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission made therein in reliance upon and in conformity
with written information furnished to the Partnership by or on behalf of any
such Holder or underwriter or managing underwriter specifically for inclusion
therein, (ii) the Partnership shall not be liable to any indemnified party under
this Section 8 with respect to any Shelf Registration Statement or Prospectus to
the extent that any such loss, claim, damage or liability of such indemnified
party results solely from an untrue statement of material fact contained in, or
the omission of a material fact from, the Shelf Registration Statement or
Prospectus which untrue statement or omission was corrected in an amended or
supplemented Shelf Registration Statement or Prospectus, if the person alleging
such loss, claim, damage or liability was not sent or given, at or prior to the
written confirmation of such sale a copy of the amended or supplemented Shelf
Registration Statement or Prospectus if the Partnership had previously furnished
copies thereof to such indemnified party and if such delivery of a Prospectus is
finally judicially determined to be required by the Act and was not so made and
(iii) the Partnership will not be liable to any indemnified party under this
Section 8 with respect to any Shelf Registration Statement or Prospectus to the
extent that any such loss, claim, damage or liability of such indemnified party
results (A) from the use of a Shelf Registration Statement during a period when
a stop order has been issued in respect thereof or any proceedings for that
purpose have been initiated or (B) from the use of the Prospectus during a
period when the use of the Prospectus has been suspended in accordance with
Section 6(c)(iii)(C) hereof, provided, in each case, that Holders received prior
notice of such stop order, initiation of proceedings or suspension.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Partnership and its directors
and officers, and each person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Partnership, to the
same extent as the foregoing indemnity from the Partnership set forth in section
(a) above, but only with reference to information relating to such Holder
furnished in writing to the Partnership by such Holder expressly for use in any
Registration Statement. In no event shall any Holder, its directors, officers or
any Person who controls such Holder be liable or responsible for any amount in
excess of the amount by which the total amount received by such Holder with
respect to its sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages that such Holder, its
directors, officers or any Person who controls such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any
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<PAGE> 17
action in respect of which indemnity may be sought pursuant to both Sections
8(a) and 8(b), a Holder shall not be required to assume the defense of such
action pursuant to this Section 8(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such counsel,
except as provided below, shall be at the expense of the Holder). Any
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Partnership, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section
8 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Partnership, on the
one hand, and the Holders, on the other hand, from their sale of Transfer
Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Partnership, on the one hand, and of the Holder, on the
other hand, in connection with the statements or omissions which
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<PAGE> 18
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative fault of the
Partnership, on the one hand, and of the Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Partnership, on the one
hand, or by the Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and judgments referred to above shall be
deemed to include, subject to the limitations set forth in the second paragraph
of Section 8(a), any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
The Partnership and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 8, no Holder, its
directors, its officers or any Person, if any, who controls such Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total received by such Holder with respect to the sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities plus (ii) the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(c) are several in
proportion to the respective principal amount of Transfer Restricted Securities
held by each Holder hereunder and not joint.
SECTION 9. RULE 144A AND RULE 144
The Partnership agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Partnership (i) is not subject to Section 13 or 15(d) of the Exchange Act, to
make available, upon request of any Holder, to such Holder or beneficial owner
of Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
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SECTION 10. MISCELLANEOUS
(a) Remedies. The Partnership acknowledges and agrees that any failure
by the Partnership to comply with its obligations under Sections 3 and 4 hereof
may result in material irreparable injury to the Initial Purchasers or the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such relief
as may be required to specifically enforce the Partnership's obligations under
Sections 3 and 4 hereof. The Partnership further agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Partnership will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Partnership has
not previously entered into any agreement granting any registration rights with
respect to its debt securities to any Person. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Partnership's securities under any
agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Partnership has obtained the written
consent of Holders of all outstanding Transfer Restricted Securities and (ii) in
the case of all other provisions hereof, the Partnership has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities (excluding Transfer Restricted Securities held by
the Partnership or its Affiliates). Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose Transfer Restricted Securities are being tendered
pursuant to the Exchange Offer, and that does not affect directly or indirectly
the rights of other Holders whose Transfer Restricted Securities are not being
tendered pursuant to such Exchange Offer, may be given by the Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities
subject to such Exchange Offer.
(d) Third-Party Beneficiary. The Holders shall be third-party
beneficiaries to the agreements made hereunder between the Partnership, on the
one hand, and the Initial Purchasers, on the other hand, and shall have the
right to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the Indenture;
and
(ii) if to the Partnership:
18
<PAGE> 20
Arden Realty Limited Partnership
11601 Wilshire Boulevard, Fourth Floor
Los Angeles, California 90025
Telecopier No.: (310) 966-2699
Attention: Diana M. Laing
With a copy to:
Latham & Watkins
650 Town Center Drive, 20th Floor
Costa Mesa, California 92626-1918
Telecopier No.: (714) 755-8290
Attention: William J. Cernius, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity,
19
<PAGE> 21
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
20
<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ARDEN REALTY LIMITED PARTNERSHIP
By: Arden Realty, Inc., its general partner
By: /s/ DIANA M. LAING
-----------------------------------
Name: Diana M. Laing
Title: Executive Vice President
and Chief Financial Officer
Accepted on behalf of all Initial Purchasers:
LEHMAN BROTHERS INC.
By: /s/ JAMES W. MERLI
---------------------------------------------
Name: James W. Merli
Title: Managing Director
<PAGE> 1
EXHIBIT 12.1
ARDEN REALTY LIMITED PARTNERSHIP
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
ARDEN REALTY LIMITED PARTNERSHIP
------------------------------------------------------
FOR THE PERIOD
OCTOBER 9,
FOR THE YEARS ENDED DECEMBER 31, 1996 TO
-------------------------------------- DECEMBER 31,
1999 1998 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Earnings Available to Cover Fixed Charges:
Income before extraordinary items $102,393 $ 95,794 $ 44,286 $ 8,426
Add: Interest Expense 60,239 43,403 19,511 1,280
-------- -------- -------- --------
Total Earnings Available to Cover Fixed Charges $162,632 $139,197 $ 63,797 $ 9,706
======== ======== ======== ========
Fixed Charges:
Interest Expense 60,239 43,403 19,511 1,280
Interest Capitalized 9,587 8,920 1,178 57
Preferred Distributions 1,354 - - -
-------- -------- -------- --------
Total Fixed Charges $ 71,180 $ 52,323 $ 20,689 $ 1,337
======== ======== ======== ========
Ratio of Earnings to Fixed Charges 2.28x 2.66x 3.08x 7.26x
======== ======== ======== ========
</TABLE>
<TABLE>
ARDEN PREDECESSORS
----------------------------
FOR THE PERIOD
JANUARY 1, FOR THE YEAR
1996 TO ENDED
OCTOBER 8, DECEMBER 31,
1996 1995
-------- --------
<S> <C> <C>
Earnings Available to Cover Fixed Charges:
Income before extraordinary items ($ 4,917) ($ 576)
Add: Interest Expense 24,521 5,537
-------- --------
Total Earnings Available to Cover Fixed Charges $ 19,604 $ 4,961
======== ========
Fixed Charges:
Interest Expense 24,521 5,537
Interest Capitalized - 8
Preferred Distributions - -
-------- --------
Total Fixed Charges $ 24,521 $ 5,545
======== ========
Ratio of Earnings to Fixed Charges 0.80x 0.89x
======== ========
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED YEAR ENDED DECEMBER 31,
--------------- -------------------------------------------------------------
MARCH
31, 1998 1997 1996 1995 1994 1993
--------------- ---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges 1.73 1.92 1.77 2.25 2.89 3.47
Ratio of Earnings to Combined Fixed Charges 1.53 1.61 1.60 2.25 2.89 3.47
Ratio of FFO to Fixed Charges 2.54 2.87 2.78 3.35 3.21 7.26
Ratio of FFO to Combined Fixed Charges 2.24 2.40 2.52 3.35 3.21 7.26
</TABLE>
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF
ARDEN REALTY LIMITED PARTNERSHIP
NAME JURISDICTIONS
- ---- -------------
Activity Business Center Limited Partnership Delaware
Arden Realty Finance III, LLC Delaware
Arden Realty Finance IV, LLC Delaware
Arden Realty Finance V, LLC Delaware
Arden Realty Finance VI, LLC Delaware
Arden Realty Finance Partnership, L.P. California
145 South Fairfax, LLC California
Westwood Center* California
*Westwood Center is a limited partnership.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4 dated April 21, 2000) and related Prospectus of
Arden Realty Limited Partnership for the Offer to Exchange $200,000,000 8.875%
Senior Notes due 2005 for any and all unregistered 8.875% Senior Notes due 2005
and $50,000,000 9.150% Senior Notes due 2010 for any and all unregistered 9.150%
Senior Notes due 2010 and to the incorporation by reference therein of our
report dated January 31, 2000, with respect to the consolidated financial
statements and schedules of Arden Realty Limited Partnership.
/s/ Ernst & Young LLP
Los Angeles, California
April 20, 2000
<PAGE> 1
EXHIBIT 25.1
===============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
ARDEN REALTY
LIMITED PARTNERSHIP
(Exact name of obligor as specified in its charter)
Maryland 95-4599813
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, California 90025
(Address of principal executive offices) (Zip code)
---------------------------
8.875% Senior Notes due 2005
9.150% Senior Notes due 2010
(Title of the indenture securities)
===============================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- ------------------------------------------ ------------------------------------
Name Address
- ------------------------------------------ ------------------------------------
<TABLE>
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York, N.Y.
New York 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to
exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. 33-6215, Exhibits
1a and 1b to Form T-1 filed with Registration Statement No.
33-21672 and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
-2-
<PAGE> 3
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 19th day of April, 2000.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
---------------------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE> 5
EXHIBIT 7
- -----------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1999, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
In Thousands
--------------
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency $3,247,576
and coin.................................
Interest-bearing balances.................. 6,207,543
Securities:
Held-to-maturity securities................ 827,248
Available-for-sale securities.............. 5,092,464
Federal funds sold and Securities purchased 5,306,926
under agreements to resell.................
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............37,734,000
LESS: Allowance for loan and
lease losses............575,224
LESS: Allocated transfer risk
reserve........................13,278
Loans and leases, net of unearned income, 37,145,498
allowance, and reserve...................
Trading Assets............................... 8,573,870
Premises and fixed assets (including 723,214
capitalized leases)........................
Other real estate owned...................... 10,962
Investments in unconsolidated subsidiaries 215,006
and associated companies...................
Customers' liability to this bank on 682,590
acceptances outstanding....................
Intangible assets............................ 1,219,736
Other assets................................. 2,542,157
-----------
Total assets................................. $71,794,790
===========
LIABILITIES
Deposits:
In domestic offices........................ $27,551,017
Noninterest-bearing..............11,354,172
Interest-bearing.................16,196,845
In foreign offices, Edge and Agreement 27,950,004
subsidiaries, and IBFs...................
Noninterest-bearing.................639,410
Interest-bearing.................27,310,594
Federal funds purchased and Securities sold
under agreements to repurchase............. 1,349,708
Demand notes issued to the U.S. Treasury..... 300,000
Trading liabilities.......................... 2,339,554
Other borrowed money:
With remaining maturity of one year or less 638,106
With remaining maturity of more than one 449
year through three years.................
With remaining maturity of more than three 31,080
years....................................
Bank's liability on acceptances executed and 684,185
outstanding................................
Subordinated notes and debentures............ 1,552,000
Other liabilities............................ 3,704,252
-----------
Total liabilities............................ 66,100,355
-----------
EQUITY CAPITAL
Common stock................................. 1,135,284
Surplus...................................... 866,947
Undivided profits and capital reserves....... 3,765,900
Net unrealized holding gains (losses) on
available-for-sale securities.............. (44,599)
Cumulative foreign currency translation
adjustments................................ (29,097)
-----------
Total equity capital......................... 5,694,435
-----------
Total liabilities and equity capital......... $71,794,790
===========
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi Directors
Alan R. Griffith
Gerald L. Hassell
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM S-4,
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1999 JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<CASH> 7,056 4,578 0
<SECURITIES> 0 0 0
<RECEIVABLES> 52,010 42,304 0
<ALLOWANCES> (4,404) (4,036) 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 0 0
<PP&E> 2,588,548 2,323,910 0
<DEPRECIATION> (146,384) (84,312) 0
<TOTAL-ASSETS> 2,572,904 2,333,866 0
<CURRENT-LIABILITIES> 50,555 35,720 0
<BONDS> 1,029,656 840,377 0
0 0 0
50,000 0 0
<COMMON> 0 0 0
<OTHER-SE> 1,439,740 1,454,844 0
<TOTAL-LIABILITY-AND-EQUITY> 2,572,904 2,333,866 0
<SALES> 0 0 0
<TOTAL-REVENUES> 337,853 281,067 133,817
<CGS> 0 0 0
<TOTAL-COSTS> (177,874) (144,656) (71,591)
<OTHER-EXPENSES> 2,822 3,515 1,630
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 60,239 43,403 19,511
<INCOME-PRETAX> 102,393 95,794 44,286
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 102,393 95,794 44,286
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 102,393 95,794 44,286
<EPS-BASIC> 1.54 1.55 1.44
<EPS-DILUTED> 1.54 1.55 1.43
</TABLE>
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
ARDEN REALTY LIMITED PARTNERSHIP
OFFER TO EXCHANGE ITS
$200,000,000 8.875% SENIOR NOTES DUE 2005 FOR ANY AND ALL
UNREGISTERED 8.875% SENIOR NOTES DUE 2005
AND
$ 50,000,000 9.150% SENIOR NOTES DUE 2010 FOR ANY AND ALL
UNREGISTERED 9.150% SENIOR NOTES DUE 2010
PURSUANT TO THE PROSPECTUS DATED _____________, 2000
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MAY __, 2000, THE EXPIRATION DATE, UNLESS THE EXCHANGE OFFER IS
EXTENDED BY ARDEN REALTY LIMITED PARTNERSHIP. TENDERED NOTES MAY BE WITHDRAWN
PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
The exchange agent for the exchange offer is:
THE BANK OF NEW YORK
Deliver to:
<TABLE>
<CAPTION>
By Registered or Certified Mail: By Hand or Overnight Delivery: By Facsimile:
(for eligible institutions only)
<S> <C> <C>
The Bank of New York The Bank of New York (212) 815-6339
101 Barclay Street, Floor 21 West 101 Barclay Street, Floor 21 West Attn: Kin Lau
New York, New York 10286 Corporate Trust Services Window
Attn: Kin Lau New York, New York 10286 Confirm by Telephone:
Reorganization Section Attn: Kin Lau (212) 815-3750
Reorganization Section
</TABLE>
Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or overnight delivery service. Facsimile
transmission is available only to "eligible institutions" which include member
firms of a registered national securities exchange or the National Association
of Securities Dealers, Inc., commercial banks or trust companies having an
office or correspondent in the United States or eligible guarantor institutions
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS
PROVIDED ABOVE OR TRANSMISSION TO A FACSIMILE NUMBER OTHER THAN THE NUMBER
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
If you wish to tender your unregistered senior notes for registered
senior notes, you must validly tender (and not withdraw) your unregistered notes
to the exchange agent prior to the expiration date. You should use this letter
of transmittal if you are delivering unregistered note certificates herewith or
if you are delivering unregistered notes by book-entry transfer to an account
maintained by the exchange agent at the Depository Trust Company, or DTC,
pursuant to the procedures set forth in the prospectus under the heading "The
Exchange Offer - Procedures for Tendering." Delivery of documents to DTC does
not constitute delivery to the exchange agent.
If your unregistered notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and you wish to tender,
you should promptly contact and instruct the registered holder to tender on your
behalf.
If you desire to tender your unregistered notes for exchange and your
unregistered notes are not immediately available or you cannot deliver your
unregistered notes, this letter of transmittal and all other required documents
to the exchange agent on or prior to the expiration date, you must tender your
unregistered notes pursuant to the guaranteed delivery procedures set forth in
the section of the prospectus entitled "The Exchange Offer--Guaranteed Delivery
Procedures." See Instruction 1.
<PAGE> 2
YOUR SIGNATURE MUST BE PROVIDED BELOW. PLEASE CAREFULLY READ THE ENTIRE
LETTER OF TRANSMITTAL, INCLUDING THE INSTRUCTIONS, BEFORE COMPLETING THIS
LETTER.
To properly complete this letter of transmittal, you must complete the
appropriate boxes below, sign the letter of transmittal and complete the
Substitute Form W-9.
DESCRIPTION OF UNREGISTERED NOTES TENDERED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
FOR 8.875% SENIOR NOTES DUE 2005
- -------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
AGGREGATE PRINCIPAL
PRINCIPAL AMOUNT TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED AMOUNT FOR EXCHANGE
HOLDER(S) OF UNREGISTERED NOTE(S) CERTIFICATE REPRESENTED (MUST BE IN
(PLEASE FILL IN, IF BLANK)(1) NUMBER(S) BY INTEGRAL
CERTIFICATE(S)(2) MULTIPLES OF
$1,000)(3)
- ---------------------------------------------- ----------------- -------------- -----------------
<S> <C> <C> <C>
----------------- -------------- -----------------
----------------- -------------- -----------------
----------------- -------------- -----------------
----------------- -------------- -----------------
----------------- -------------- -----------------
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
FOR 9.150% SENIOR NOTES DUE 2010
- -------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
AGGREGATE PRINCIPAL
PRINCIPAL AMOUNT TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED AMOUNT FOR EXCHANGE
HOLDER(S) OF UNREGISTERED NOTE(S) CERTIFICATE REPRESENTED (MUST BE IN
(PLEASE FILL IN, IF BLANK)(1) NUMBER(S) BY INTEGRAL
CERTIFICATE(S)(2) MULTIPLES OF
$1,000)(3)
- ---------------------------------------------- ----------------- -------------- -----------------
<S> <C> <C> <C>
----------------- -------------- -----------------
----------------- -------------- -----------------
----------------- -------------- -----------------
----------------- -------------- -----------------
----------------- -------------- -----------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Name(s) must be exactly as they appear on the unregistered note
certificates.
(2) Unless indicated in the column "Principal Amount Tendered for Exchange,"
you will be deemed to have tendered the entire aggregate principal amount
represented by the column labeled "Aggregate Principal Amount Represented
by Certificate(s)."
(3) The minimum permitted tender is $1,000 in principal amount of either series
of unregistered notes. All other tenders must be in integral multiples of
$1,000.
2
<PAGE> 3
[ ] Check here if your unregistered notes are enclosed.
[ ] Check here if your unregistered notes are being delivered by book-entry
transfer made to the account maintained by the exchange agent with DTC and
complete the following:
Name of Tendering Institution:______________________________________________
Account Number:_____________________________________________________________
Transaction Code Number:____________________________________________________
[ ] Check here if your unregistered notes are being delivered pursuant to a
notice of guaranteed delivery enclosed herewith and complete the following:
Name of Registered holder:__________________________________________________
Date of Execution of Notice of Guaranteed Delivery:_________________________
Window Ticket Number (if available):________________________________________
Name of Eligible Institution which Guaranteed Delivery:_____________________
Account Number (if delivered by book-entry transfer):_______________________
[ ] Check here if you are a broker-dealer who acquired the unregistered notes
for your own account as a result of market making or other trading
activities and wish to receive 10 additional copies of the prospectus and 10
copies of any amendments or supplements thereto:
Name:_______________________________________________________________________
Address:____________________________________________________________________
____________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
exchange notes.
If the undersigned is a broker-dealer that will receive exchange notes
for its own account in exchange for unregistered notes, it acknowledges that the
unregistered notes were acquired as a result of market-making activities or
other trading activities and that it will deliver a prospectus in connection
with any resale of such exchange notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
3
<PAGE> 4
Ladies And Gentlemen:
Subject to the terms and conditions of the exchange offer, the
undersigned hereby tenders to the partnership for exchange the principal amount
of unregistered notes indicated above. Subject to and effective upon the
acceptance for exchange of the principal amount of unregistered notes tendered
in accordance with this letter of transmittal, the undersigned hereby exchanges,
assigns and transfers to the partnership all right, title and interest in and to
the unregistered notes tendered for exchange hereby.
The undersigned hereby irrevocably constitutes and appoints the exchange
agent, the agent and attorney-in-fact of the undersigned (with full knowledge
that the exchange agent also acts as the agent of the partnership in connection
with the exchange offer) with respect to the tendered unregistered notes with
full power of substitution to deliver such unregistered notes, or transfer
ownership of such unregistered notes on the account books maintained by the DTC,
to the partnership and deliver all accompanying evidences of transfer and
authenticity, and present such unregistered notes for transfer on the books of
the partnership and receive all benefits and otherwise exercise all rights of
beneficial ownership of such unregistered notes, all in accordance with the
terms of the exchange offer. The power of attorney granted in this paragraph
shall be deemed to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the
unregistered notes tendered hereby and to acquire the exchange notes issuable
upon the exchange of such tendered unregistered notes, and that the partnership
will acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim,
when the same are accepted for exchange by the partnership.
The undersigned acknowledges that this exchange offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties in unrelated transactions by the staff of the Securities and Exchange
Commission (the "Commission") that the exchange notes issued in exchange for the
unregistered notes pursuant to the exchange offer may be offered for resale,
resold and otherwise transferred by holders thereof (other than a holder that is
(1) an "affiliate" of the partnership within the meaning of Rule 405 under the
Securities Act or (2) a broker-dealer that acquired the unregistered notes in a
transaction other than as part of its market-making or other trading
activities), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such exchange notes are acquired
in the ordinary course of such holders' business and such holders are not
engaging in and do not intend to engage in a distribution of the exchange notes
and have no arrangement or understanding with any person to participate in a
distribution of the exchange Notes.
The undersigned hereby further represents to the partnership that (1)
any exchange notes acquired in exchange for unregistered notes tendered hereby
are being acquired in the ordinary course of business of the person receiving
the exchange notes, (2) neither the undersigned nor the person receiving the
exchange notes is engaging in or intends to engage in a distribution of the
exchange notes, (3) neither the undersigned nor the person receiving the
exchange notes has an arrangement or understanding with any person to
participate in the distribution of such exchange notes, and (4) neither the
holder nor the person receiving the exchange notes is an "affiliate," as defined
in Rule 405 under the Securities Act, of the partnership or, if it is an
affiliate, it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
If the undersigned or the person receiving the exchange notes is a
broker-dealer that is receiving exchange notes for its own account in exchange
for unregistered notes that were acquired as a result of market-making
activities or other trading activities, the undersigned acknowledges that it or
the person receiving the exchange notes will deliver a prospectus in connection
with any resale of such exchange notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that the
undersigned or such other person is an "underwriter" within the meaning of the
Securities Act. The undersigned acknowledges that if the undersigned is
participating in the exchange offer for the purpose of distributing the exchange
notes (a) the undersigned cannot rely on the position of the staff of the
Commission in certain no-action letters and, in the absence of an exemption
therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the exchange notes, in which case the registration statement must
contain the selling security holder information required by Item 507 or Item
508, as applicable, of Regulation S-K of the Securities Act, and (b) failure to
comply with such requirements in such instance could result in the undersigned
incurring liability under the Securities Act for which the undersigned is not
indemnified by the partnership.
4
<PAGE> 5
The undersigned, if a California resident, hereby further represents and
warrants that the undersigned or the person receiving the exchange notes (1) is
a bank, savings and loan association, trust company, insurance company,
investment company registered under the Investment Company Act of 1940, pension
or profit-sharing trust (other than a pension or profit-sharing plan of the
partnership, a self-employed individual retirement plan or individual retirement
account) or a corporation which has a net worth on a consolidated basis
according to its most recent audited financial statement of not less than
$14,000,000 and (2) is acquiring the exchange notes for its own account for
investment purposes or for the account of the beneficial owner of the exchange
notes for investment purposes.
If the undersigned or the person receiving the exchange notes is an
"affiliate" (as defined in Rule 405 under the Securities Act), the undersigned
represents to the partnership that the undersigned understands and acknowledges
that the exchange notes may not be offered for resale, resold or otherwise
transferred by the undersigned or such other person without registration under
the Securities Act or an exemption therefrom.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the exchange agent or the partnership to be necessary or
desirable to complete the exchange, assignment and transfer of the unregistered
notes tendered hereby, including the transfer of such unregistered notes on the
account books maintained by the DTC.
For purposes of the exchange offer, the partnership shall be deemed to
have accepted for exchange validly tendered unregistered notes when, as and if
the partnership gives oral or written notice thereof to the exchange agent. Any
tendered unregistered notes that are not accepted for exchange pursuant to the
exchange offer for any reason will be returned, without expense, to the
undersigned at the address shown below or at a different address as may be
indicated herein under "Special Delivery Instructions" as promptly as
practicable after the expiration date.
All authority conferred or agreed to be conferred by this letter of
transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this letter of
transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned acknowledges that the partnership's acceptance of
properly tendered unregistered notes pursuant to the procedures described under
the caption "The Exchange Offer -- Procedures for Tendering" in the prospectus
and in the instructions hereto will constitute a binding agreement between the
undersigned and the partnership upon the terms and subject to the conditions of
the exchange offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the exchange notes issued in exchange for the unregistered notes accepted
for exchange and return any unregistered notes not tendered or not exchanged, in
the names of the undersigned. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please mail or deliver the exchange notes
issued in exchange for the unregistered notes accepted for exchange and any
unregistered notes not tendered or not exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signatures). In the event that both "Special Issuance Instructions" and "Special
Delivery Instructions" are completed, please issue the exchange notes issued in
exchange for the unregistered notes accepted for exchange in the names of, and
return any unregistered notes not tendered or not exchanged to, the persons so
indicated. The undersigned recognizes that the partnership has no obligation
pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any unregistered notes from the name of the registered
holders thereof if the partnership does not accept for exchange any of the
unregistered notes so tendered for exchange.
5
<PAGE> 6
SPECIAL ISSUANCE INSTRUCTIONS
(See Instruction 2, 5 and 6)
To be completed ONLY if the exchange notes are to be issued in the name
of and sent to someone other than the undersigned.
Issue certificates to:
Name:___________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
(Including Zip Code)
________________________________________________________________________________
________________________________________________________________________________
Telephone Number (with area code):______________________________________________
Tax ID Number:__________________________________________________________________
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 2, 5 and 6)
To be completed ONLY if certificates for exchange notes are to be sent
to someone other than the undersigned or to the undersigned at an address other
than shown in the box entitled "Description of Unregistered Notes Tendered"
above.
Issue certificates to:
Name:___________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
(Including Zip Code)
________________________________________________________________________________
________________________________________________________________________________
Telephone Number (with area code):______________________________________________
Tax ID Number:__________________________________________________________________
6
<PAGE> 7
SIGNATURE
To be completed by all exchanging holders of unregistered notes. Must be
signed by registered holder exactly as name appears on unregistered notes. If
signature is by trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, please set forth full title. See Instruction 5.
X_______________________________________________________________________________
X_______________________________________________________________________________
(Signature(s) of Registered holder(s) or Authorized Signatory)
Dated:_________________ ____________________________________________________
Names(s):_______________________________________________________________________
(Please Type Or Print)
Capacity:_______________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
Telephone No. (with area code):_________________________________________________
Tax ID Number:__________________________________________________________________
SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 2)
Certain Signatures Must be Guaranteed by an Eligible Guarantor Institution
________________________________________________________________________________
(Name Of Eligible Institution Guaranteeing Signatures)
Address of Firm:________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
Telephone No. (with area code):_________________________________________________
________________________________________________________________________________
(Authorized Signature)
____________________________ ____________________________________________
(Printed Name and Title)
Dated:__________________________________________________________________________
PLEASE READ THE FOLLOWING INSTRUCTIONS,
WHICH FORM A PART OF THIS LETTER OF TRANSMITTAL
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND UNREGISTERED NOTES; GUARANTEED
DELIVERY PROCEDURES. This letter of transmittal is to be completed either if (a)
certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer -- Procedures for Tendering" in the prospectus. Certificates representing
the unregistered notes, or timely confirmation of a book entry transfer of
unregistered notes into the exchange agent's account at DTC, as well as this
letter of transmittal, properly completed and duly executed, with any required
signature guarantees, and any other documents required by this letter of
transmittal, must be received by the exchange agent at its address set forth
herein on or prior to the expiration date.
Holders who wish to tender their unregistered notes and (1) whose
unregistered notes are not immediately available or (2) who cannot deliver their
unregistered notes, this letter of transmittal and all other required documents
to the exchange agent on or prior to the expiration date or (3) who cannot
complete the procedures for delivery by book-entry transfer on a timely basis,
may tender their unregistered notes by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery Procedures" in the
prospectus. Pursuant to such procedures: (a) your tender must be made by or
through an eligible institution (as defined on the cover page hereof); (b) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Partnership, must be received by
the exchange agent on or prior to the expiration date; and (c) the certificates
(or a book-entry confirmation) representing all tendered unregistered notes, in
proper form for transfer, together with a letter of transmittal, properly
completed and duly executed, with any required signature guarantees and any
other documents required by this letter of transmittal, must be received by the
exchange agent within three business days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in "The Exchange Offer --
Guaranteed Delivery Procedures" in the prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the exchange agent, and must include a
guarantee by an eligible institution in the form set forth in the Notice of
Guaranteed Delivery. For unregistered notes to be properly tendered pursuant to
the guaranteed delivery procedure, the exchange agent must receive a Notice of
Guaranteed Delivery on or prior to the expiration date.
THE METHOD OF DELIVERY OF UNREGISTERED NOTES, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT, IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The partnership will not accept any alternative, conditional or
contingent tenders. Each tendering holder, by execution of a letter of
transmittal (or facsimile thereof), waives any right to receive any notice of
the acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this letter of
transmittal is required if:
(a) this letter of transmittal is signed by the registered holder (which
term, for purposes of this document, shall include any participant in DTC whose
name appears on the relevant security position listing as the owner of the
unregistered notes ) of unregistered notes tendered herewith, unless such holder
has completed either the box entitled "Special Issuance Instructions" or the box
entitled "Special Delivery Instructions" above, or
(b) such unregistered notes are tendered for the account of a firm that
is an eligible institution.
In all other cases, an eligible institution must guarantee the
signatures on this letter of transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Unregistered Notes Tendered" is inadequate, the certificate
numbers and the aggregate principal amount of unregistered notes, and any
8
<PAGE> 9
other required information should be listed on a separate signed schedule which
is attached to this letter of transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. If less than all of the
principal amount of unregistered notes evidenced by any note or certificate
submitted are to be tendered, fill in the aggregate principal amount of
unregistered notes which are to be tendered in the applicable box entitled
"Aggregate Principal Amount Tendered." In such case, new certificates(s) for the
remainder of the unregistered notes that were evidenced by the old certificates
will be sent to the holder of the unregistered notes (or such other party as you
identify in the box captioned "Special Delivery Instructions") promptly after
the expiration date. All unregistered notes represented by certificates
delivered to the exchange agent will be deemed to have been fully tendered
unless otherwise indicated.
Except as otherwise provided herein, tenders of unregistered notes may
be withdrawn at any time on or prior to the expiration date. In order for a
withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission of such notice of withdrawal must be timely received by the
exchange agent at its address set forth above on or prior to the expiration
date. Any such notice of withdrawal must specify the name of the person who
tendered the unregistered notes to be withdrawn, the aggregate principal amount
of unregistered notes to be withdrawn, and (if certificates for unregistered
notes have been tendered) the name of the registered holder of such unregistered
notes as set forth on the note or certificate for such unregistered notes, if
different from that of the person who tendered such unregistered notes. If
unregistered notes have been delivered or otherwise identified to the exchange
agent, then prior to the physical release of such unregistered notes, the
tendering holder must submit the serial numbers shown on the particular
unregistered notes to be withdrawn and the signature on the notice of withdrawal
must be guaranteed by an eligible institution, except in the case of
unregistered notes tendered for the account of an eligible institution. If
unregistered notes have been tendered pursuant to the procedures for book-entry
transfer set forth in "The Exchange Offer -- Procedures for Tendering," the
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawal of unregistered notes, in which case a notice of
withdrawal will be effective if delivered to the exchange agent by written,
telegraphic, telex or facsimile transmission. Withdrawals of tenders of
unregistered notes may not be rescinded. Unregistered notes properly withdrawn
will not be deemed validly tendered for purposes of the exchange offer, but may
be retendered at any subsequent time on or prior to the expiration date by
following any of the procedures described in the prospectus under "The Exchange
Offer -- Procedures for Tendering."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Partnership, in
its sole discretion, whose determination shall be final and binding on all
parties. The partnership, any affiliates or assigns of the partnership, the
exchange agent or any other person shall not be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any unregistered notes
which have been tendered but which are withdrawn will be returned to the holder
thereof without cost to such holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this letter of transmittal is signed by the registered holder of the
unregistered notes tendered hereby, the signatures must correspond exactly with
the names as written on the face of the unregistered notes or, in the case of
book-entry securities, on the relevant security position listing, without
alteration, enlargement or any change whatsoever.
If any of the unregistered notes tendered hereby are owned of record by
two or more joint owners, all such owners must sign this letter of transmittal.
If this letter of transmittal or any unregistered notes or bond powers
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the partnership, in its sole discretion, of such
persons' authority to so act.
When this letter of transmittal is signed by the registered owners of
the unregistered notes listed and transmitted hereby, no endorsements of
unregistered notes or separate bond powers are required unless exchange notes
are to be issued in the name of a person other than the registered holders.
Signatures on such unregistered notes or bond powers must be guaranteed by an
eligible institution.
9
<PAGE> 10
If this letter of transmittal is signed by a person other than the
registered owners of the unregistered notes listed, the unregistered notes must
be endorsed or accompanied by appropriate bond powers, signed exactly as the
name or names of the registered owners appear on such unregistered notes , and
also must be accompanied by such opinions of counsel, certifications and other
information as the partnership may require in accordance with the restrictions
on transfer applicable to the unregistered notes. Signatures on such
unregistered notes or bond powers must be guaranteed by an eligible institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION. If exchange notes are to
be issued in the name of a person other than the signer of this letter of
transmittal, or if exchange notes are to be sent to someone other than the
signer of this letter of transmittal or to an address other than shown above,
the appropriate boxes on this letter of transmittal should be completed.
Certificates for unregistered notes not exchanged will be returned by mail or,
if tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The partnership will determine, in its sole
discretion, all questions as to the form of documents, validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of
unregistered notes, which determination shall be final and binding on all
parties. The partnership reserves the absolute right to reject any and all
tenders determined by it not to be in proper form or the acceptance of which, or
exchange for, may, in the view of counsel to the partnership, be unlawful. The
partnership also reserves the absolute right, subject to applicable law, to
waive any conditions or irregularity in any tender of unregistered notes of any
particular holder whether or not similar conditions or irregularities are waived
in the case of other holders. The partnership's interpretation of the terms and
conditions of the exchange offer (including this letter of transmittal and the
instructions hereto) will be final and binding. No tender of unregistered notes
will be deemed to have been validly made until all irregularities with respect
to such tender have been cured or waived. The partnership, any affiliates or
assigns of the partnership, the exchange agent, or any other person shall not be
under any duty to give notification of any irregularities in tenders or incur
any liability for failure to give such notification.
8. QUESTIONS, REQUEST FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the exchange agent at its address
and telephone number set forth on the front of this letter of transmittal.
Additional copies of the prospectus, the Notice of Guaranteed Delivery and the
letter of transmittal may be obtained from the exchange agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any notes or certificates
representing unregistered notes have been lost, destroyed or stolen, the holder
should promptly notify the exchange agent. The holder will then be instructed as
to the steps that must be taken in order to replace the certificates. This
letter of transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen notes or certificates have
been followed.
10. SECURITY TRANSFER TAXES. The partnership will pay any transfer taxes
in connection therewith. If, however, exchange notes are to be delivered to, or
are to be issued in the name of, any person other than the registered holder of
the unregistered notes, or if a transfer tax is imposed for any reason other
than the exchange of unregistered notes in connection with the exchange offer,
then the amount of any such transfer tax (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the letter of transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS
MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
10
<PAGE> 11
IMPORTANT TAX INFORMATION
Under current federal income tax law, if your tendered unregistered
notes are accepted for exchange, you may be subject to backup withholding unless
you provide the partnership (as payor), through the exchange agent, with either
(i) your correct taxpayer identification number ("TIN") on Substitute Form W-9
attached hereto, certifying that the TIN provided on Substitute Form W-9 is
correct (or that you are awaiting a TIN) and that (A) you have not been notified
by the Internal Revenue Service that you are subject to backup withholding as a
result of a failure to report all interest or dividends or (B) the Internal
Revenue Service has notified you that you are no longer subject to backup
withholding; or (ii) an adequate basis for exemption from backup withholding. If
you are an individual, the TIN is your social security number. If the exchange
agent is not provided with the correct taxpayer identification number, you may
be subject to certain penalties imposed by the Internal Revenue Service.
Certain holders of unregistered notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt holders of unregistered notes
should indicate their exempt status on Substitute Form W-9. A foreign individual
may qualify as an exempt recipient by submitting to the exchange agent a
properly completed Internal Revenue Service Form W-8 (which the exchange agent
will provide upon request) signed under penalty of perjury, attesting to the
holder's exempt status. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the partnership is required to withhold
31% of any payment made to you or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
You are required to give the exchange agent the TIN (e.g., social
security number or employer identification number) of the record owner of the
unregistered notes. If the unregistered notes are held in more than one name or
are not held in the name of the actual owner, consult the enclosed Guidelines
for additional guidance regarding which number to report.
11
<PAGE> 12
PAYER'S NAME:
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE PART 1--PLEASE ------------------------------
FORM W-9 PROVIDE YOUR TIN IN Social Security Number
THE BOX AT RIGHT AND
Department of the Treasury CERTIFY BY SIGNING
Internal Revenue Service AND DATING BELOW OR
------------------------------
Employer Identification Number
-------------------------------------------------------------------
Payer's Request for Taxpayer PART 2--CERTIFICATION--Under penalties of perjury, I certify that:
Identification Number (TIN)
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me) and
(2) I am not subject to backup withholding
either because I have not been notified by the
Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of a
failure to report all interest or dividends, or
the IRS has notified me that I am no longer
subject to backup withholding.
-------------------------------------------------------------------
PART 3--AWAITING TIN [ ]
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION INSTRUCTIONS--You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding because
of underrporting interest or dividends on your tax return. However, if after
being notified by the IRS that you are subject to backup withholding you receive
another notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out item(2).
Signature_________________________________________________ Date_______________
Name____________________________________________________________________________
Address_________________________________________________________________________
City________________________ State_________________ Zip Code_______________
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver such an application in the near future. I understand that if I do not
provide a taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide such
number.
______________________________________________________ _________________
SIGNATURE DATE
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
12
<PAGE> 1
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
TO TENDER
UNREGISTERED 8.875% SENIOR NOTES DUE 2005
OR
UNREGISTERED 9.150% SENIOR NOTES DUE 2010
OF
ARDEN REALTY LIMITED PARTNERSHIP
As set forth in Arden Realty Limited Partnership's prospectus, this form
or one substantially equivalent hereto must be used to accept the exchange offer
(1) if certificates for unregistered 8.875% senior notes due 2005 or
certificates for unregistered 9.150% senior notes due 2010 of Arden Realty
Limited Partnership, are not immediately available, (2) time will not permit a
holder's unregistered notes or other required documents to reach The Bank of New
York, the exchange agent, on or prior to the expiration date or (3) the
procedure for book-entry transfer cannot be completed on a timely basis. This
form may be delivered by facsimile transmission, registered or certified mail,
by hand or by overnight delivery service to the exchange agent. See "The
Exchange Offer--Procedures for Tendering" in the prospectus.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MAY __, 2000, THE EXPIRATION DATE, UNLESS THE EXCHANGE OFFER IS
EXTENDED BY ARDEN REALTY LIMITED PARTNERSHIP. TENDERED NOTES MAY BE WITHDRAWN
PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
The exchange agent for the exchange offer is:
THE BANK OF NEW YORK
Deliver to:
<TABLE>
<CAPTION>
By Registered or Certified Mail: By Hand or Overnight Delivery: By Facsimile:
(for eligible institutions only)
<S> <C> <C>
The Bank of New York The Bank of New York (212) 815-6339
101 Barclay Street, Floor 21 101 Barclay Street, Floor 21 Attn: Kin Lau
West West
New York, New York 10286 Corporate Trust Services Confirm by Telephone:
Attn: Kin Lau Window (212) 815-3750
Reorganization Section New York, New York 10286
Attn: Kin Lau
Reorganization Section
</TABLE>
Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or overnight delivery service. Facsimile
transmission is available only to "eligible institutions" which include member
firms of a registered national securities exchange or the National Association
of Securities Dealers, Inc., commercial banks or trust companies having an
office or correspondent in the United States or eligible guarantor institutions
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS PROVIDED ABOVE OR TRANSMISSION TO A FACSIMILE NUMBER OTHER THAN THE NUMBER
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Arden Realty Limited Partnership, upon the
terms and subject to the conditions set forth in the prospectus dated
____________, 2000, as the same may be amended or supplemented from time to
time, and the related letter of transmittal, receipt of which is hereby
acknowledged, the aggregate principal amount of unregistered notes set forth
below pursuant to the guaranteed delivery procedures set forth in the prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures."
Name(s) of Registered Holder(s):________________________________________________
Aggregate Principal Amount Tendered:* $_________________________________________
Certificate No.(s) (if available):______________________________________________
(Total Principal Amount Represented by
Unregistered Notes Certificate(s)): $___________________________________________
If unregistered notes will be tendered by book-entry transfer, provide the
following information;
DTC Account Number:_____________________________________________________________
Date:___________________________________________________________________________
________________________________________________________________________________
* Must be in denominations of $1,000 and any integral multiple thereof.
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE
THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE
UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
<PAGE> 3
PLEASE SIGN HERE
X
------------------------------------ ------------------------------------
X
------------------------------------ ------------------------------------
Signature(s) or Owner(s) Date
or Authorized Signatory
Telephone No. (with area code):_________________________________________________
Must be signed by the holders of the unregistered notes as their names
appears on certificates for unregistered notes or on a security position
listing, or by persons authorized to become registered holders by endorsement
and documents transmitted with this notice of guaranteed delivery. If signature
is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
set forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):________________________________________________________________________
Capacity:_______________________________________________________________________
Address(es):____________________________________________________________________
________________________________________________________________________________
THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED.
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of or participant in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Signature Program or a
firm or other entity identified in Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended, as an "eligible guarantor institution," including (as
such terms are defined therein): (1) a bank; (2) a broker, dealer, municipal
securities broker, municipal securities dealer, government securities broker or
government securities dealer; (3) a credit union; (4) a national securities
exchange, registered securities association or clearing agency; or (5) a savings
association that is a participant in a Securities Transfer Association
recognized program (each of the foregoing being referred to as an "Eligible
Institution"), hereby guarantees to deliver to the exchange agent, at one of its
addresses set forth above, either the unregistered notes tendered hereby in
proper form for transfer, or confirmation of the book-entry transfer of such
unregistered notes to the exchange agent's account at The Depositary Trust
Company, pursuant to the procedures for book-entry transfer set forth in the
prospectus, within three New York Stock Exchange, Inc. trading days after the
date of execution of this notice of guaranteed delivery.
The undersigned acknowledges that it must deliver the unregistered notes
tendered hereby to the exchange agent within the time period set forth above and
that failure to do so could result in a financial loss to the undersigned.
SIGN HERE
Name of Firm:___________________________________________________________________
Authorized Signature:___________________________________________________________
Name:___________________________________________________________________________
(Please Print)
Title:__________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
Telephone No. (with area code):_________________________________________________
Date:___________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES FOR UNREGISTERED NOTES WITH THIS FORM.
<PAGE> 5
INSTRUCTIONS
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this notice of guaranteed delivery and any other
documents required by this notice of guaranteed delivery must be received by the
exchange agent at its address set forth on the cover hereof before the exchange
offer expiration date. The method of delivery of this notice of guaranteed
delivery and all other required documents to the exchange agent is at the
election and risk of the holder but, except as otherwise provided below, the
delivery will be deemed made only when actually received by the exchange agent.
If the delivery is by mail, it is recommended that the holder use properly
insured, registered mail with return receipt requested. For a full description
of the guaranteed delivery procedures, see the Prospectus under the caption "The
Exchange Offer--Guaranteed Delivery Procedures." In all cases, sufficient time
should be allowed to assure timely delivery. No notice of guaranteed delivery
should be sent to Arden Realty Limited Partnership.
2. SIGNATURE ON THIS NOTICE OF GUARANTEED DELIVERY; GUARANTEE OF
SIGNATURES. If this notice of guaranteed delivery is signed by the registered
holders of the unregistered notes referred to herein, the signature must
correspond with the names as written on the face of the unregistered notes
without alteration, enlargement or any change whatsoever.
If this notice of guaranteed delivery is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, that person
should so indicate when signing, and, unless waived by Arden Realty Limited
Partnership, evidence satisfactory to Arden Realty Limited Partnership, of their
authority so to act must be submitted with this notice of guaranteed delivery.
If this notice of guaranteed delivery is signed by a participant
of the book-entry transfer facility whose name appears on a security position
listing as the owner of the unregistered notes, the signature must correspond
with the name shown on the security position listing as the owner of the
unregistered notes.
If this notice of guaranteed delivery is signed by a person
other than the registered holders of any unregistered notes listed or a
participant of the book-entry transfer Facility, this notice of guaranteed
delivery must be accompanied by appropriate bond powers, signed as the name of
the registered holders appears on the unregistered notes or signed as the name
of the participant shown on the book-entry transfer facility's security position
listing.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to
the exchange offer or the procedure for tendering as well as requests for
assistance or for additional copies of the prospectus and the letter of
transmittal, may be directed to the exchange agent. Holders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the exchange offer.
<PAGE> 1
Exhibit 99.3
LETTER TO REGISTERED HOLDERS AND DTC PARTICIPANTS
REGARDING OFFER TO EXCHANGE
$200,000,00 8.875% SENIOR NOTES DUE 2005 FOR ANY AND ALL
UNREGISTERED 8.875% SENIOR NOTES DUE 2005
AND
$50,000,000 9.150% SENIOR NOTES DUE 2010 FOR ANY AND ALL
UNREGISTERED 9.150% SENIOR NOTES DUE 2010
OF
ARDEN REALTY LIMITED PARTNERSHIP
TO REGISTERED HOLDERS AND THE DEPOSITORY TRUST COMPANY PARTICIPANTS:
We are enclosing herewith the materials listed below relating to the
offer by Arden Realty Limited Partnership to exchange $1000 principal amount of
its 8.875% senior notes due 2005, registered under the Securities Act of 1933,
for any and all unregistered 8.875% senior notes due 2005, and $1,000 principal
amount of its 9.150% senior notes due 2010, registered under the Securities Act
of 1933, for any and all unregistered 9.150% senior notes due 2010. The
registered notes received in exchange for the unregistered notes are sometimes
collectively referred to herein in as the exchange notes, upon the terms and
subject to the conditions set forth in Arden Realty Limited Partnership's
prospectus, dated ________, 2000, and the related letter of transmittal, which
together constitute the exchange offer.
Enclosed are copies of the following documents:
1. Prospectus dated _________, 2000;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder or DTC Participant From Beneficial
Owner; and
5. Letter to Clients which may be sent to your clients for whose account
you hold definitive unregistered notes or book-entry interests representing
unregistered notes in your name or in the name of your nominee, to accompany the
instruction form referred to above, for obtaining such client's instruction with
regard to the exchange offer.
- --------------------------------------------------------------------------------
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE EXCHANGE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MAY
__, 2000, THE EXPIRATION DATE, UNLESS THE EXCHANGE OFFER IS EXTENDED BY ARDEN
REALTY LIMITED PARTNERSHIP.
- --------------------------------------------------------------------------------
The exchange offer is not conditioned upon any minimum principal amount
of unregistered notes being tendered.
To participate in the exchange offer, a beneficial holder must either
(1) cause to be delivered to The Bank of New York, the exchange agent, at the
address set forth in the letter of transmittal, definitive unregistered notes in
proper form for transfer together with a properly executed letter of transmittal
or (2) cause a DTC participant to tender such holder's unregistered notes to the
exchange agent's account maintained at the Depository Trust Company, or DTC, for
the benefit of the exchange agent through DTC's Automated Tender Offer Program,
or ATOP, including transmission of a computer-generated message that
acknowledges and agrees to be bound by the terms of the letter of transmittal.
By complying with DTC's ATOP procedures with respect to the exchange offer, the
DTC participant confirms on behalf of itself and the beneficial owners of
tendered unregistered notes all provisions of the letter of transmittal
applicable to it and such beneficial owners as fully as if it completed,
executed and returned the letter of transmittal to the exchange agent.
<PAGE> 2
Pursuant to the letter of transmittal, each holder of unregistered notes
will represent to Arden Realty Limited Partnership that:
(i) the exchange notes or book-entry interests therein to be
acquired by such holder and any beneficial owner(s) of the
unregistered notes or interests therein ("Beneficial Owner(s)")
in connection with the exchange offer are being acquired by such
holder and any Beneficial Owner(s) in the ordinary course of
business of the holder and any Beneficial Owner(s);
(ii) the holder and each Beneficial Owner are not participating,
do not intend to participate, and have no arrangement or
understanding with any person to participate, in the
distribution of the exchange notes;
(iii) if the holder or Beneficial Owner is a resident of the
State of California, it falls under the self-executing
institutional investor exemption set forth under Section
25102(i) of the Corporate Securities Law of 1968 and Rules
260.102.10 and 260.105.14 of the California Blue Sky
Regulations;
(iv) the holder and each Beneficial Owner acknowledge and agree
that any person who is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
or is participating in the exchange offer for the purpose of
distributing the exchange notes must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction
of the exchange notes or interests therein acquired by such
person and cannot rely on the position of the staff of the
Commission set forth in certain no-action letters;
(v) the holder and each Beneficial Owner understand that a
secondary resale transaction described in clause (iv) above and
any resales of exchange notes or interests therein obtained by
such holder in exchange for unregistered notes or interests
therein originally acquired by such holder directly from Arden
Realty Limited Partnership should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission; and
(vi) neither the holder nor any Beneficial Owner(s) is an
"affiliate," as defined in Rule 405 under the Securities Act, of
Arden Realty Limited Partnership. Upon a request by Arden Realty
Limited Partnership, a holder or Beneficial Owner will deliver
to Arden Realty Limited Partnership a legal opinion confirming
its representation made in clause (vii) above.
If the tendering holder of unregistered notes is (1) a broker-dealer
(whether or not it is also an "affiliate") or (2) a Beneficial Owner(s) that
will receive exchange notes pursuant to the exchange offer, the tendering holder
will represent on behalf of itself and, if such unregistered notes are being
held on behalf of Beneficial Owner(s), on behalf of such Beneficial Owner(s)
that the unregistered notes to be exchanged for the exchange notes were acquired
as a result of market-making activities or other trading activities, and
acknowledge on its own behalf and, if such unregistered notes are held on behalf
of Beneficial Owner(s), on behalf of such Beneficial Owner(s) that it or they
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such exchange notes; however, by so acknowledging
and by delivering a prospectus, such tendering holder will not be deemed to
admit that it or any Beneficial Owner is an "underwriter" within the meaning of
the Securities Act.
The enclosed "Instruction to Registered holder or DTC Participant from
Beneficial Owner" form contains an authorization by the beneficial owners of
unregistered notes for you to make the foregoing representations.
Arden Realty Limited Partnership will not pay any fee or commission to
any broker or dealer or to any other persons (other than the exchange agent) in
connection with the solicitation of tenders of unregistered notes pursuant to
the exchange offer. Arden Realty Limited Partnership will pay or cause to be
paid any transfer taxes payable on the transfer of unregistered notes to them,
except as otherwise provided in the section "The Exchange Offer--You may be
required to pay transfer taxes in connection with your tender" of the enclosed
prospectus.
<PAGE> 3
Additional copies of the enclosed materials may be obtained from the
exchange agent.
Very truly yours,
Arden Realty Limited Partnership
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL
CONSTITUTE YOU THE AGENT OF ARDEN REALTY LIMITED PARTNERSHIP OR THE EXCHANGE
AGENT OR AUTHORIZE YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON ITS BEHALF
IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH
AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 4
INSTRUCTION TO REGISTERED HOLDER OR
DEPOSITORY TRUST COMPANY PARTICIPANT
FROM BENEFICIAL OWNER OF
8.875% SENIOR NOTES DUE 2005
OR
9.150% SENIOR NOTES DUE 2010
OF
ARDEN REALTY LIMITED PARTNERSHIP
The undersigned hereby acknowledges receipt of the prospectus dated
_______, 2000, of Arden Realty Limited Partnership, a Maryland limited
partnership (the "partnership"), and the accompanying letter of transmittal,
that together constitute the exchange offer. Capitalized terms used by not
defined herein have the meanings ascribed to them in the prospectus.
This will instruct you, the registered holder, as to the action to be
taken by you relating to the exchange offer with respect to the unregistered
8.875% senior notes due 2005 and unregistered 9.150% senior notes due 2010 held
by you for the account of the undersigned.
The aggregate face amount of the unregistered notes held by you for the
account of the undersigned is (fill in amount):
$_________________ of the unregistered notes.
With respect to the exchange offer, the undersigned hereby instructs you
(check appropriate box):
[ ] To TENDER the following unregistered notes held by you for the
account of the undersigned (insert principal amount of unregistered notes to be
tendered, if any):
$_________________ of the unregistered notes.
[ ] NOT to TENDER any unregistered notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the unregistered notes held
by you for the account of the undersigned, it is understood that you are
authorized (a) to make, on behalf of the undersigned (and the undersigned, by
its signature below, hereby makes to you), the representations and warranties
contained in the letter of transmittal that are to be made with respect to the
undersigned as a beneficial owner of the unregistered notes, including but not
limited to the representations that (i) the undersigned's principal residence is
in the state of (fill in state)________________________, (ii) the undersigned is
acquiring the exchange notes in the ordinary course of business of the
undersigned, (iii) the undersigned has no arrangement or understanding with any
person to participate in the distribution of exchange notes, (iv) the
undersigned acknowledges that any person who is a broker-dealer registered under
the Securities Exchange Act of 1934, as amended, or is participating in the
exchange offer for the purpose of distributing the exchange notes must comply
with the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended, in connection with a secondary resale transaction of the
exchange notes acquired by such person and cannot rely on the position of the
Staff of the Securities and Exchange Commission set forth in certain no-action
letters (See the section of the Prospectus entitled "The Exchange Offer--Resale
of the Exchange Notes"), (v) the undersigned understands that a secondary resale
transaction described in clause (iv) above and any resales of exchange notes
obtained by the undersigned in exchange for the unregistered notes acquired by
the undersigned directly from the partnership should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or Item 508, if applicable, of Regulation S-K of the
Securities and Exchange Commission, (vi) the undersigned is not an "affiliate,"
as defined in Rule 405 under the Securities Act, of the partnership, and (vii)
if the undersigned is a broker-dealer that will receive exchange notes for its
own account in exchange for unregistered notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act of
1933, as amended, in connection with any sale of such exchange notes; however,
by so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933, as amended; (b) to agree, on behalf of the
<PAGE> 5
undersigned, as set forth in the letter of transmittal; and (c) to take such
other action as necessary under the prospectus or the letter of transmittal to
effect the valid tender of unregistered notes.
The purchaser status of the undersigned is (check the box that applies):
[ ] A "Qualified Institutional Buyer" (as defined in Rule 144A under the
Securities Act of 1933, as amended)
[ ] An "Institutional Accredited Investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act of 1933, as amended)
[ ] A non "U.S. person" (as defined in Regulation S of the Securities Act
of 1933, as amended) that purchased the unregistered notes outside the
United States in accordance with Rule 904 of the Securities Act of 1933,
as amended.
[ ] Other (describe) ______________________________________________________
______________________________________________________
SIGN HERE
________________________________________________________________________________
________________________________________________________________________________
Name of Beneficial Owner(s)_____________________________________________________
________________________________________________________________________________
Signature(s)____________________________________________________________________
________________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Principal place of business (if different from address listed above)____________
________________________________________________________________________________
Telephone Numbers_______________________________________________________________
________________________________________________________________________________
Taxpayer Identification of Social Security Number(s)____________________________
________________________________________________________________________________
Date:___________________________________________________________________________
________________________________________________________________________________
<PAGE> 1
Exhibit 99.4
LETTER TO CLIENTS
FOR TENDER OF
$200,000,000 8.875% SENIOR NOTES DUE 2005 FOR ANY AND ALL
UNREGISTERED 8.875% SENIOR NOTES DUE 2005
OR
$50,000,000 9.150% SENIOR NOTES DUE 2010 FOR ANY AND ALL
UNREGISTERED 9.150% SENIOR NOTES DUE 2010
OF
ARDEN REALTY LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MAY __, 2000, THE EXPIRATION DATE, UNLESS THE EXCHANGE OFFER IS
EXTENDED BY ARDEN REALTY LIMITED PARTNERSHIP. TENDERED NOTES MAY BE WITHDRAWN
PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
To Our Clients:
We are enclosing herewith a prospectus, dated ______, 2000, of Arden
Realty Limited Partnership (the "Partnership") and a related Letter of
Transmittal which together constitute the "Exchange Offer" relating to the offer
by the Partnership to exchange its 8.875% senior notes due 2005, registered
under the Securities Act of 1933, as amended, for any and all of its
unregistered 8.875% senior notes due 2005, and its 9.150% senior notes due 2010,
registered under the Securities Act, for any and all of its unregistered 9.150%
senior notes due 2010. The registered notes received in exchange for the
unregistered notes are sometimes collectively referred to herein in as the
exchange notes, upon the terms and subject to the conditions set forth in the
Exchange Offer. The Exchange Offer is not conditioned upon any minimum number of
unregistered notes being tendered.
We are the holder of record of unregistered notes held by us for your
own account. A tender of such unregistered notes can be made only by us as the
record holder and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
unregistered notes held by us for your account.
We request instructions as to whether you wish to tender any or all of
the unregistered notes held by us for your account pursuant to the terms and
conditions of the Exchange Offer. We also request that you confirm that we may
on your behalf make the representations contained in the Letter of Transmittal.
If you elect to tender your unregistered notes, you will represent to
the Partnership pursuant to the Letter of Transmittal, among other things, that
(1) the exchange notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such
exchange notes, (2) you do not have an arrangement or understanding with any
person to participate in the distribution within the meaning of the Securities
Act of such exchange notes, (3) you are not engaged in nor intend to participate
in the distribution of the exchange notes and (4) you are not an "affiliate" of
the Partnership within the meaning of Rule 405 under the Securities Act or, if
you are an "affiliate," you will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable. If you are
a broker-dealer (whether or not you are also an "affiliate") that will receive
exchange notes for your own account in exchange for unregistered notes, you will
represent that your unregistered notes were acquired as a result of
market-making activities or other trading activities, and acknowledge that you
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such exchange notes. By acknowledging that you
will deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such exchange notes, you are not
deemed to admit that you are an "underwriter" within the meaning of the
Securities Act. Please refer to the Letter of Transmittal for the full text of
the representations you are required to make to the Partnership.
Please read the Letter of Transmittal carefully, including the
instructions contained therein, before providing us with instructions on whether
to tender your unregistered notes on your behalf.
Very truly yours,
