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Filed pursuant to Rule 424(b)(5)
Registration Number 333-67511
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 10, 1999)
NPXL LOGO
$325,000,000
NEW PLAN EXCEL REALTY TRUST, INC.
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
New Plan Excel Realty Trust, Inc. (which we generally refer to as the
"Company" in this prospectus supplement) may offer up to $325 million of its
Medium-Term Notes Due Nine Months or More from Date of Issue (the "Notes"), at
one or more times.
The following terms may apply to particular Notes being offered:
- Maturities of nine months or more from issue date
- Subject to redemption at our option or repayment at your option
- Not convertible, amortized or subject to a sinking fund
- Remarketing or resetting features
- Certificated or book-entry form
- U.S. dollars or foreign currency payments
- Minimum denominations of $1,000, increased in multiples of $1,000
- Fixed or floating interest rate, with the floating interest rate
formula based on one of the following indices (plus or minus a spread
and/or multiplied by a spread multiplier):
-- CD Rate
-- CMT Rate
-- Commercial Paper Rate
-- Eleventh District Cost of Funds Rate
-- Federal Funds Rate
-- LIBOR
-- Prime Rate
-- Treasury Rate
- Interest paid on fixed rate Notes semi-annually or otherwise
- Interest paid on floating rate Notes monthly, quarterly, semi-annually,
annually or otherwise
We will specify the final terms for each Note, which may be different from
the terms described in this prospectus supplement, in the applicable pricing
supplement.
INVESTING IN THE NOTES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE S-3.
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus supplement, the
accompanying prospectus or any pricing supplement is truthful or complete. Any
representation to the contrary is a criminal offense.
<TABLE>
<S> <C> <C> <C>
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PUBLIC AGENTS' DISCOUNTS PROCEEDS TO THE COMPANY,
OFFERING PRICE AND COMMISSIONS BEFORE EXPENSES
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Per Note...................... 100% .125% - .750% 99.875% - 99.250%
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Total(1)...................... $325,000,000 $406,250 - $2,437,500 $324,593,750 - $322,562,500
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Or the equivalent thereof in one or more foreign currencies.
We may sell Notes to any of the Agents (referred to below) acting as
principal for resale at varying or fixed offering prices or through the Agents
acting as agent using their reasonable efforts on our behalf. We may also sell
Notes without the assistance of the Agents (whether acting as principal or as
agent).
If we sell other securities referred to in the accompanying prospectus, the
total initial offering price of Notes that we may offer and sell by use of this
prospectus supplement is subject to reduction.
SALOMON SMITH BARNEY
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PRUDENTIAL SECURITIES
-------------------------
September 10, 1999
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ABOUT THIS PROSPECTUS SUPPLEMENT; PRICING SUPPLEMENTS
We may use this prospectus supplement, together with the attached
prospectus and an attached pricing supplement, to offer the Notes from time to
time. The total initial public offering price of the Notes that we may offer by
use of this prospectus supplement is $325,000,000 (or the equivalent in one or
more foreign currencies).
This prospectus supplement sets forth certain terms of the Notes that we
may offer. It supplements the description of our Debt Securities (as defined
below) contained in the attached prospectus. If information in this prospectus
supplement is inconsistent with the prospectus, this prospectus supplement will
apply and will supersede the information in the prospectus.
Each time we issue Notes, we will attach a pricing supplement to this
prospectus supplement. The pricing supplement will contain the specific
description of the Notes being offered and the terms of the offering. The
pricing supplement may also add, update or change information in this prospectus
supplement or the attached prospectus. Any information in the pricing
supplement, including any changes in the method of calculating interest on any
Note, that is inconsistent with this prospectus supplement will apply and will
supersede the information in this prospectus supplement.
It is important for you to read and carefully consider all information
contained in this prospectus supplement and the attached prospectus and pricing
supplement in making your investment decision. You should also read and
carefully consider the information in the documents we have referred you to in
"Where to Find Additional Information" on page 2 of the attached prospectus.
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RISK FACTORS
Your investment in the Notes involves certain risks. Before deciding
whether an investment in the Notes is suitable for you, you should carefully
consider, among other matters, the following discussion of risks, along with the
discussion of other risks contained in the Company's most recent Annual Report
on Form 10-K or 10-K/A, or in the other reports filed by the Company with SEC.
STRUCTURE RISKS
Risks Related to Indices or Formulas. Some of the Notes may be indexed to
one or more currencies, commodities, interest rates or other indices or
formulas. An investment in these Notes involves significant risks that are not
associated with similar investments in a conventional fixed rate or floating
rate debt security. These risks include the possibility that any applicable
index or formula may be subject to significant changes, that the resulting
interest rate will be less than that payable on a conventional fixed rate or
floating rate debt security issued by us at the same time, and that you could
lose all or a substantial portion of the principal payable upon maturity of such
Notes. These risks depend on a number of factors beyond our control, including
economic, financial and political events. In addition, if the formula used to
determine the amounts payable under such Notes contains a multiplier or leverage
factor, the effect of any change in any applicable index or formula will be
magnified. In recent years, values of certain indices and formulas have been
highly volatile and such volatility may continue or increase in the future.
Redemption Risk. Any optional redemption feature of the Notes might affect
the market value of such Notes. You should expect that we will redeem these
Notes when prevailing interest rates are relatively low. In such cases, you
generally will not be able to reinvest the redemption proceeds in a comparable
security at an effective interest rate as high as the current interest rate on
such Notes.
Uncertain Trading Markets. We cannot assure you that a trading market for
the Notes will ever develop or, if one develops, be maintained. The market value
for the Notes in any trading market will be affected by a number of factors
unrelated to our creditworthiness. These factors include:
- the complexity and volatility of any index or formula applicable to the
Notes,
- the method of calculating the amounts payable under the Notes,
- the time remaining to the maturity of the Notes,
- the outstanding amount of the Notes,
- any redemption features of the Notes, and
- the level, direction and volatility of market interest rates generally.
Therefore, you may not be able to sell such Notes readily or at prices that
will enable you to realize your anticipated yield. You should not purchase Notes
unless you understand and are able to bear the risk that Notes may not be
readily saleable, that the market value of Notes will fluctuate over time and
that such fluctuations may be significant.
EXCHANGE RATE RISKS AND EXCHANGE CONTROL RISKS
If you invest in Notes that are payable in one or more foreign currencies
("Foreign Currency Notes"), there will be significant risks that are not
associated with a similar investment in a debt security payable in United States
dollars. These risks include the possibility of significant changes in the rate
of exchange between the United States dollar and the applicable foreign
currency, as well as the possibility of the imposition or modification of
exchange controls by the applicable governments or monetary authorities. These
risks generally depend on factors beyond our control, such as economic,
financial and political events and the supply and demand for the applicable
currencies. In addition, if the formula used to determine the amounts payable
under Foreign Currency Notes contains a multiplier or leverage factor, the
effect of any change in the applicable currencies will be magnified. In recent
years, rates of exchange between the United States dollar and foreign currencies
have been highly volatile and such volatility may continue or increase in the
future.
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Depreciation of the foreign currency in which a Foreign Currency Note is payable
against the United States dollar would result in a decrease in the yield and
market value of such Foreign Currency Note on a United States dollar-equivalent
basis.
Governments or monetary authorities may impose exchange controls at or
prior to the date on which any amount payable under a Foreign Currency Note is
due. Any such action could affect exchange rates as well as the availability of
the foreign currency in which such payment is to be made on such date. Even if
there are no exchange controls, it is possible that the applicable foreign
currency would not be available on the applicable payment date due to other
circumstances beyond our control. In such cases, we will be entitled to satisfy
our payment obligations under such Foreign Currency Note in United States
dollars. See "Special Provisions Relating to Foreign Currency Notes -- Payment
Currency."
EFFECTIVE SUBORDINATION
The Notes are unsecured and will rank equally with all of the Company's
unsecured debt, but will be effectively subordinated to all of the Company's
secured debt. The Notes also will be effectively subordinated to all unsecured
and secured debt of the Company's subsidiaries. See "Description of
Notes -- General." Due to our structure, subsidiaries of the Company own a
significant percentage of our assets.
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DESCRIPTION OF NOTES
The following summary of certain terms of the Notes and the Indenture (as
defined below) is not complete. You should refer to the Indenture under which
the Notes will be issued, a copy of which is included as an exhibit to the
registration statement of which this prospectus supplement is a part. The
definitions of certain capitalized terms used in this prospectus supplement are
provided in the Glossary beginning on page S-31. Capitalized terms used in this
prospectus supplement but not defined in this prospectus supplement (including
the Glossary) have the meanings assigned in the attached prospectus and/or the
Indenture. The term "Debt Securities," as used in this prospectus supplement,
refers to all debt securities, including the Notes, issued and issuable from
time to time under the Indenture.
The Notes will be issued as a part of a series of Debt Securities under an
Indenture, dated as of February 3, 1999, as amended, supplemented or modified
from time to time (the "Indenture"), between the Company and State Street Bank
and Trust Company, as trustee (the "Trustee"). The Indenture is subject to, and
governed by, the Trust Indenture Act of 1939.
GENERAL
The Notes will be direct, unsecured obligations of the Company. The Notes
will rank equally with all existing and future unsecured and unsubordinated debt
of the Company. The Notes will be effectively subordinated to all existing and
future secured indebtedness of the Company. The Notes also will be effectively
subordinated to all unsecured and secured debt of the Company's subsidiaries.
The Indenture under which the Notes will be issued does not limit the amount of
additional indebtedness which the Company or its subsidiaries can create, incur,
assume or guarantee, except in certain circumstances. See "Description of Debt
Securities -- Certain Covenants" in the attached prospectus.
The Indenture does not limit the aggregate initial offering price of Debt
Securities that may be issued thereunder and Debt Securities may be issued
thereunder from time to time in one or more series up to the aggregate initial
offering price from time to time authorized by the Company for each series. The
Company may, from time to time, without the consent of the holders of the Notes
(collectively, the "Holders"), provide for the issuance of Notes or other Debt
Securities under the Indenture in addition to the $325,000,000 aggregate initial
offering price of Notes offered hereby.
The Notes that will be offered are limited to up to $325,000,000 aggregate
initial offering price, or the equivalent thereof in one or more foreign
currencies. The Notes will be offered on a continuous basis by the Company to or
through the Agents and will mature on any day nine months or more from their
dates of issue (each, a "Stated Maturity Date"), as specified in the applicable
pricing supplement. Unless otherwise specified in the applicable pricing
supplement, interest-bearing Notes will either bear interest at fixed rates
("Fixed Rate Notes") or at floating rates ("Floating Rate Notes"), as specified
in the applicable pricing supplement. Notes may also be issued that do not bear
any interest currently or that bear interest at a below market rate.
Unless otherwise specified in the applicable pricing supplement, the Notes
will be denominated in, and payments of principal, premium, if any, and/or
interest in respect thereof will be made in, United States dollars. The Company
also may issue Foreign Currency Notes. See "Special Provisions Relating to
Foreign Currency Notes -- Payment of Principal, Premium, if any, and Interest."
The currency in which a Note is denominated (or (i) if such currency (other than
Euro) is no longer legal tender for the payment of public and private debts in
the relevant country, such other currency which is then such legal tender or
(ii) if such currency is Euro and is no longer legal tender in the member states
of the European Union that have adopted the single currency in accordance with
the Treaty establishing the European Community, as amended by the Treaty on
European Union, such other currency which is then such legal tender) is herein
referred to as the "Specified Currency" with respect to such Notes. References
herein to "United States dollars," "U.S. dollars" and "U.S. $" are to the lawful
currency of the United States of America.
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Unless otherwise specified in the applicable pricing supplement, purchasers
are required to pay for the Notes in the applicable Specified Currency. At the
present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign currencies and vice versa, and
commercial banks generally do not offer non-United States dollar checking or
savings account facilities in the United States. The applicable Agent may be
prepared to arrange for the conversion of United States dollars into the
applicable Specified Currency to enable the purchaser to pay for the related
Foreign Currency Note, provided that a request is made to such Agent on or prior
to the fifth Business Day preceding the date of delivery of such Foreign
Currency Note, or by such other day as determined by such Agent. Any such
conversion will be made by an Agent on such terms and subject to such
conditions, limitations and charges as such Agent may from time to time
establish in accordance with its regular foreign exchange practices. All costs
of exchange will be borne by the purchaser of each such Foreign Currency Note.
See "Special Provisions Relating to Foreign Currency Notes."
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other factors, the aggregate principal amount of Notes
purchased in any single transaction. Interest rates or formulas and other terms
of Notes are subject to change by the Company from time to time, but no such
change will affect any Note previously issued or as to which an offer to
purchase has been accepted by the Company.
Each Note will be issued as a Book-Entry Note represented by one or more
fully registered Global Securities or as a fully registered Certificated Note.
The minimum denominations of each Note other than a Foreign Currency Note will
be $1,000 and integral multiples thereof, unless otherwise specified in the
applicable pricing supplement, while the minimum denominations of each Foreign
Currency Note will be specified in the applicable pricing supplement.
Payments of principal of, premium, if any, and interest, if any, on,
Book-Entry Notes will be made by the Company through the Trustee to the
Depositary. See "-- Book-Entry Notes" below. In the case of Certificated Notes,
payment of principal and premium, if any, due on the Stated Maturity Date or any
prior date on which the principal, or an installment of principal, of each
Certificated Note becomes due and payable, whether by the declaration of
acceleration, notice of redemption at the option of the Company, notice of the
Holder's option to elect repayment or otherwise (the Stated Maturity Date or
such prior date, as the case may be, is herein referred to as the "Maturity
Date" with respect to the principal of the applicable Note repayable on such
date) will be made in immediately available funds upon presentation and
surrender thereof (or, in the case of any repayment on an Optional Repayment
Date, upon presentation and surrender thereof and a duly completed election form
in accordance with the provisions described below) at the office or agency
maintained by the Company for such purpose in the Borough of Manhattan, The City
of New York. Such office or agency is maintained currently by the Trustee at 61
Broadway, New York, New York 10006. Payment of interest, if any, due on the
Maturity Date of a Certificated Note will be made to the person to whom payment
of the principal thereof and premium, if any, thereon shall be made. Payment of
interest, if any, due on a Certificated Note on any Interest Payment Date (as
defined below) other than the Maturity Date will be made at the office or agency
referred to above maintained by the Company for such purpose or, at the option
of the Company, may be made by check mailed to the address of the Holder
entitled thereto as such address shall appear in the Security Register
maintained by the Trustee. Notwithstanding the foregoing, a Holder of $10
million (or, if the applicable Specified Currency is other than United States
dollars, the equivalent thereof in such Specified Currency) or more in aggregate
principal amount of Notes (whether having identical or different terms and
provisions) will be entitled to receive interest payments on any Interest
Payment Date other than the Maturity Date by wire transfer of immediately
available funds if appropriate wire transfer instructions have been received in
writing by the Trustee not less than 15 days prior to such Interest Payment
Date. Any such wire transfer instructions received by the Trustee shall remain
in effect until revoked by such Holder. For special payment terms applicable to
Foreign Currency Notes, see "Special Provisions Relating to Foreign Currency
Notes -- Payment of Principal, Premium, if any, and Interest."
Book-Entry Notes may be transferred or exchanged only through the
Depositary. See "-- Book-Entry Notes" below. Registration of transfer or
exchange of Certificated Notes will be made at the office or agency maintained
by the Company in any place where the principal thereof and any premium or
interest thereon are
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payable. No service charge will be made by the Company or the Trustee for any
such registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith (other than exchanges pursuant to the
Indenture not involving any transfer).
Notwithstanding any provisions described in this prospectus supplement to
the contrary, if a Note specifies that an Addendum is attached thereto or that
"Other/Additional Provisions" apply, such Note will be subject to the terms
specified in such Addendum or "Other/Additional Provisions," as the case may be,
and will be described in the applicable pricing supplement.
The defeasance and covenant defeasance provisions of the Indenture
described under "Description of Debt Securities -- Discharge, Defeasance and
Covenant Defeasance" in the accompanying prospectus will apply to the Notes.
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise specified in the applicable pricing supplement, the Notes
will not be subject to any sinking fund. The applicable pricing supplement will
indicate if the Notes will be redeemable prior to the Stated Maturity Date and
the terms on which such Notes will be redeemable at the option of the Company.
If so specified, the Notes will be subject to redemption at the option of the
Company on any date on and after the initial redemption date specified in the
applicable pricing supplement in whole or from time to time in part in
increments of $1,000 or such other minimum denomination specified in such
pricing supplement (provided that any remaining principal amount thereof shall
be at least $1,000 or such minimum denomination), at the applicable Redemption
Price (as defined below), together with unpaid interest accrued thereon to the
date of redemption, on written notice given to the Holders thereof not more than
60 nor less than 30 calendar days prior to the date of redemption and in
accordance with the provisions of the Indenture. Unless otherwise specified in
the applicable pricing supplement, "Redemption Price," with respect to a Note,
means an amount equal to the initial redemption percentage specified in the
applicable pricing supplement (as adjusted by the annual redemption percentage
reduction, if applicable, specified in the applicable pricing supplement)
multiplied by the unpaid principal amount to be redeemed. The initial redemption
percentage, if any, applicable to a Note shall decline at each anniversary of
the initial redemption date by an amount equal to the applicable annual
redemption percentage reduction, if any, until the Redemption Price is equal to
100% of the unpaid principal amount to be redeemed. See also "-- Discount Notes"
below.
REPAYMENT AT THE OPTION OF THE HOLDER; REPURCHASES BY THE COMPANY
The applicable pricing supplement will indicate if the Notes will be
repayable at the option of the Holders thereof on a date specified prior to the
applicable Maturity Date and, unless otherwise specified in the applicable
pricing supplement, such Notes will be repayable at a price equal to 100% of the
principal amount thereof, together with unpaid interest accrued to the date of
repayment. See also "-- Discount Notes" below.
Unless otherwise specified in the Pricing Supplement, in order for such a
Note to be repaid, the Trustee must receive at least 30 days but not more than
60 days prior to the repayment date (i) such Note with the form entitled "Option
to Elect Repayment" on the reverse of such Note duly completed or (ii) a
telegram, telex, facsimile transmission, or a letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company in the United States setting forth the name of
the Holder of such Note, the principal amount of such Note, the principal amount
of such Note to be repaid, the certificate number or a description of the tenor
and terms of such Note, a statement that the option to elect repayment is being
exercised thereby, and a guarantee that such Note to be repaid, together with
the duly completed form entitled "Option to Elect Repayment" on the reverse of
such Note, will be received by the Trustee not later than the fifth Business Day
after the date of such telegram, telex, facsimile transmission or letter;
however, such telegram, telex, facsimile transmission or letter will only be
effective if such Note and duly completed form are received by the Trustee by
such fifth Business Day. Unless otherwise specified in the applicable pricing
supplement, exercise of the repayment option by the Holder of a Note will be
irrevocable. The repayment option may be exercised by the Holder of a Note for
less than the entire
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principal amount of the Note, but, in that event, the principal amount of the
Note remaining outstanding after repayment must be in an authorized
denomination.
If a Note is represented by a Global Security, the Depositary's nominee
will be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment with respect to a particular Note, the
Beneficial Owner (as defined below) of such Note must instruct the broker or
other Direct Participant (as defined below) or Indirect Participant (as defined
below) through which it holds an interest in such Note to notify the Depositary
of its desire to exercise a right to repayment. Different firms have different
deadlines for accepting instructions from their customers. Accordingly, each
Beneficial Owner should consult the broker or other Direct Participant or
Indirect Participant through which it holds an interest in a Note in order to
ascertain the deadline by which such an instruction must be given in order for
timely notice to be delivered to the Depositary.
If applicable, the Company will comply with the requirements of Section
14(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), and the rules
promulgated thereunder, and any other securities laws or regulations in
connection with any such repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
INTEREST
General
Unless otherwise specified in the applicable pricing supplement, each
interest-bearing Note will bear interest from its date of issue at the rate per
annum, in the case of a Fixed Rate Note, or pursuant to the interest rate
formula, in the case of a Floating Rate Note, in each case as specified in the
applicable pricing supplement, until the principal thereof is paid or duly made
available for payment. Unless otherwise specified in the applicable pricing
supplement, interest payments in respect of Fixed Rate Notes and Floating Rate
Notes will equal the amount of interest accrued during the Interest Payment
Period.
Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and on the Maturity Date. Unless otherwise
specified in the applicable pricing supplement, the first payment of interest on
any such Note originally issued between a Record Date and the related Interest
Payment Date will be made on the Interest Payment Date immediately following the
next succeeding Record Date to the Holder on such next succeeding Record Date.
Fixed Rate Notes
Interest on Fixed Rate Notes will be payable in arrears on a semi-annual or
other basis on the date(s) specified in the applicable pricing supplement (each,
an "Interest Payment Date" with respect to a Fixed Rate Note) and on the
Maturity Date. Unless otherwise specified in the applicable pricing supplement,
interest on Fixed Rate Notes will be computed on the basis of a 360-day year of
twelve 30-day months.
If any Interest Payment Date or the Maturity Date of a Fixed Rate Note
falls on a day that is not a Business Day, the required payment of principal,
premium, if any, and/or interest, will be made on the next succeeding Business
Day with the same force and effect as if made on the date such payment was due,
and no interest will accrue on such payment for the period from and after such
Interest Payment Date or the Maturity Date, as the case may be, to the date of
such payment on the next succeeding Business Day.
Floating Rate Note
Unless otherwise specified in the applicable pricing supplement, Floating
Rate Notes will be issued as described below. The applicable pricing supplement
will specify certain terms with respect to which each Floating Rate Note that is
being delivered, including whether such Floating Rate Note is a "Regular
Floating
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Rate Note," a "Floating Rate/Fixed Rate Note" or an "Inverse Floating Rate
Note," the Fixed Rate Commencement Date, if applicable, Fixed Interest Rate, if
applicable, Interest Rate Basis or Bases, Initial Interest Rate, if any, Initial
Interest Reset Date, Interest Reset Period and Dates, Interest Payment Period
and Dates, Index Maturity, Maximum Interest Rate and/or Minimum Interest Rate,
if any, and the Spread and/or Spread Multiplier, if any. If one or more of the
applicable Interest Rate Bases is LIBOR or the CMT Rate, the applicable pricing
supplement will specify the Designated LIBOR Currency, if any, and Designated
LIBOR Page or the Designated CMT Maturity Index and Designated CMT Telerate
Page, respectively, as such terms are described in "Glossary."
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," or an "Inverse Floating Rate Note" or as having an
Addendum attached or having "Other/Additional Provisions" apply relating to
a different interest rate formula, such Floating Rate Note will be
designated as a "Regular Floating Rate Note" and, except as described below
or in the applicable pricing supplement, will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Regular Floating Rate Note
shall be payable shall be reset as of each Interest Reset Date; provided,
however, that the interest rate in effect for the period, if any, from the
date of issue to the Initial Interest Reset Date will be the Initial
Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," then, except as described below or in the applicable
pricing supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (y) the interest rate in effect for the period, if
any, from the date of issue to the Initial Interest Reset Date will be the
Initial Interest Rate and (z) the interest rate in effect (the "Fixed
Interest Rate") for the period commencing on the date specified therefor in
the applicable pricing supplement (the "Fixed Rate Commencement Date") to
the Maturity Date shall be the interest rate so specified in the applicable
pricing supplement or, if no interest rate is specified, the interest rate
in effect thereon on the day immediately preceding the Fixed Rate
Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in the applicable pricing
supplement, such Floating Rate Note will bear interest at the Fixed
Interest Rate minus the rate determined by reference to the applicable
Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
provided, however, that, unless otherwise specified in the applicable
pricing supplement, the interest rate thereon will not be less than zero.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Inverse Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
Unless otherwise specified in the applicable pricing supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or in
the applicable pricing supplement, the interest rate in effect on each day shall
be (i) if such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date immediately preceding such Interest Reset Date
or (ii) if such day is not an Interest Reset Date, the interest rate determined
as of the Interest Determination Date immediately preceding the most recent
Interest Reset Date.
Interest on Floating Rate Notes will be determined by reference to (i) the
CD Rate, (ii) the CMT Rate, (iii) the Commercial Paper Rate, (iv) the Eleventh
District Cost of Funds Rate, (v) the Federal Funds Rate, (vi) LIBOR, (vii) the
Prime Rate, (viii) the Treasury Rate or (ix) such other interest rate or
interest rate formula as may be specified in the applicable pricing supplement
(each, an "Interest Rate Basis"); provided,
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however, that the interest rate in effect on a Floating Rate Note for the
period, if any, from the date of issue to the Initial Interest Reset Date will
be the Initial Interest Rate; provided further, that with respect to a Floating
Rate/Fixed Rate Note the interest rate in effect for the period commencing on
the Fixed Rate Commencement Date to the Maturity Date shall be the Fixed
Interest Rate, if such rate is specified in the applicable pricing supplement
or, if no such Fixed Interest Rate is specified, the interest rate in effect
thereon on the day immediately preceding the Fixed Rate Commencement Date.
The applicable pricing supplement will specify the applicable Interest
Reset Period and Interest Reset Date. Unless otherwise specified in the
applicable pricing supplement, the Interest Reset Dates will be, in the case of
Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly, the
Wednesday of each week (with the exception of weekly reset Floating Rate Notes
as to which the Treasury Rate is an applicable Interest Rate Basis, which will
reset the Tuesday of each week, except as described below); (iii) monthly, the
third Wednesday of each month (with the exception of monthly reset Floating Rate
Notes as to which the Eleventh District Cost of Funds Rate is an applicable
Interest Rate Basis, which will reset on the first calendar day of the month);
(iv) quarterly, the third Wednesday of March, June, September and December of
each year; (v) semiannually, the third Wednesday of the two months specified in
the applicable pricing supplement; and (vi) annually, the third Wednesday of the
month specified in the applicable pricing supplement; provided, however, that,
with respect to Floating Rate/Fixed Rate Notes, the rate of interest thereon
will not reset after the applicable Fixed Rate Commencement Date. If any
Interest Reset Date for any Floating Rate Note would otherwise be a day that is
not a Business Day, such Interest Reset Date will be postponed to the next
succeeding Business Day, except that in the case of a Floating Rate Note as to
which LIBOR is an applicable Interest Rate Basis and such Business Day falls in
the next succeeding calendar month, such Interest Reset Date will be the
immediately preceding Business Day. In addition, in the case of a Floating Rate
Note as to which the Treasury Rate is an applicable Interest Rate Basis and the
Interest Determination Date would otherwise fall on an Interest Reset Date, then
such Interest Reset Date will be postponed to the next succeeding Business Day.
The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date and calculated on or prior to the Calculation Date,
except with respect to LIBOR and the Eleventh District Cost of Funds Rate, which
will be calculated on such Interest Determination Date. Each Interest Rate Basis
will be determined as of the Interest Determination Date, and the applicable
interest rate will take effect on the applicable Interest Reset Date.
A Floating Rate Note may also have either or both of (i) a Maximum Interest
Rate, or ceiling, that may accrue during any Interest Payment Period, and (ii) a
Minimum Interest Rate, or floor, that may accrue during any Interest Payment
Period. In addition to any Maximum Interest Rate that may apply to any Floating
Rate Note, the interest rate on Floating Rate Notes will in no event be higher
than the maximum rate permitted by New York law, as the same may be modified by
United States law of general application. Under New York law in effect on the
date of this prospectus supplement, the maximum rate of interest, subject to
certain exceptions, for any loan in an amount less than $250,000 is 16% and for
any loan in the amount of $250,000 or more but less than $2,500,000 is 25% per
annum on a simple interest basis. These limits do not apply to loans of
$2,500,000 or more.
Except as provided below or in the applicable pricing supplement, interest
will be payable, in the case of Floating Rate Notes which reset: (i) daily,
weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified in
the applicable pricing supplement; (ii) quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) semiannually, on the
third Wednesday of the two months of each year specified in the applicable
pricing supplement; and (iv) annually, on the third Wednesday of the month of
each year specified in the applicable pricing supplement (each, an "Interest
Payment Date" with respect to a Floating Rate Note) and, in each case, on the
Maturity Date. If any Interest Payment Date other than the Maturity Date for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date will be postponed to the next succeeding Business Day,
except that in the case of a Floating Rate Note as to which LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding Business Day. If the Maturity Date of
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a Floating Rate Note falls on a day that is not a Business Day, the required
payment of principal, premium, if any, and interest, if any, will be made on the
next succeeding Business Day with the same force and effect as if made on the
date such payment was due, and no interest will accrue on such payment for the
period from and after the Maturity Date to the date of such payment on the next
succeeding Business Day.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in
or resulting from such calculation on Floating Rate Notes will be rounded, in
the case of United States dollars, to the nearest cent or, in the case of a
foreign currency, to the nearest unit (with one-half cent or unit being rounded
upwards).
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable Interest Payment Period. Unless otherwise specified in the
applicable pricing supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Floating Rate Notes for which an applicable Interest Rate Basis is the
CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of days
in the year in the case of Floating Rate Notes for which an applicable Interest
Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise specified in
the applicable pricing supplement, the interest factor for Floating Rate Notes
for which the interest rate is calculated with reference to two or more Interest
Rate Bases will be calculated in each period in the same manner as if only one
of the applicable Interest Rate Bases applied as specified in the applicable
pricing supplement.
Upon request of the Holder of any Floating Rate Note, the Calculation Agent
will disclose the interest rate then in effect and, if determined, the interest
rate that will become effective as a result of a determination made for the next
succeeding Interest Reset Date with respect to such Floating Rate Note.
Unless otherwise specified in the applicable pricing supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
CD Rate. Unless otherwise specified in the applicable pricing supplement,
"CD Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CD Rate (a "CD Rate Interest Determination Date"), the rate on such date for
negotiable United States dollar certificates of deposit having the Index
Maturity specified in the applicable pricing supplement as published in
H.15(519) under the heading "CDs (secondary market)," or, if not so published by
3:00 P.M., New York City time, on the related Calculation Date, the rate on such
CD Rate Interest Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity specified in the applicable
pricing supplement as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "CDs (secondary market)." If such rate is not yet published in
H.15(519), H.15 Daily Update or another recognized electronic source by 3:00
P.M., New York City time, on the related Calculation Date, then the CD Rate on
such CD Rate Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market offered rates as
of 10:00 A.M., New York City time, on such CD Rate Interest Determination Date,
of three leading nonbank dealers in negotiable United States dollar certificates
of deposit in The City of New York (which may include an Agent or its
affiliates) selected by the Calculation Agent for negotiable United States
dollar certificates of deposit of major United States money center banks in the
market for negotiable United States dollar certificates of deposit with a
remaining maturity closest to the Index Maturity specified in the applicable
pricing supplement in an amount that is representative for a single transaction
in that market at that time; provided, however, that if the dealers so selected
by the Calculation Agent are not quoting as mentioned in this sentence, the CD
Rate determined as of such CD Rate Interest Determination Date will be the CD
Rate in effect on such CD Rate Interest Determination Date.
CMT Rate. Unless otherwise specified in the applicable pricing supplement,
"CMT Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is
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determined with reference to the CMT Rate (a "CMT Rate Interest Determination
Date"), the rate displayed on the Designated CMT Telerate Page under the caption
". . . Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . .
. Mondays Approximately 3:45 P.M.," under the column for the Designated CMT
Maturity Index for (i) if the Designated CMT Telerate Page is 7051, the rate on
such CMT Rate Interest Determination Date and (ii) if the Designated CMT
Telerate Page is 7052, the weekly or monthly average, as specified in the
applicable pricing supplement, for the week or the month, as applicable, ended
immediately preceding the week or month, as applicable, in which the related CMT
Rate Interest Determination Date occurs. If such rate is no longer displayed on
the relevant page or is not displayed by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published or is not published by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate on such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate on the CMT Rate
Interest Determination Date will be calculated by the Calculation Agent and will
be a yield to maturity, based on the arithmetic mean of the secondary market
offered rates as of approximately 3:30 P.M., New York City time, on such CMT
Rate Interest Determination Date reported, according to their written records,
by three leading primary United States government securities dealers in The City
of New York (which may include an Agent or its affiliates) (each, a "Reference
Dealer") selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent is unable to obtain three such Treasury
Note quotations, the CMT Rate on such CMT Rate Interest Determination Date will
be calculated by the Calculation Agent and will be a yield to maturity based on
the arithmetic mean of the secondary market offered rates as of approximately
3:30 P.M., New York City time, on such CMT Rate Interest Determination Date of
three Reference Dealers in The City of New York (from five such Reference
Dealers selected by the Calculation Agent and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation (or,
in the event of equality, one of the lowest)), for Treasury Notes with an
original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100 million. If
three or four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the offered
rates obtained and neither the highest nor the lowest of such quotes will be
eliminated; provided, however, that if fewer than three Reference Dealers so
selected by the Calculation Agent are quoting as mentioned herein, the CMT Rate
determined as of such CMT Rate Interest Determination Date will be the CMT Rate
in effect on such CMT Rate Interest Determination Date. If two Treasury Notes
with an original maturity as described in the second preceding sentence have
remaining terms to maturity equally close to the Designated CMT Maturity Index,
the Calculation Agent will obtain quotations for the Treasury Note with the
shorter remaining term to maturity and will use such quotations to calculate the
CMT Rate as set forth above.
Commercial Paper Rate. Unless otherwise specified in the applicable
pricing supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Commercial Paper Rate (a "Commercial Paper
Rate Interest Determination Date"), the Money Market Yield on such date of the
rate for commercial paper having the Index Maturity specified in the applicable
pricing supplement as published in H.15(519) under the heading "Commercial
Paper-Nonfinancial." or, if not so published by 3:00 P.M., New York City time,
on the
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related Calculation Date, then the rate on such Commercial Paper Rate Interest
Determination Date for commercial paper having the Index Maturity specified in
the applicable pricing supplement as published in H.15 Daily Update, or such
other recognized electronic source used for the purpose of displaying such rate,
under the caption "Commercial Paper-Nonfinancial." If such rate is not yet
published in H.15(519), H.15 Daily Update or another recognized electronic
source by 3:00 P.M., New York City time, on the related Calculation Date, then
the Commercial Paper Rate on such Commercial Paper Rate Interest Determination
Date will be calculated by the Calculation Agent and will be the Money Market
Yield of the arithmetic mean of the offered rates at approximately 11:00 A.M.,
New York City time, on such Commercial Paper Rate Interest Determination Date of
three leading dealers of United States dollar commercial paper in The City of
New York (which may include an Agent or its affiliates) selected by the
Calculation Agent for commercial paper having the Index Maturity specified in
the applicable pricing supplement placed for an industrial issuer whose bond
rating is "Aa," or the equivalent, from a nationally recognized statistical
rating organization; provided, however, that if the dealers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Commercial
Paper Rate determined as of such Commercial Paper Rate Interest Determination
Date will be the Commercial Paper Rate in effect on such Commercial Paper Rate
Interest Determination Date.
Eleventh District Cost of Funds Rate. Unless otherwise specified in the
applicable pricing supplement, "Eleventh District Cost of Funds Rate" means,
with respect to any Interest Determination Date relating to a Floating Rate Note
for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh District Cost of Funds Rate Interest Determination Date falls, as set
forth under the caption "11th District" on the display on Bridge Telerate, Inc.
(or any successor service) on page 7058 (or any other page as may replace such
page on such service) ("Telerate Page 7058) as of 11:00 A.M., San Francisco
time, on such Eleventh District Cost of Funds Rate Interest Determination Date.
If such rate does not appear on Telerate Page 7058 on such Eleventh District
Cost of Funds Rate Interest Determination Date then the Eleventh District Cost
of Funds Rate on such Eleventh District Cost of Funds Rate Interest
Determination Date shall be the monthly weighted average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District that was
most recently announced (the "Index") by the Federal Home Loan Bank of San
Francisco (the "FHLB of San Francisco") as such cost of funds for the calendar
month immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date. If the FHLB of San Francisco fails to announce the Index on
or prior to such Eleventh District Cost of Funds Rate Interest Determination
Date for the calendar month immediately preceding such Eleventh District Cost of
Funds Rate Interest Determination Date, the Eleventh District Cost of Funds Rate
determined as of such Eleventh District Cost of Funds Rate Interest
Determination Date will be the Eleventh District Cost of Funds Rate in effect on
such Eleventh District Cost of Funds Rate Interest Determination Date.
Federal Funds Rate. Unless otherwise specified in the applicable pricing
supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for United States dollar
federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)," as such rate is displayed on Bridge Telerate, Inc. (or any
successor service) on page 120 (or any other page as may replace such page on
such service) ("Telerate Page 120"), or if such rate does not appear on Telerate
Page 120 or if not so published by 3:00 P.M., New York City time on the related
Calculation Date, the rate on such Federal Funds Rate Interest Determination
Date for United States dollar federal funds as published in H.15 Daily Update,
or such other recognized electronic source used for the purpose of displaying
such rate, under the caption "Federal Funds (Effective)." If such rate does not
appear on Telerate Page 120 or is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source by 3:00 P.M., New York City time,
on the related Calculation Date, then the Federal Funds Rate on such Federal
Funds Rate Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of United States dollar federal funds transactions in The City of New York
(which may include an Agent or its affiliates) selected by the Calculation Agent
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prior to 9:00 A.M., New York City time, on such Federal Funds Rate Interest
Determination Date; provided, however, that if the brokers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate determined as of such Federal Funds Rate Interest Determination Date
will be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR. Unless otherwise specified in the applicable pricing supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
(i) With respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference
to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be either: (a)
if "LIBOR Telerate" is specified in the applicable pricing supplement or if
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
pricing supplement as the method for calculating LIBOR, the rate for
deposits in the Designated LIBOR Currency having the Index Maturity
specified in such pricing supplement, commencing on such Interest Reset
Date, that appears on the Designated LIBOR Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date, or (b) if "LIBOR Reuters"
is specified in the applicable pricing supplement, the arithmetic mean of
the offered rates (unless the Designated LIBOR Page by its terms provides
only for a single rate, in which case such single rate shall be used) for
deposits in the Designated LIBOR Currency having the Index Maturity
specified in such pricing supplement, commencing on the applicable Interest
Reset Date, that appear (or, if only a single rate is required as
aforesaid, appears) on the Designated LIBOR Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date. If fewer than two such
offered rates appear, or if no such rate appears, as applicable, LIBOR on
such LIBOR Interest Determination Date will be determined in accordance
with the provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case may
be, on the Designated LIBOR Page as specified in clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks (which may include affiliates of the Agents) in the
London interbank market, as selected by the Calculation Agent, to provide
the Calculation Agent with its offered quotation for deposits in the
Designated LIBOR Currency for the period of the Index Maturity specified in
the applicable pricing supplement, commencing on the applicable Interest
Reset Date, to prime banks in the London interbank market at approximately
11:00 A.M., London time, on such LIBOR Interest Determination Date and in a
principal amount that is representative for a single transaction in the
Designated LIBOR Currency in such market at such time. If at least two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of the rates quoted at approximately 11:00
A.M., in the applicable Principal Financial Center, on such LIBOR Interest
Determination Date by three major banks (which may include affiliates of
the Agents) in such Principal Financial Center selected by the Calculation
Agent for loans in the Designated LIBOR Currency to leading European banks,
having the Index Maturity specified in the applicable pricing supplement
and in a principal amount that is representative for a single transaction
in the Designated LIBOR Currency in such market at such time; provided,
however, that if the banks so selected by the Calculation Agent are not
quoting as mentioned in this sentence, LIBOR determined as of such LIBOR
Interest Determination Date will be LIBOR in effect on such LIBOR Interest
Determination Date.
Prime Rate. Unless otherwise specified in the applicable pricing
supplement, "Prime Rate" means, with respect to any Interest Determination Date
relating to a Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the
rate on such date as is published in H.15(519) under the caption "Bank Prime
Loan" or, if not published by to 3:00 P.M., New York City time, on the related
Calculation Date, the rate on such Prime Rate Interest Determination Date as
published in H.15 Daily Update, or such other recognized electronic source used
for the purpose of displaying such rate, under the caption "Bank Prime Loan." If
such rate is not yet published in H.15(519), H.15 Daily Update or another
recognized electronic source by 3:00 P.M., New York City time, on the related
Calculation Date, then the Prime Rate shall be the arithmetic mean of the rates
of interest publicly announced
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by each bank that appears on the Reuters Screen US PRIME 1 Page as such bank's
prime rate or base lending rate as of 11:00 A.M., New York time, on such Prime
Rate Interest Determination Date. If fewer than four such rates so appear on the
Reuters US PRIME 1 Page for such Prime Rate Interest Determination Date, then
the Prime Rate shall be the arithmetic mean of the prime rates or base lending
rates quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date by three major banks (which may include affiliates of the
Agents) selected by the Calculation Agent in The City of New York; provided,
however, that if the banks so selected by the Calculation Agent are not quoting
as mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
Treasury Rate. Unless otherwise specified in the applicable pricing
supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is determined
by reference to the Treasury Rate (a "Treasury Rate Interest Determination
Date"), the rate from the auction held on such Treasury Rate Interest
Determination Date (the "Auction") of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified in the applicable pricing
supplement, under the caption "INVESTMENT RATE" on the display on Bridge
Telerate, Inc. (or any successor service) on page 56 (or any other page as may
replace such page on such service) ("Telerate Page 56") or page 57 (or any other
page as may replace such page on such service) ("Telerate Page 57") or, if not
so published by 3:00 P.M., New York City time, on the related Calculation Date,
the Bond Equivalent Yield of the rate for such Treasury Bills as published in
H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government securities/
Treasury bills/Auction high" or, if not so published by 3:00 P.M., New York City
time, on the related Calculation Date, the Bond Equivalent Yield of the auction
rate of such Treasury Bills as announced by the United States Department of the
Treasury. In the event that the auction rate of Treasury Bills having the Index
Maturity specified in the applicable pricing supplement is not so announced by
the United States Department of the Treasury, or if no such Auction is held, the
Treasury Rate will be the Bond Equivalent Yield of the rate on such Treasury
Rate Interest Determination Date of Treasury Bills having the Index Maturity
specified in the applicable pricing supplement as published in H.15(519) under
the caption "U.S. Government securities/Treasury bills/Secondary market" or, if
not so published by 3:00 P.M., New York City time, on the related Calculation
Date, the rate on such Treasury Rate Interest Determination Date of such
Treasury Bills as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "U.S. Government securities/Treasury bills/Secondary market." If such
rate is not yet published in H.15(519), H.15 Daily Update or another recognized
electronic source, then the Treasury Rate will be calculated by the Calculation
Agent and will be the Bond Equivalent Yield of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Rate Interest Determination Date, of three primary United
States government securities dealers (which may include the Agents or their
affiliates) selected by the Calculation Agent, for the issue of Treasury Bills
with a remaining maturity closest to the Index Maturity specified in the
applicable pricing supplement; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Treasury Rate determined as of such Treasury Rate Interest Determination
Date will be the Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
AMORTIZING NOTES
The Company may from time to time offer Notes with the amount of principal
thereof and interest thereon payable in installments over the term of such Notes
("Amortizing Notes"). Unless otherwise specified in the applicable pricing
supplement, interest on each Amortizing Note will be computed on the basis of a
360-day year of twelve 30-day months. Payments with respect to Amortizing Notes
will be applied first to interest due and payable thereon and then to the
reduction of the unpaid principal amount thereof. Further information concerning
additional terms and provisions of Amortizing Notes will be specified in the
applicable pricing supplement, including a table setting forth repayment
information for such Amortizing Notes.
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DISCOUNT NOTES
The Company may from time to time offer Notes that have an Issue Price (as
specified in the applicable pricing supplement) that is less than 100% of the
principal amount thereof (i.e., par) ("Discount Notes"). Discount Notes may not
bear any interest currently or may bear interest at a rate that is below market
rates at the time of issuance. Unless otherwise specified in the applicable
pricing supplement, the difference between the Issue Price of a Discount Note
and par is referred to herein as the "Discount." In the event of redemption,
repayment or acceleration of maturity of a Discount Note, the amount payable to
the Holder of such Discount Note will be equal to the sum of: (i) the Issue
Price (increased by any accruals of Discount, as specified in the applicable
pricing supplement) and, in the event of any redemption of such Discount Note
(if applicable), multiplied by the initial redemption percentage specified in
the applicable pricing supplement (as adjusted by the annual redemption
percentage reduction, if applicable); and (ii) any accrued and unpaid interest
on such Discount Note, from the date of issue to the date of redemption,
repayment or acceleration of maturity.
Certain additional considerations relating to the Discount Notes may be
specified in the applicable pricing supplement. The accrual of the applicable
Discount may differ from the accrual of original issue discount for U.S. federal
income tax purposes. See "Certain United States Federal Income Tax
Considerations."
INDEXED NOTES
The Company may from time to time offer Notes with the amount of principal,
premium and/or interest payable in respect thereof to be determined with
reference to the price or prices of specified commodities or stocks, to the
exchange rate of one or more specified currencies relative to an indexed
currency or to such other price(s) or exchange rate(s) ("Indexed Notes"), as
specified in the applicable pricing supplement. In certain cases, Holders of
Indexed Notes may receive a principal payment on the Maturity Date that is
greater than or less than the principal amount of such Indexed Notes depending
upon the relative value on the Maturity Date of the specified indexed item.
Information as to the method for determining the amount of principal, premium,
if any, and/or interest, if any, payable in respect of Indexed Notes, certain
historical information with respect to the specified indexed item and any
material tax considerations associated with an investment in Indexed Notes will
be specified in the applicable pricing supplement. See also "Risk Factors."
BOOK-ENTRY NOTES
The Company has established a depositary arrangement with The Depository
Trust Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable pricing supplement.
Upon issuance, all Book-Entry Notes bearing interest (if any) at the same
rate or pursuant to the same formula and having the same date of issue,
Specified Currency, Interest Payment Dates (if any), Stated Maturity Date,
redemption provisions (if any), repayment provisions (if any) and other terms
will be represented by a single Global Security. Each Global Security
representing Book-Entry Notes will be deposited with, or on behalf of, the
Depositary and will be registered in the name of the Depositary or a nominee of
the Depositary. No Global Security may be transferred except as a whole by a
nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or such nominee to a successor of the
Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or its nominee, as the case may be, will be the
sole Holder of the Book-Entry Notes represented thereby for all purposes under
the Indenture. Except as otherwise provided below, the Beneficial Owners of the
Global Security or Securities representing Book-Entry Notes will not be entitled
to receive physical delivery of Certificated Notes and will not be considered
the Holders thereof for any purpose under the Indenture, and no Global Security
representing Book-Entry Notes shall be exchangeable or transferable.
Accordingly, each Beneficial Owner must rely on the procedures of the Depositary
and, if such Beneficial Owner is not a Participant (as defined below), on the
procedures of the Participant through which such Beneficial Owner
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owns its interest in order to exercise any rights of a Holder under such Global
Security or the Indenture. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security representing Book-Entry Notes.
Unless otherwise specified in the applicable pricing supplement, each
Global Security representing Book-Entry Notes will be exchangeable for
Certificated Notes of like tenor and terms and of differing authorized
denominations aggregating a like principal amount, only if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for the Global Securities or the Depositary ceases to be a clearing agency
registered under the Exchange Act (if so required by applicable law or
regulation) and, in each case, a successor Depositary is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such unwillingness, inability or ineligibility, (ii) the Company in its sole
discretion determines that the Global Securities shall be exchangeable for
Certificated Notes or (iii) there shall have occurred and be continuing an Event
of Default under the Indenture with respect to the Notes and Beneficial Owners
representing a majority in aggregate principal amount of the Book-Entry Notes
represented by Global Securities advise the Depositary to cease acting as
depositary. Upon any such exchange, the Certificated Notes shall be registered
in the names of the Beneficial Owners of the Global Security or Securities
representing Book-Entry Notes, which names shall be provided by the Depositary's
relevant Participants (as identified by the Depositary) to the Trustee.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership
nominee). One fully registered Global Security will be issued for each
issue of Book-Entry Notes, each in the aggregate principal amount of such
issue, and will be deposited with the Depositary. If, however, the
aggregate principal amount of any issue exceeds $200 million, one Global
Security will be issued with respect to each $200 million of principal
amount and an additional Global Security will be issued with respect to any
remaining principal amount of such issue.
The Depositary 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. The Depositary was created
to hold securities of its participants ("Participants") and to facilitate
the clearance and settlement of transactions among Participants in such
securities through electronic book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities
certificates. Direct Participants of the Depositary ("Direct Participants")
include securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations. The
Depositary is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange LLC and the National
Association of Securities Dealers, Inc. Access to the Depositary's system
is also available to others, such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants
are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be
made by or through Direct Participants, which will receive a credit for
such Book-Entry Notes on the Depositary's records. The ownership interest
of each actual purchaser of each Book-Entry Note represented by a Global
Security ("Beneficial Owner") is in turn to be recorded on the Direct
Participants' and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participants or Indirect Participants through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in a Global Security representing Book-Entry Notes are
to be accomplished by entries made on the books of
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Participants acting on behalf of Beneficial Owners. Beneficial Owners of a
Global Security representing Book-Entry Notes will not receive Certificated
Notes representing their ownership interests therein, except in the event
that use of the Book-Entry system for such Book-Entry Notes is
discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary
are registered in the name of the Depositary's partnership nominee, Cede &
Co. The deposit of Global Securities with, or on behalf of, the Depositary
and their registration in the name of Cede & Co. effect no change in
beneficial ownership. The Depositary has no knowledge of the actual
Beneficial Owners of the Global Securities representing the Book-Entry
Notes; the Depositary's records reflect only the identity of the Direct
Participants to whose accounts such Book-Entry Notes are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial Owners will
be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with
respect to the Global Securities representing the Book-Entry Notes. Under
its usual procedures, the Depositary mails an Omnibus Proxy to the Company
as soon as possible after the applicable record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Book-Entry Notes are credited on the
applicable record date (identified in a listing attached to the Omnibus
Proxy).
Principal, premium, if any, and/or interest payments, if any, on the
Global Securities representing the Book-Entry Notes will be made to the
Depositary. The Depositary's practice is to credit Direct Participants'
accounts on the applicable payment date in accordance with their respective
holdings shown on the Depositary's records unless the Depositary has reason
to believe that it will not receive payment on such date. Payments by
Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of the Depositary,
the Trustee or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal,
premium, if any, and/or interest to the Depositary is the responsibility of
the Company or the Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of the Depositary, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct Participants and Indirect Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes within an issue are being redeemed, the
Depositary's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
A Beneficial Owner shall give notice of any option to elect to have
its Book-Entry Notes repaid by the Company, through its Participant, to the
Trustee, and shall effect delivery of such Book-Entry Notes by causing the
Direct Participant to transfer the Participant's interest in the Global
Security or Securities representing such Book-Entry Notes, on the
Depositary's records, to the Trustee. The requirement for physical delivery
of Book-Entry Notes in connection with a demand for repayment will be
deemed satisfied when the ownership rights in the Global Security or
Securities representing such Book-Entry Notes are transferred by Direct
Participants on the Depositary's records.
Management of the Depositary is aware that some computer applications,
systems and the like for processing data ("Systems") that are dependent
upon calendar dates, including dates before, on and after January 1, 2000,
may encounter "Year 2000 problems." The Depositary has informed Direct
Participants and Indirect Participants and other members of the financial
community (the "Industry") that it has developed and is implementing a
program so that its Systems, as the same relate to the timely payment of
distributions (including principal and interest payments) to
securityholders, book-entry deliveries and settlement of trades within the
Depositary ("Depositary Services"), continue to function appropriately.
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This program includes a technical assessment and a remediation plan, each
of which is complete. Additionally, the Depositary's plan includes a
testing phase, which is expected to be completed within appropriate time
frames.
However, the Depositary's ability to perform properly its services is
also dependent upon other parties, including, but not limited to, issuers
and their agents, as well as the Depositary's Direct Participants and
Indirect Participants, third-party vendors form whom the Depositary
licenses software and hardware, and third-party vendors on whom the
Depositary relies for information or the provision of services, including
telecommunication and electrical utility service providers, among others.
The Depositary has informed the Industry that it is contacting (and will
continue to contact) third-party vendors from whom the Depositary acquires
services to: (i) impress upon them the importance of such services being
Year 2000 compliant; and (ii) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, the Depositary is in the process of developing such contingency
plans as it deems appropriate.
According to the Depositary, the information in the preceding two
paragraphs with respect to the Depositary has been provided to the Industry
for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the Trustee. Under such circumstances,
in the event that a successor securities depository is not obtained,
Certificated Notes are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In
that event, Certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
None of the Company, any Agents, the Trustee or the registrar for the Notes will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
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SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable pricing supplement, Foreign
Currency Notes will not be sold in, or to residents of, the country issuing the
Specified Currency. The information set forth in this prospectus supplement is
directed to prospective purchasers who are United States residents. The Company
disclaims any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the purchase, holding or receipt of payments of principal of, and
premium, if any, and interest on, the Foreign Currency Notes. Such persons
should consult their own financial and legal advisors with regard to such
matters.
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
Unless otherwise specified in the applicable pricing supplement, the
Company is obligated to make payments of principal of, and premium, if any, and
interest on, Foreign Currency Notes in the applicable Specified Currency (or, if
such Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued such Specified Currency as at the time of such payment is
legal tender for the payment of such debts). Any such amounts payable by the
Company in a foreign currency will, unless otherwise specified in the applicable
pricing supplement, be converted by the exchange rate agent named in the
applicable pricing supplement (the "Exchange Rate Agent") into United States
dollars for payment to Holders. However, the Holder of a Foreign Currency Note
may elect to receive such amounts in the applicable foreign currency as
hereinafter described.
Any United States dollar amount to be received by a Holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New York
received by the Exchange Rate Agent at approximately 11:00 A.M., New York City
time, on the second Business Day preceding the applicable payment date from
three recognized foreign exchange dealers (one of whom may be the Exchange Rate
Agent) selected by the Exchange Rate Agent and approved by the Company for the
purchase by the quoting dealer of the Specified Currency for United States
dollars for settlement on such payment date in the aggregate amount of such
Specified Currency payable to all Holders of Foreign Currency Notes scheduled to
receive United States dollar payments and at which the applicable dealer commits
to execute a contract. All currency exchange costs will be borne by the Holders
of such Foreign Currency Notes by deductions from such payments. If three such
bid quotations are not available, payments will be made in the Specified
Currency.
A Holder of a Foreign Currency Note may elect to receive all or a specified
portion of any payment of the principal of, and premium, if any, and/or interest
on, such Foreign Currency Note in the Specified Currency by submitting a written
request for such payment to the Trustee at its corporate trust office (or at the
office of the New York presenting agent) in The City of New York on or prior to
the applicable Record Date or at least fifteen calendar days prior to the
Maturity Date, as the case may be. Such written request may be mailed or hand
delivered or sent by cable, telex or other form of facsimile transmission. A
Holder of a Foreign Currency Note may elect to receive all or a specified
portion of all future payments in the Specified Currency in respect of such
principal, premium, if any, and/or interest and need not file a separate
election for each payment. Such election will remain in effect until revoked by
written notice to the Trustee, but written notice of any such revocation must be
received by the Trustee on or prior to the applicable Record Date or at least
fifteen calendar days prior to the Maturity Date, as the case may be. Holders of
Foreign Currency Notes whose Notes are to be held in the name of a broker or
nominee should contact such broker or nominee to determine whether and how an
election to receive payments in the Specified Currency may be made.
Payments of the principal of, and premium, if any, and/or interest on,
Foreign Currency Notes which are to be made in United States dollars will be
made in the manner specified herein with respect to Notes denominated in United
States dollars. See "Description of Notes -- General." Payments of interest on
Foreign Currency Notes which are to be made in the Specified Currency on an
Interest Payment Date other than the Maturity Date will be made by check mailed
to the address of the Holders of such Foreign Currency
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Notes as they appear in the Security Register, subject to the right to receive
such interest payments by wire transfer of immediately available funds under
certain circumstances described under "Description of Notes -- General."
Payments of principal of, and premium, if any, and/or interest on, Foreign
Currency Notes which are to be made in the Specified Currency on the Maturity
Date will be made by wire transfer of immediately available funds to an account
with a bank designated at least fifteen calendar days prior to the Maturity Date
by each Holder thereof, provided that such bank has appropriate facilities
therefor and that the applicable Foreign Currency Note is presented and
surrendered at the office of the New York presenting agent payable in time for
the Trustee to make such payments in such funds in accordance with its normal
procedures.
Unless otherwise specified in the applicable pricing supplement, a
Beneficial Owner of a Global Security or Securities representing Book-Entry
Notes payable in a Specified Currency other than United States dollars which
elects to receive payments of principal, premium, if any, and/or interest in
such Specified Currency must notify the Participant through which it owns its
interest on or prior to the applicable Record Date or at least fifteen calendar
days prior to the Maturity Date, as the case may be, of such Beneficial Owner's
election. Such Participant must notify the Depositary of such election on or
prior to the third Business Day after such Record Date or at least twelve
calendar days prior to the Maturity Date, as the case may be, and the Depositary
will notify the Trustee of such election on or prior to the fifth Business Day
after such Record Date or at least ten calendar days prior to the Maturity Date,
as the case may be. If complete instructions are received by the Participant
from the Beneficial Owner and forwarded by the Participant to the Depositary,
and by the Depositary to the Trustee, on or prior to such dates, then such
Beneficial Owner will receive payments in the applicable Specified Currency.
PAYMENT CURRENCY
If the Specified Currency for a Foreign Currency Note is not available for
the required payment of principal, premium, if any, and/or interest in respect
thereof due to the imposition of exchange controls or other circumstances beyond
the control of the Company, the Company will be entitled to satisfy its
obligations to the Holder of such Foreign Currency Note by making such payment
in United States dollars on the basis of the Market Exchange Rate, computed by
the Exchange Rate Agent, on the second Business Day prior to such payment or, if
such Market Exchange Rate is not then available, on the basis of the most
recently available Market Exchange Rate, or as otherwise specified in the
applicable pricing supplement.
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
GOVERNING LAW; JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. If an action based on Foreign Currency Notes were
commenced in a court of the United States, it is likely that such court would
grant judgment relating to such Foreign Currency Notes only in United States
dollars. It is not clear, however, whether, in granting such judgment, the rate
of conversion into United States dollars would be determined with reference to
the date of default, the date of entry of the judgment or some other date. Under
New York law in effect as of the date of this Prospectus Supplement, a state
court in the State of New York rendering a judgment on a Foreign Currency Note
would be required to render such judgment in the applicable foreign currency,
and such judgment would be converted into United States dollars at the exchange
rate prevailing on the date of entry of the judgment. Accordingly, Holders of
Foreign Currency Notes would bear the risk of exchange rate fluctuations between
the time the amount of the judgment is calculated and the time such amount is
converted from United States dollars into the applicable foreign currency. It is
not certain, however, whether a non-New York state court would follow the same
rules and procedures with respect to conversion of foreign currency judgments.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. The summary is stated in general terms. It deals only with
Notes held as capital assets and does not purport to deal with persons in
special tax situations, such as financial institutions, insurance companies,
tax-exempt organizations, regulated investment companies, dealers in securities
or currencies, persons holding Notes as a hedge against currency risks or as a
position in a "straddle" for tax purposes, or persons whose functional currency
is not the United States dollar, or otherwise to deal with all possible
situations. It also does not deal with Holders other than original purchasers
(except where otherwise specifically noted). BECAUSE THE EXACT PRICING AND OTHER
TERMS OF THE NOTES WILL VARY, NO ASSURANCE CAN BE GIVEN THAT THE CONSIDERATIONS
DESCRIBED BELOW WILL APPLY TO A PARTICULAR ISSUANCE OF NOTES. PERSONS
CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR
PARTICULAR SITUATION AS WELL AS ANY CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE NOTES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN
TAXING JURISDICTION.
As used herein, the term "U.S. Holder" means a Beneficial Owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation or partnership (including an entity
treated as a partnership or corporation for U.S. income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia (unless, in the case of a partnership, Treasury regulations
are adopted that provide otherwise), (iii) an estate the income of which is
subject to United States Federal income taxation regardless of its source, (iv)
a trust whose administration is subject to the primary supervision of a United
States court and which has one or more United States persons who have the
authority to control all substantial decisions of the trust, or (v) any other
person whose income or gain in respect of a Note is effectively connected with
the conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a Beneficial Owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting). As discussed below, however, interest which is not
"qualified stated interest" may be treated as original issue discount, and
special rules apply to contingent payment debt instruments.
Original Issue Discount. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Notes issued with original issue discount
("Original Issue Discount Notes").
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of 1%
of the Note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date or, in the case of a Note
providing for the payment of any amount other than qualified stated interest (as
hereinafter defined) prior to maturity, multiplied by the weighted average
maturity of such Note). The issue price of each Note in an issue of Notes equals
the first price at which a substantial amount of such Notes has been sold
(ignoring sales to bond houses, brokers, or similar persons or organizations
acting in the capacity of underwriters, placement agents, or wholesalers). The
stated redemption price at maturity of a Note is the sum of all payments
provided by the Note other than "qualified stated interest" payments. The term
"qualified stated interest" generally means stated interest to the extent that
it is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate or certain formula rates
(as discussed further below). Therefore, unless the
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de minimis exception applies, stated interest which is not qualified stated
interest will be part (or all) of the original issue discount.
Payments of qualified stated interest on a Note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of an Original Issue Discount Note must include
original issue discount in income as ordinary interest income for United States
Federal income tax purposes as it accrues under a constant yield method, which
will result in accrual in advance of receipt of the cash payments attributable
to such income, regardless of such U.S. Holder's regular method of tax
accounting. In general, the amount of original issue discount included in income
by the initial U.S. Holder of an Original Issue Discount Note is the sum of the
daily portions of original issue discount with respect to such Original Issue
Discount Note for each day during the taxable year (or portion of the taxable
year) on which such U.S. Holder held such Original Issue Discount Note. The
"daily portion" of original issue discount on any Original Issue Discount Note
is determined by allocating to each day in any accrual period a ratable portion
of the original issue discount allocable to that accrual period. An "accrual
period" may be of any length and the accrual periods may vary in length over the
term of the Original Issue Discount Note, provided that each accrual period is
no longer than one year and each scheduled payment of principal or interest
occurs either on the final day of an accrual period or on the first day of an
accrual period. The amount of original issue discount allocable to each accrual
period is generally equal to the difference between (i) the product of the
Original Issue Discount Note's adjusted issue price at the beginning of such
accrual period and its yield to maturity (determined on the basis of compounding
at the close of each accrual period and appropriately adjusted to take into
account the length of the particular accrual period) and (ii) the amount of any
qualified stated interest payments allocable to such accrual period. The
"adjusted issue price" of an Original Issue Discount Note at the beginning of
any accrual period is the sum of the issue price of the Original Issue Discount
Note plus the amount of original issue discount allocable to all prior accrual
periods minus the amount of any prior payments on the Original Issue Discount
Note that were not qualified stated interest payments. Under these rules, U.S.
Holders generally will have to include in income increasingly greater amounts of
original issue discount in successive accrual periods.
A U.S. Holder who purchases an Original Issue Discount Note for an amount
that is greater than its adjusted issue price as of the purchase date and less
than or equal to the sum of all amounts payable on the Original Issue Discount
Note after the purchase date other than payments of qualified stated interest,
will be considered to have purchased the Original Issue Discount Note at an
"acquisition premium." Under the acquisition premium rules, the amount of
original issue discount which such U.S. Holder must include in its gross income
with respect to such Original Issue Discount Note for any taxable year (or
portion thereof in which the U.S. Holder holds the Original Issue Discount Note)
will be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
Floating Rate Notes and Indexed Notes ("Variable Notes") are subject to
special rules whereby a Variable Note will qualify as a "variable rate debt
instrument" (and will be subject to taxation as described below) if (a) its
issue price does not exceed the total noncontingent principal payments that may
be due under the Variable Note by more than a specified de minimis amount and
(b) it does not provide for stated interest other than stated interest, paid or
compounded at least annually, at current values of (i) one or more qualified
floating rates, (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single objective rate, or (iv) a single fixed rate and a single
objective rate that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than .65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than .65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, two or more qualified floating rates that can reasonably be expected
to have approximately the same values throughout the term of the Variable Note
(e.g., two or more qualified floating rates with values within 25 basis points
of each other as determined on the Variable Note's issue date) will be treated
as a single qualified
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floating rate. Notwithstanding the foregoing, a variable rate that would
otherwise constitute a qualified floating rate but which is subject to one or
more restrictions such as a restriction on the maximum stated interest rate
(i.e., a cap), a restriction on the minimum stated interest rate (i.e., a
floor), a restriction on the amount of increase or decrease in the stated
interest rate (i.e., a governor), or other similar restrictions, may, under
certain circumstances, fail to be treated as a qualified floating rate unless
such cap, floor or governor is fixed throughout the term of the Note, or such
restriction is, in general, not otherwise expected to significantly affect the
yield. An "objective rate" is a rate that is not itself a qualified floating
rate but which is determined using a single fixed formula and which is based
upon objective financial or economic information (e.g., a rate that is based on
one or more qualified floating rates or on the yield of actively traded personal
property, other than stock or debt of the issuer or a related party). A rate
will not qualify as an objective rate if it is based on information (other than
credit quality of the issuer) that is within the control of the issuer (or a
related party) or that is unique to the circumstances of the issuer (or a
related party), such as dividends, profits, or the value of the issuer's stock.
Also, other variable interest rates may be treated as objective rates if so
designated by the Internal Revenue Service (the "IRS") in the future. Despite
the foregoing, a variable rate of interest on a Variable Note will not
constitute an objective rate if it is reasonably expected that the average value
of such rate during the first half of the Variable Note's term will be either
significantly less than or significantly greater than the average value of the
rate during the final half of the Variable Note's term. A "qualified inverse
floating rate" is any objective rate where such rate is equal to a fixed rate
minus a qualified floating rate, as long as variations in the rate can
reasonably be expected to inversely reflect contemporaneous variations in the
qualified floating rate. Also, if a Variable Note provides for stated interest
at a fixed rate for an initial period of one year or less followed by a variable
rate that is either a qualified floating rate or an objective rate and if the
variable rate on the Variable Note's issue date is intended to approximate the
fixed rate (e.g., the value of the variable rate on the issue date does not
differ from the value of the fixed rate by more than 25 basis points), then the
fixed rate and the variable rate together will constitute either a single
qualified floating rate or objective rate, as the case may be.
If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument," and if stated interest on such
Note is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually, then all stated interest on such Note will
constitute qualified stated interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single qualified
floating rate or a single objective rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" will generally not be treated as
having been issued with original issue discount unless the Variable Note is
issued at a price below the Note's stated principal amount by an amount in
excess of a specified de minimis amount. Original issue discount and qualified
stated interest, if any, that accrues during an accrual period on such a
Variable Note is determined under the rules applicable to fixed rate debt
instruments by assuming that the variable rate is a fixed rate equal to (i) in
the case of a qualified floating rate or qualified inverse floating rate, the
value as of the issue date, of the qualified floating rate or qualified inverse
floating rate, or (ii) in the case of an objective rate (other than a qualified
inverse floating rate), a fixed rate that reflects the yield that is reasonably
expected for the Variable Note. The amount of qualified stated interest
allocable to an accrual period is increased (or decreased) if the interest
actually paid during an accrual period exceeds (or is less than) the interest
assumed to be paid during the accrual period pursuant to the foregoing rules.
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. Such a Variable Note is
generally converted into an "equivalent" fixed rate debt instrument by
substituting any qualified floating rate or qualified inverse floating rate
provided for under the terms of the Variable Note with a fixed rate equal to the
value of the qualified floating rate or qualified inverse floating rate, as the
case may be, as of the Variable Note's issue date. Any objective rate (other
than a qualified inverse floating rate) provided for under the terms of the
Variable Note is converted into a fixed rate that reflects the yield that is
reasonably expected for the Variable Note. In the case of a Variable Note that
qualifies as a "variable rate debt instrument" and provides for stated interest
at a fixed rate in addition to either one or more qualified floating rates or a
qualified inverse floating rate, the fixed rate is initially converted into a
qualified floating rate (or a qualified inverse floating rate, if the Variable
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<PAGE> 25
Note provides for a qualified inverse floating rate). Under such circumstances,
the qualified floating rate or qualified inverse floating rate that replaces the
fixed rate must be such that the fair market value of the Variable Note as of
the Variable Note's issue date is approximately the same as the fair market
value of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the fixed
rate. Subsequent to converting the fixed rate into either a qualified floating
rate or a qualified inverse floating rate, the Variable Note is then converted
into an "equivalent" fixed rate debt instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest are determined for the "equivalent" fixed
rate debt instrument by applying the general original issue discount rules to
the "equivalent" fixed rate debt instrument and a U.S. Holder of the Variable
Note will account for such original issue discount and qualified stated interest
as if the U.S. Holder held the "equivalent" fixed rate debt instrument. Each
accrual period appropriate adjustments will be made to the amount of qualified
stated interest or original issue discount assumed to have been accrued or paid
with respect to the "equivalent" fixed rate debt instrument in the event that
such amounts differ from the actual amount of interest accrued or paid on the
Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument,"
then the Variable Note would be treated as a contingent payment debt instrument.
Generally, where there is a contingent payment debt instrument issued for money,
interest payments thereon will be treated under the noncontingent bond method.
Under this method, interest or discount allocable to a year is taken into
account whether or not the amount of any payment is fixed or determinable in
that year. The amount of interest or discount allocable to any particular
accrual period is determined by estimating a projected payment schedule for the
Variable Note based on comparative yield based on a hypothetical fixed rate
instrument having similar terms and conditions as the Variable Note and applying
daily accrual rules similar to those for accruing original issue discount on
Notes issued with original issue discount (as discussed above). If the actual
amount of a contingent payment is not equal to the projected amount, appropriate
adjustments are made to reflect the difference. In addition, the holder's
adjusted issue price and basis in a contingent payment Variable Note are based
on the projected payments (as adjusted for actual payments) and any gain
recognized by a U.S. Holder on the sale, exchange or retirement of a contingent
payment debt instrument will be treated as interest income, and all or a portion
of any recognized loss could be treated as ordinary loss or capital loss
depending on the circumstances.
Certain of the Notes (i) may be redeemable at the option of the Company
prior to their stated maturity (a "call option") and/or (ii) may be repayable at
the option of the Holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such features
should consult their own tax advisors, since the original issue discount
consequences will depend, in part, on the particular terms and features of the
purchased Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
Short-Term Notes. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount, but, in general, a cash method U.S. Holder is not required to accrue
such original issue discount unless the U.S. Holder elects to do so. If such an
election is not made, any gain recognized by the U.S. Holder on the sale,
exchange or maturity of the Short-Term Note will be ordinary income to the
extent of the original issue discount accrued on a straight-line basis, or upon
election under the constant yield method (based on daily compounding), through
the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
Short-Term Note will be deferred until a corresponding amount of income is
realized. Accrual method U.S. Holders and certain other Holders such as banks
and dealers in securities are required to accrue original issue
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<PAGE> 26
discount on a Short-Term Note on a straight-line basis unless an election is
made to accrue the original issue discount under a constant yield method (based
on daily compounding).
Market Discount. If a U.S. Holder purchases a Note, other than an Original
Issue Discount Note, for an amount that is less than its issue price (or, in the
case of a subsequent purchaser, its stated redemption price at maturity) or, in
the case of an Original Issue Discount Note, for an amount that is less than its
adjusted issue price as of the purchase date, such U.S. Holder will be treated
as having purchased such Note at a "market discount," unless such market
discount is less than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of an Original Issue Discount
Note, any payment that is part of its "stated redemption price at maturity") on,
or any gain realized on the sale, exchange, retirement or other disposition of,
a Note as ordinary income to the extent of the lesser of (i) the amount of such
payment or realized gain or (ii) the market discount which has not previously
been included in income and is treated as having accrued on such Note at the
time of such payment or disposition. Market discount will be considered to
accrue ratably during the period from the date of acquisition to the Maturity
Date of the Note, unless the U.S. Holder elects to accrue market discount on the
basis of a constant interest rate.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of market discount. A
U.S. Holder may elect to include market discount in income currently as it
accrues (on either a ratable or a constant interest rate basis), in which case
the rules described above regarding the treatment as ordinary income of gain
upon the disposition of the Note and upon the receipt of certain cash payments
and regarding the deferral of interest deductions will not apply. Generally,
such currently included market discount is treated as ordinary interest for
United States Federal income tax purposes. Such an election will apply to all
debt instruments acquired by the U.S. Holder on or after the first day of the
taxable year to which such election applies and may be revoked only with the
consent of the IRS.
Premium. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest, such U.S. Holder will be considered
to have purchased the Note with "amortizable bond premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may offset interest
otherwise required to be included in respect of the Note during any taxable year
by the amortized amount of such excess for the taxable year. However, if the
Note may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of the Note. Any election to amortize bond premium applies to
all taxable debt instruments then owned and thereafter acquired by the U.S.
Holder on or after the first day of the first taxable year to which such
election applies and may be revoked only with the consent of the IRS.
Disposition of a Note. Except as discussed above, upon the sale, exchange
or retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note increased by any original issue discount included in income (and
accrued market discount, if any, if the U.S. Holder has included such market
discount in income) and decreased by the amount of any payments, other than
qualified stated interest payments, received and amortizable bond premium taken
with respect to such Note. Such gain or loss generally will be long-term capital
gain or loss if the Note were held for more than one year.
NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS PAYABLE, IN A FOREIGN
CURRENCY
As used herein, "Foreign Currency" means a currency other than U.S.
dollars.
Cash Method. A U.S. Holder who uses the cash method of accounting for
United States Federal income tax purposes and who receives a payment of interest
on a Note (other than original issue discount or
S-26
<PAGE> 27
market discount) will be required to include in income the U.S. dollar value of
the Foreign Currency payment (determined on the date such payment is received)
regardless of whether the payment is in fact converted to U.S. dollars at that
time, and such U.S. dollar value will be the U.S. Holder's tax basis in such
Foreign Currency.
Accrual Method. A U.S. Holder who uses the accrual method of accounting
for United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the U.S.
dollar value of the amount of interest income (including original issue discount
or market discount and reduced by amortizable bond premium to the extent
applicable) that has accrued and is otherwise required to be taken into account
with respect to a Note during an accrual period. The U.S. dollar value of such
accrued income will be determined by translating such income at the average rate
of exchange for the accrual period or, with respect to an accrual period that
spans two taxable years, at the average rate for the partial period within the
taxable year. A U.S. Holder may elect, however, to translate such accrued
interest income using the rate of exchange on the last day of the accrual period
or, with respect to an accrual period that spans two taxable years, using the
rate of exchange on the last day of the taxable year. If the last day of an
accrual period is within five business days of the date of receipt of the
accrued interest, a U.S. Holder may translate such interest using the rate of
exchange on the date of receipt. The above election will apply to other debt
obligations held by the U.S. Holder and may not be changed without the consent
of the IRS. A U.S. Holder should consult a tax advisor before making the above
election. A U.S. Holder will recognize exchange gain or loss (which will be
treated as ordinary income or loss) with respect to accrued interest income on
the date such income is received. The amount of ordinary income or loss
recognized will equal the difference, if any, between the U.S. dollar value of
the Foreign Currency payment received (determined on the date such payment is
received) in respect of such accrual period and the U.S. dollar value of
interest income that has accrued during such accrual period (as determined
above).
Purchase, Sale and Retirement of Notes. A U.S. Holder who purchases a Note
with previously owned Foreign Currency will recognize ordinary income or loss in
an amount equal to the difference, if any, between such U.S. Holder's tax basis
in the Foreign Currency and the U.S. dollar fair market value of the Foreign
Currency used to purchase the Note, determined on the date of purchase.
Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the Note. Such gain
or loss generally will be capital gain or loss (except to the extent of any
accrued market discount not previously included in the U.S. Holder's income) and
will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Note has been held by such U.S. Holder for more than one year. To
the extent the amount realized represents accrued but unpaid interest, however,
such amounts must be taken into account as interest income, with exchange gain
or loss computed as described in "Payments of Interest in a Foreign Currency"
above. If a U.S. Holder receives Foreign Currency on such a sale, exchange or
retirement, the amount realized will be based on the U.S. dollar value of the
Foreign Currency on the date the payment is received or the Note is disposed of
(or deemed disposed of in the case of a taxable exchange of the Note for a new
Note). In the case of a Note that is denominated in Foreign Currency and is
traded on an established securities market, a cash basis U.S. Holder (or, upon
election, an accrual basis U.S. Holder) will determine the U.S. dollar value of
the amount realized by translating the Foreign Currency payment at the spot rate
of exchange on the settlement date of the sale. A U.S. Holder's adjusted tax
basis in a Note will equal the cost of the Note to such Holder, increased by the
amounts of any market discount or original issue discount previously included in
income by the Holder with respect to such Note and reduced by any amortized
acquisition or other premium and any principal payments received by the Holder.
A U.S. Holder's tax basis in a Note, and the amount of any subsequent
adjustments to such Holder's tax basis, will be the U.S. dollar value of the
Foreign Currency amount paid for such Note, or of the Foreign Currency amount of
the adjustment, determined on the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S.
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<PAGE> 28
dollar value of the Foreign Currency principal amount of the Note, determined on
the date such payment is received or the Note is disposed of, and the U.S.
dollar value of the Foreign Currency principal amount of the Note, determined on
the date the U.S. Holder acquired the Note. Such Foreign Currency gain or loss
will be recognized only to the extent of the total gain or loss realized by the
U.S. Holder on the sale, exchange or retirement of the Note.
Original Issue Discount. In the case of an Original Issue Discount Note or
Short Term Note, (i) original issue discount is determined in units of the
Foreign Currency, (ii) accrued original issue discount is translated into U.S.
dollars as described in "Payments of Interest in a Foreign Currency -- Accrual
Method" above and (iii) the amount of Foreign Currency gain or loss on the
accrued original issue discount is determined by comparing the amount of income
received attributable to the discount (either upon payment, maturity or an
earlier disposition), as translated into U.S. dollars at the rate of exchange on
the date of such receipt, with the amount of original issue discount accrued, as
translated above.
Premium and Market Discount. In the case of a Note with market discount,
(i) market discount is determined in units of the Foreign Currency, (ii) accrued
market discount taken into account upon the receipt of any partial principal
payment or upon the sale, exchange, retirement or other disposition of the Note
(other than accrued market discount required to be taken into account currently)
is translated into U.S. dollars at the exchange rate on such disposition date
(and no part of such accrued market discount is treated as exchange gain or
loss) and (iii) accrued market discount currently includible in income by a U.S.
Holder for any accrual period is translated into U.S. dollars on the basis of
the average exchange rate in effect during such accrual period, and the exchange
gain or loss is determined upon the receipt of any partial principal payment or
upon the sale, exchange, retirement or other disposition of the Note in the
manner described in "Payments of Interest in a Foreign Currency -- Accrual
Method" above with respect to computation of exchange gain or loss on accrued
interest.
With respect to a Note issued with amortizable bond premium, such premium
is determined in the relevant Foreign Currency and reduces interest income in
units of the Foreign Currency. Although not entirely clear, a U.S. Holder should
recognize exchange gain or loss equal to the difference between the U.S. dollar
value of the bond premium amortized with respect to a period, determined on the
date the interest attributable to such period is received, and the U.S. dollar
value of the bond premium determined on the date of the acquisition of the Note.
Exchange of Foreign Currencies. A U.S. Holder will have a tax basis in any
Foreign Currency received as interest or on the sale, exchange or retirement of
a Note equal to the U.S. dollar value of such Foreign Currency, determined at
the time the interest is received or at the time of the sale, exchange or
retirement. Any gain or loss realized by a U.S. Holder on a sale or other
disposition of Foreign Currency (including its exchange for U.S. dollars or its
use to purchase Notes) will be ordinary income or loss.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Note, unless such non-U.S. Holder is a direct or indirect
10% or greater shareholder of the Company, a controlled foreign corporation
related to the Company or a bank receiving interest described in section
881(c)(3)(A) of the Code. To qualify for the exemption from taxation, the last
United States payor in the chain of payment prior to payment to a non-U.S.
Holder (the "Withholding Agent") must have received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the Beneficial Owner of the
Note under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the Beneficial Owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the Beneficial Owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by the
Beneficial Owner to the
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<PAGE> 29
organization or institution. The Treasury Department is considering
implementation of further certification requirements aimed at determining
whether the issuer of a debt obligation is related to Holders thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the Company
or, at the time of such individual's death, payments in respect of the Notes
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
Beneficial Owner would be allowed as a refund or a credit against such
Beneficial Owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis for sale by the Company
to or through Salomon Smith Barney Inc., Lehman Brothers Inc., Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Prudential Securities Incorporated (collectively, the
"Agents"). The Agents, individually or in a syndicate, may purchase Notes, as
principal, from the Company from time to time for resale to investors and other
purchasers at varying prices relating to prevailing market prices at the time of
resale as determined by the applicable Agent(s), or, if so specified in the
applicable pricing supplement, for resale at a fixed offering price. If agreed
to by the Company and an Agent, such Agent may also utilize its reasonable
efforts on an agency basis to solicit offers to purchase the Notes at 100% of
the principal amount thereof, unless otherwise specified in the applicable
pricing supplement. The Company will pay a commission to an Agent, ranging from
.125% to .750% of the principal amount of each Note, depending upon its stated
maturity, sold through such Agent as an agent of the Company. Commissions with
respect to Notes with stated maturities in excess of 30 years that are sold
through an Agent as an agent of the Company will be negotiated between the
Company and such Agent at the time of such sale. In addition, the expenses
incurred by the Company in connection with the offering and sale of the Notes,
including reimbursement of certain of the Agents' expenses, is currently
estimated to be $300,000.
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<PAGE> 30
Unless otherwise specified in the applicable pricing supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. Each Agent may sell Notes it has purchased from the Company
as principal to other dealers for resale to investors and other purchasers, any
may allow all or any portion of the discount received in connection with such
purchase from the Company to such dealers. After the initial offering of Notes,
the offering price (in the case of Notes to be resold on a fixed price basis),
the concession and the discount may be changed.
The Company has reserved the right to sell the Notes directly to investors,
and may solicit and accept offers to purchase Notes directly from investors from
time to time on its own behalf. No commission will be paid on Notes sold
directly by the Company. In certain instances, the Company may offer Notes to or
through additional agents named in the applicable pricing supplement.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject offers in whole or in part (whether placed
directly with the Company or through the Agents). Each Agent will have the
right, in its discretion reasonably exercised, to reject in whole or in part any
offer to purchase Notes received by it on an agency basis.
Unless otherwise specified in the applicable pricing supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in the Specified Currency in The City of New York on the date of
settlement. See "Description of Notes -- General."
Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange. The Agents may from time to
time purchase and sell Notes in the secondary market, but the Agents are not
obligated to do so, and there can be no assurance that there will be a secondary
market for the Notes or that there will be liquidity in the secondary market if
one develops. From time to time, the Agents may make a market in the Notes, but
the Agents are not obligated to do so and may discontinue any market-making
activity at any time.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) will be permitted to
engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of Notes. If the Agent creates or the Agents create, as
the case may be, a short position in Notes, i.e., if it sells or they sell Notes
with an aggregate initial offering price exceeding that set forth in the
applicable pricing supplement, such Agent(s) may reduce that short position by
purchasing Notes in the open market. In general, purchases of Notes for the
purpose of stabilization or to reduce a short position could cause the price of
Notes to be higher than it might be in the absence of such purchases.
Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described in the immediately preceding paragraph may have on the price of Notes.
In addition, neither the Company nor any of the Agents makes any representation
that the Agents will engage in any such transactions or that such transactions,
once commenced, will not be discontinued without notice.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Securities Act"). The Company has agreed to
indemnify the Agents against, and to provide contribution with respect to,
certain liabilities (including liabilities under the Securities Act), or to
contribute to payments the Agents may be required to make in respect thereof.
The Company has agreed to reimburse the Agents for certain other expenses.
In the ordinary course of their respective businesses, the Agents
(including their predecessors) and their affiliates have engaged and may in the
future engage in investment banking transactions with the Company and certain of
its affiliates. In particular, Morgan Stanley & Co. Incorporated (now Morgan
Stanley Dean Witter) represented New Plan Realty Trust in connection with the
merger involving New Plan Realty Trust and Excel Realty Trust, Inc. (later
renamed New Plan Excel Realty Trust, Inc.) that was consummated on September 28,
1998 (the "Merger"). Merrill Lynch & Co. delivered a fairness opinion to the
board of trustees of New Plan Realty Trust in connection with the Merger.
Prudential Securities delivered a fairness opinion to
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the board of directors of Excel Realty Trust, Inc. in connection with the
Merger. In addition, certain of the Agents (including their predecessors) and
their affiliates have served and may in the future serve as agents or
underwriters in connection with various offerings of securities by the Company.
Concurrently with the offering of Notes described herein or from time to
time, the Company may issue other securities described in the accompanying
prospectus, and the amount of Notes offered hereby is subject to reduction as a
result of the issuance of such securities.
LEGAL MATTERS
The legality of the Notes offered pursuant to this prospectus supplement
has been passed upon for the Company by Hogan & Hartson L.L.P., New York, New
York. Certain legal matters have been passed upon for the Agents by Brown & Wood
LLP, New York, New York.
In addition to the legal opinions referred to under "Legal Matters" in the
accompanying prospectus, the description of federal income tax matters contained
in this prospectus supplement entitled "Certain United States Federal Income Tax
Considerations" is based upon the opinion of Altheimer & Gray, Chicago,
Illinois.
GLOSSARY
Set forth below are definitions of some of the terms used in this
prospectus supplement.
"Bond Equivalent Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
<TABLE>
<C> <C> <S>
D x N
Bond Equivalent Yield = ------------- x 100
360 - (D x M)
</TABLE>
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the applicable Interest Reset Period.
"Business Day" means any day, other than a Saturday or Sunday, that (i) is
neither a legal holiday nor a day on which commercial banks in The City of New
York are authorized or required by law, regulation or executive order to close,
(ii) with respect to Foreign Currency Notes only, such day is also not a day on
which commercial banks are authorized or required by law, regulation or
executive order to close in the Principal Financial Center of the country
issuing the Specified Currency (or, if the Specified Currency is Euro, such day
is also a day on which the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System is open) and (iii) with respect only to Notes
as to which LIBOR is an applicable Interest Rate Basis, such day is also a
London Business Day.
"Calculation Agent" means the entity appointed by the Company to calculate
interest rates for Floating Rate Notes. Unless otherwise specified in the
applicable pricing supplement, the Calculation Agent will be State Street Bank
and Trust Company.
"Calculation Date" means, with respect to any Interest Determination Date,
the date on which the Calculation Agent is to calculate an interest rate for a
Floating Rate Note. Unless otherwise specified in the applicable pricing
supplement, the Calculation Date, if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or the Maturity Date, as the case may be.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either one, two, three, five, seven, 10, 20 or 30
years) specified in the applicable pricing supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the applicable
pricing supplement, the Designated CMT Maturity Index shall be two years.
S-31
<PAGE> 32
"Designated CMT Telerate Page" means the display on Bridge Telerate, Inc.
(or any successor service) on the page specified in the applicable pricing
supplement (or any other page as may replace such page on that service (or any
successor service) for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519)). If no such page is specified in the applicable pricing
supplement, the Designated CMT Telerate Page shall be 7052, for the most recent
week.
"Designated LIBOR Currency" means the currency specified in the applicable
pricing supplement as to which LIBOR will be calculated. If no such currency is
specified in the applicable pricing supplement, the Designated LIBOR Currency
will be United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable pricing supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such pricing
supplement (or any other page as may replace such page on such service (or any
successor service)) for the purpose of displaying the London interbank rates of
major banks for the Designated LIBOR Currency, or (b) if "LIBOR Telerate" is
specified in the applicable pricing supplement or neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified in the applicable pricing supplement as the method
for calculating LIBOR, the display on the Bridge Telerate, Inc. (or any
successor service) on the page specified in such pricing supplement (or any
other page as may replace such page on such service (or any successor service))
for the purpose of displaying the London interbank rates of major banks for the
Designated LIBOR Currency.
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
"Index Maturity" means, with respect to a Floating Rate Note, the period to
maturity of the instrument or obligation with respect to which the related
Interest Rate Basis or Bases will be calculated.
"Interest Determination Date" means (i) with respect to the CD Rate, the
CMT Rate, the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate,
the second Business Day immediately preceding the applicable Interest Reset
Date, (ii) with respect to the Eleventh District Cost of Funds Rate, the last
working day of the month immediately preceding the applicable Interest Reset
Date on which the FHLB of San Francisco publishes the Index, (iii) with respect
to LIBOR, the second London Business Day immediately preceding the applicable
Interest Reset Date, unless the Designated LIBOR Currency is British pounds
sterling, in which case the Interest Determination Date will be the applicable
Interest Reset Date, (iv) with respect to the Treasury Rate, the day in the week
in which the applicable Interest Reset Date falls on which day Treasury Bills
are normally auctioned (Treasury Bills are normally sold at an auction held on
Monday of each week, unless that day is a legal holiday, in which case the
auction is normally held on the following Tuesday, except that such auction may
be held on the preceding Friday); provided, however, that if an auction is held
on the Friday of the week preceding the applicable Interest Reset Date, the
Interest Determination Date will be such preceding Friday, and (v) with respect
to a Floating Rate Note the interest rate of which is determined by reference to
two or more Interest Rate Bases, the most recent Business Day which is at least
two Business Days prior to the applicable Interest Reset Date for such Floating
Rate Note on which each Interest Rate Basis is determinable.
"Interest Payment Period" means, with respect to a Note, the period from
and including the immediately preceding Interest Payment Date in respect of
which interest has been paid or duly made available for payment (or from and
including the date of issue, if no interest has been paid or duly made available
for payment with respect to the applicable Note) to but excluding the applicable
Interest Payment Date or the Maturity Date, as the case may be.
"Interest Reset Date" means, with respect to Floating Rate Note, the date
on which the rate of interest on such Floating Rate Note will be reset. The
Interest Reset Dates will be specified in the applicable pricing supplement.
S-32
<PAGE> 33
"Interest Reset Period" means, with respect to a Floating Rate Note, the
frequency with which the rate of interest on such Floating Rate Note will be
reset (i.e., daily, weekly, monthly, quarterly, semiannually, annually or
otherwise). The Interest Reset Period will be specified in the applicable
pricing supplement.
"London Business Day" means any day on which commercial banks in London are
open for business, including dealings in the Designated LIBOR Currency.
"Market Exchange Rate" means, with respect to a Specified Currency other
than United States dollars, the noon dollar buying rate in The City of New York
for cable transfers for such Specified Currency as certified for customs
purposes by (or, if not so certified, as otherwise determined by) the Federal
Reserve Bank of New York. Any payment made in United States dollars under such
circumstances where the required payment is in a Specified Currency other than
United States dollars will not constitute an Event of Default under the
Indenture with respect to the Notes.
"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
<TABLE>
<C> <C> <S>
D x 360
Money Market Yield = ------------- x 100
360 - (D x M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable Interest Reset Period.
"Principal Financial Center" means (i) the capital city of the country
issuing the Specified Currency or (ii) the capital city of the country to which
the Designated LIBOR Currency relates, as applicable, except, in each case, that
with respect to United States dollars, Australian dollars, Canadian dollars,
Deutsche marks, Dutch guilders, Portuguese escudos, South African rand and Swiss
francs, the Principal Financial Center shall be The City of New York, Sydney and
(solely in the case of the Specified Currency) Melbourne, Toronto, Frankfurt,
Amsterdam, London (solely in the case of the Designated LIBOR Currency),
Johannesburg and Zurich, respectively.
"Record Date" means, unless otherwise specified in the applicable pricing
supplement, the fifteenth calendar day (whether or not a Business Day)
immediately preceding the related Interest Payment Date.
"Reuters Screen US PRIME 1 Page" means the display designated as page "US
PRIME 1" on the Reuter Monitor Money Rates Service (or any successor service) or
such other page as may replace the US PRIME 1 Page on the Reuter Monitor Money
Rates Service (or any successor service) for the purpose of displaying prime
rates or base lending rates of major United States banks.
"Spread" means, with respect to a Floating Rate Note, the number of basis
points to be added to or subtracted from the related Interest Rate Basis or
Bases applicable to such Floating Rate Note. The Spread will be specified in the
applicable pricing supplement.
"Spread Multiplier" means, with respect to a Floating Rate Note, the
percentage by which the related Interest Rate Basis or Bases applicable to such
Floating Rate Note will be multiplied to determine the applicable interest rate
on such Floating Rate Note. The Spread Multiplier will be specified in the
applicable pricing supplement.
S-33
<PAGE> 34
PROSPECTUS
$825,000,000
NEW PLAN EXCEL REALTY TRUST, INC.
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
WARRANTS
RIGHTS
CORPORATE HEADQUARTERS:
1120 Avenue of the Americas
New York, New York 10036
(212) 869-3000
------------------------
We will provide specific terms of these securities in supplements to this
prospectus.
You should read this prospectus and any supplement carefully before you invest.
------------------------
These securities have not been approved by the SEC or any state securities
commission, nor have these organizations determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
THIS PROSPECTUS IS DATED SEPTEMBER 10, 1999.
<PAGE> 35
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this process, New Plan Excel
Realty Trust, Inc. (which we generally refer to as the "Company" in this
prospectus) may offer and sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$825,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we offer securities, we will provide a
prospectus supplement and attach it to this prospectus. The prospectus
supplement will contain specific information about the terms of the securities
being offered at that time. The prospectus supplement may also add, update or
change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement, together with any additional
information you may need to make your investment decision.
WHERE TO FIND ADDITIONAL INFORMATION
The Company files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy materials the Company
has filed with the SEC at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the
operation of its public reference room. The Company's SEC filings also are
available to the public on the SEC's Internet site at http://www.sec.gov. In
addition, you may obtain a copy of the Company's SEC filings at no cost by
writing or telephoning the Company's General Counsel at:
New Plan Excel Realty Trust, Inc.
1120 Avenue of the Americas
New York, New York 10036
(212) 869-3000
The SEC allows the Company to "incorporate by reference" in this prospectus
certain information it files with the SEC, which means that it may disclose
important information in this prospectus by referring the reader to the document
that contains the information. The information incorporated by reference is
considered to be a part of this prospectus, and later information filed with the
SEC will update and supersede this information. The Company incorporates by
reference the documents listed below and any future filings it makes with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, until the offering of securities covered by this prospectus is completed:
- the Company's Annual Report on Form 10-K/A for the year ended
December 31, 1998;
- the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999;
- the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1999;
- the Company's Current Reports on Form 8-K filed with the SEC on February
3, 1999, April 22, 1999 and May 5, 1999; and
- the Company's Proxy Statement with
respect to its Annual Meeting of Stockholders held on June 3, 1999.
The Company has filed with the SEC a "shelf" registration statement on Form
S-3 under the
Securities Act of 1933, relating to the securities that may be offered by this
prospectus. This prospectus is a part of that registration statement, but does
not contain all of the information in the registration statement. For more
detail concerning the Company and any securities offered by this prospectus, you
may examine the registration statement and the exhibits filed with it at the
locations listed in the first paragraph under this heading.
Readers should rely on the information
provided or incorporated by reference in this
prospectus or in the applicable supplement to this prospectus. Readers should
not assume that the information in this prospectus and the applicable supplement
is accurate as of any date other than the date on the front cover of the
document.
2
<PAGE> 36
ABOUT THE COMPANY
The Company, a self-administered and self-managed equity real estate
investment trust ("REIT"), is a Maryland corporation and one of the nation's
largest community and neighborhood shopping center companies. As of June 30,
1999, the Company owned interests in 303 shopping centers (including 11 office
and other properties) containing over 37 million square feet of gross leasable
area in 31 states. The Company also owned, as of that date, 55 apartment
communities in 14 states containing approximately 13,146 units.
The Company's primary objective is to acquire, own and manage a portfolio
of commercial retail properties and apartment communities that will provide cash
for quarterly distributions to stockholders while protecting investor capital
and providing potential for capital appreciation. The Company seeks to achieve
this objective by:
- aggressively managing and, where appropriate, redeveloping its existing
operating properties;
- continuing to acquire well-located community and neighborhood shopping
centers and other retail properties with tenants that have a national or
regional presence and an
established credit quality, and well-located income-producing apartment
communities at a discount to replacement cost;
- disposing of mature properties to continually update its core property
portfolio; and
- continuing to maintain a strong and flexible financial position to
facilitate growth.
As of June 30, 1999, the Company had
approximately 800 employees and 24 offices coast-to-coast. Its principal
executive offices are located at 1120 Avenue of the Americas, New York, New York
10036, where its telephone number is (212) 869-3000.
USE OF PROCEEDS
Unless otherwise described in the supplement to this prospectus used to
offer specific securities, the Company intends to use the net proceeds from the
sale of securities under this prospectus for general corporate purposes, which
may include the acquisition of community and neighborhood shopping centers or
other retail properties and apartment communities as suitable opportunities
arise, the expansion, redevelopment and improvement of certain properties in the
Company's portfolio, and the repayment of outstanding indebtedness.
3
<PAGE> 37
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general provisions of the debt
securities that may be offered by means of this prospectus. The particular terms
of the debt securities being offered and the extent to which the general
provisions described below apply will be described in a prospectus supplement
relating to the debt securities.
Any senior debt securities offered by means of this prospectus will be
issued under a senior debt securities indenture, dated as of February 3, 1999,
as amended or supplemented from time to time (the "Senior Debt Securities
Indenture"), between the Company and State Street Bank and Trust Company, as
trustee. Subordinated debt securities will be issued under a separate
subordinated debt securities indenture, as amended or supplemented from time to
time (the "Subordinated Debt Securities Indenture"), between the Company and a
trustee to be selected by the Company. The Senior Debt Securities Indenture and
the Subordinated Debt Securities Indenture are referred to herein individually
as the "Indenture" and collectively as the "Indentures." The Senior Debt
Securities Indenture and a form of the Subordinated Debt Securities Indenture
have been filed as exhibits to the Registration Statement of which this
prospectus is a part and will be available for inspection at the respective
corporate trust offices of the trustees or as described above under "Where to
Find Additional Information." The Indentures are and will be subject to and
governed by the Trust Indenture Act of 1939. The description of the Indentures
set forth below assumes that the Company has entered into both of the
Indentures. The Company already has executed and delivered the Senior Debt
Securities Indenture and will execute and deliver the Subordinated Debt
Securities Indenture when and if it issues subordinated debt securities. The
statements made hereunder relating to the Indentures and the debt securities to
be issued thereunder are summaries of certain provisions thereof and do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indentures and such debt securities.
Unless otherwise specified, all section references appearing herein are to
sections of the Indentures, and capitalized terms used but not defined herein
have the meanings set forth in the Indentures.
GENERAL
The debt securities offered by means of this prospectus will be direct,
unsecured obligations of the Company. Senior debt securities will rank equally
with other senior unsecured and unsubordinated debt of the Company that may be
outstanding from time to time, and will rank senior to all subordinated debt
securities of the Company that may be outstanding from time to time.
Subordinated debt securities will be subordinated in right of payment to the
prior payment in full of the senior debt of the Company, as described under
"-- Subordination" below.
Each Indenture provides that debt securities may be issued without limit as
to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of the Company or as established in one or
more indentures supplemental to the Indenture. All debt securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of the holders of the debt securities of such
series, for issuances of additional debt securities of such series (Section 301
of each Indenture).
Each Indenture provides that there may be more than one trustee thereunder,
each with respect to one or more series of debt securities. Any trustee under
either Indenture may resign or be removed with respect to one or more series of
debt securities, and a successor trustee will be appointed by the Company, by or
pursuant to a resolution adopted by the Board of Directors, to act with respect
to such series (Section 608 of each Indenture). In the event that two or more
persons are acting as trustee with respect to different series of debt
securities, each such trustee will be a trustee of a trust under the applicable
Indenture separate and apart from the trust administered by any other trustee
thereunder, and, except as otherwise indicated herein or therein, any action
described to be taken by the trustee may be taken by each such trustee with
respect to, and only with respect to, the one or more series of debt securities
for which it is trustee under the Indenture (Section 609 of each Indenture).
4
<PAGE> 38
The supplement to this prospectus relating to the series of debt securities
being offered will contain information on the specific terms thereof, including:
(1) the title of such debt securities;
(2) the classification of such debt securities as senior debt
securities or subordinated debt securities;
(3) the aggregate principal amount of such debt securities and any
limit on such aggregate principal amount;
(4) the percentage of the principal amount of such debt securities
that will be issued and, if other than the entire principal amount thereof,
the portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof;
(5) the terms and conditions, if any, upon which such debt securities
may be convertible into other securities of the Company and the terms and
conditions upon which such conversion will be effected, including, without
limitation, whether such debt securities are convertible into Common Stock
or Preferred Stock, the initial conversion price or rate (or manner of
calculation thereof), the portion that is convertible or the method by
which any such portion shall be determined, the conversion period,
provisions as to whether conversion will be at the option of the holders or
the Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such debt
securities, and any applicable limitations on the ownership or
transferability of the Common Stock or Preferred Stock into which such debt
securities are convertible;
(6) the date or dates, or the method for determining such date or
dates, on which the principal of such debt securities will be payable;
(7) the rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such debt
securities will bear interest, if any;
(8) the date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the date or dates on which
any such interest will be payable, the regular record dates for the
interest payment dates, or the method by which the regular record dates are
to be determined, the person to whom such interest will be payable, and the
basis upon which interest shall be calculated if other than that of a
360-day year of twelve 30-day months;
(9) the place or places other than or in addition to New York City
where the principal of (and premium, if any) and interest and Additional
Amounts, if any, on such debt securities will be payable, such debt
securities may be surrendered for conversion or registration of transfer or
exchange and notices or demands to or upon the Company in respect of such
debt securities and the applicable Indenture may be served;
(10) the date or dates on which, or period or periods within which,
the price or prices at which and the terms and conditions upon which such
debt securities may be redeemed, in whole or in part, at the option of the
Company, if the Company is to have such an option;
(11) the obligation, if any, of the Company to redeem, repay or
purchase such debt securities pursuant to any sinking fund or analogous
provision or at the option of a holder thereof, and the date or dates on
which, or period or periods within which, the price or prices at which and
the terms and conditions upon which such debt securities will be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation;
(12) if other than U.S. dollars, the currency or currencies in which
such debt securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(13) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such debt securities may be determined with
reference to an index, formula or other method (which
5
<PAGE> 39
index, formula or method may, but need not be, based on a currency,
currencies, currency unit or units or composite currency or currencies) and
the manner in which such amounts shall be determined;
(14) whether such debt securities will be issued in the form of one or
more global securities and whether such global securities are to be
issuable in a temporary global form or permanent global form;
(15) any additions to, modifications of or deletions from the terms of
such debt securities with respect to the events of default and notice and
waiver thereof or covenants set forth in the applicable Indenture;
(16) whether the principal of (and premium, if any) or interest or
Additional Amounts, if any, on such debt securities are to be payable, at
the election of the Company or a holder, in one or more currencies other
than that in which such debt securities are payable in the absence of the
making of such an election, 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 in
which such debt securities are payable in the absence of making such an
election and the currency or currencies in which such debt securities are
to be payable upon the making of such an election;
(17) whether such debt securities will be issued in certificated or
book-entry form;
(18) whether such debt securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the denominations
thereof and terms and conditions relating thereto;
(19) the applicability, if any, of the defeasance and covenant
defeasance provisions of Article XIV of the applicable Indenture;
(20) if such debt securities are to be issued upon the exercise of
warrants, the time, manner and place for such debt securities to be
authenticated and delivered;
(21) whether and under what circumstances the Company will pay
Additional Amounts as contemplated in the applicable Indenture on such debt
securities in respect of any tax, assessment or governmental charge and, if
so, whether the Company will have the option to redeem such debt securities
in lieu of making such payment;
(22) the name of the applicable trustee and the address of its
corporate trust office;
(23) whether and to what extent such debt securities will be
guaranteed; and
(24) any other terms of such debt securities not inconsistent with the
provisions of the applicable Indenture (Section 301).
Debt securities offered by means of this prospectus may be original issue
discount securities, in that they provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof. If they are original issue discount securities, the special U.S.
federal income tax, accounting and other considerations applicable to such
securities will be described in the applicable prospectus supplement.
Except as set forth under "Certain Covenants -- Senior Debt Securities
Indenture Limitations on Incurrence of Debt" below, neither Indenture contains
any other provisions that would limit the ability of the Company to incur
indebtedness or that would afford holders of debt securities protection in the
event of a highly leveraged or similar transaction involving the Company or in
the event of a change of control. However, restrictions on ownership and
transfers of the Company's Common Stock and Preferred Stock designed to preserve
its status as a REIT may act to prevent or hinder a change of control. See
"Description of Common Stock" and "Description of Preferred Stock."
A significant number of the Company's properties are owned through
subsidiaries. The rights of the Company and its creditors, including holders of
debt securities offered by means of this prospectus, to participate in the
assets of such subsidiaries upon the liquidation or recapitalization of such
subsidiaries or
6
<PAGE> 40
otherwise will be subject to the prior claims of such subsidiaries' respective
secured and unsecured creditors (except to the extent that claims of the Company
itself as a creditor may be recognized).
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable prospectus supplement, the
debt securities of any series offered by means of this prospectus will be
issuable in denominations of $1,000 and integral multiples thereof and those in
bearer form will be issuable in denominations of $5,000 (Section 302 of each
Indenture).
Unless otherwise specified in the applicable prospectus supplement, the
principal of (and premium, if any) and interest and any Additional Amounts on
any series of debt securities offered by means of this prospectus will be
payable at the corporate trust office of the applicable trustee or an office or
agency established by the Company in accordance with the Indenture, provided
that, at the option of the Company, payment of interest may be made by check
mailed to the address of the person entitled thereto as it appears in the
security register for the relevant debt securities or by wire transfer of funds
to such person at an account maintained within the United States (Sections 301,
305, 306, 307 and 1002 of each Indenture).
Any interest not punctually paid or duly provided for on any interest
payment date with respect to a debt security offered by means of this prospectus
("Defaulted Interest") will forthwith cease to be payable to the holder on the
applicable regular record date and may either be paid to the person in whose
name such debt security is registered at the close of business on a special
record date (the "Special Record Date") for the payment of such Defaulted
Interest to be fixed by the applicable trustee, notice whereof shall be given to
the holder of such debt security not less than 10 days prior to such Special
Record Date, or may be paid at any time in any other lawful manner, all as more
completely described in the applicable Indenture (Section 307 of each
Indenture).
Subject to certain limitations imposed upon debt securities issued in
book-entry form, the debt securities of any series offered by means of this
prospectus will be exchangeable for other debt securities of the same series and
of a like aggregate principal amount and tenor of different authorized
denominations upon surrender of such debt securities at the corporate trust
office of the applicable trustee or at an office or agency established by the
Company in accordance with the Indenture. In addition, subject to certain
limitations imposed upon debt securities issued in book-entry form, the debt
securities of any series offered by means of this prospectus may be surrendered
for conversion or registration of transfer or exchange thereof at the corporate
trust office of the trustee referred to above. Every debt security surrendered
for conversion, registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer. No service charge will be made
for any registration of transfer or exchange of any debt securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith (Section 305 of each
Indenture). If the applicable prospectus supplement refers to any transfer agent
(in addition to the trustee) initially designated by the Company with respect to
any series of debt securities, the Company may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Company will be
required to maintain a transfer agent in each place of payment for such series.
The Company may at any time designate additional transfer agents with respect to
any series of debt securities offered by means of this prospectus (Section
1002).
Neither the Company nor the trustee for any series of debt securities
offered by means of this prospectus will be required to (i) issue, register the
transfer of or exchange debt securities of any series during a period beginning
at the opening of business 15 days before any selection of debt securities of
that series to be redeemed and ending at the close of business on the day of
mailing of the relevant notice of redemption; (ii) register the transfer of or
exchange any debt security, or portion thereof, called for redemption, except
the unredeemed portion of any debt security being redeemed in part; or (iii)
issue, register the transfer of or exchange any debt security which has been
surrendered for repayment at the option of the holder, except the portion, if
any, of such debt security not to be so repaid (Section 305 of each Indenture).
7
<PAGE> 41
CERTAIN COVENANTS
Senior Debt Securities Indenture Limitations on Incurrence of Debt. Under
the Senior Debt Securities Indenture, the Company will not, and will not permit
any subsidiary to, incur any Debt (as defined in the Indenture and described
below) other than intercompany debt if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds thereof,
the aggregate principal amount of all outstanding Debt of the Company and its
subsidiaries on a consolidated basis determined in accordance with generally
accepted accounting principles is greater than 65% of the sum of (i) the
Company's Total Assets (as defined in the Indenture and described below) as of
the end of the fiscal quarter covered in the Company's Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed
with the Securities and Exchange Commission (or, if such filing is not permitted
under the Exchange Act, with the trustee) prior to the incurrence of such
additional Debt, and (ii) the increase in the Company's Total Assets from the
end of such quarter including, without limitation, any increase resulting from
the incurrence of such additional Debt (such increase, together with the
Company's Total Assets, being referred to as "Adjusted Total Assets" herein)
(Section 1004 of the Senior Debt Securities Indenture).
In addition to the foregoing limitations on the incurrence of Debt, the
Company will not, and will not permit any subsidiary to, incur any Secured Debt
if, immediately after giving effect to the incurrence of such additional Secured
Debt and the application of the proceeds thereof, the aggregate principal amount
of all outstanding Secured Debt of the Company and its subsidiaries on a
consolidated basis is greater than 40% of Adjusted Total Assets (Section 1004 of
the Senior Debt Securities Indenture).
In addition to the foregoing limitations on the incurrence of Debt, the
Company will not, and will not permit any subsidiary to, incur any Debt other
than intercompany debt if Consolidated Income Available for Debt Service (as
defined in the Indenture and described below) for any 12 consecutive calendar
months within the 15 calendar months immediately preceding the date on which
such additional Debt is to be incurred would have been less than 1.5 times the
Maximum Annual Service Charge (as defined in the Indenture and described below)
on the Debt of the Company and all subsidiaries to be outstanding immediately
after the incurrence of such additional Debt. In determining whether that limit
would be exceeded, the Senior Debt Securities Indenture requires that
calculations be made on a pro forma basis, assuming that debt incurred, repaid,
retired or acquired, and that increases or decreases in Total Assets, occurred
at the beginning of the 12-month period (Section 1004 of the Senior Debt
Securities Indenture).
The Company will at all times maintain an Unencumbered Total Asset Value in
an amount not less than 100% of the aggregate principal amount of all
outstanding Debt of the Company and its subsidiaries that is not Secured Debt
(Section 1004 of the Senior Debt Securities Indenture).
As used herein,
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined in the Indenture and described below) of the
Company and its subsidiaries plus amounts which have been deducted for (a)
interest on Debt of the Company and its subsidiaries, (b) provision for taxes of
the Company and its subsidiaries based on income, (c) amortization of debt
discount, (d) property depreciation and amortization, (e) the effect of any
noncash charge resulting from a change in accounting principles in determining
Consolidated Net Income for such period, (f) provisions for losses from sales or
joint ventures, (g) increases in deferred taxes and other non-cash items, and
(h) charges for early extinguishment of debt, and less amounts which have been
added in determining Consolidated Net Income for such period for (i) provisions
for gains from sales or joint ventures and (ii) decreases in deferred taxes and
other non-cash items.
"Consolidated Net Income" for any period means the amount of net income (or
loss) of the Company and its subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Debt" of the Company or any subsidiary means any indebtedness of the
Company or any subsidiary, whether or not contingent, in respect of (i) borrowed
money or evidenced by bonds, notes, debentures or similar instruments, (ii)
indebtedness secured by any mortgage, pledge, lien, charge, encumbrance or any
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security interest existing on property owned by the Company or any subsidiary,
(iii) reimbursement obligations, contingent or otherwise, in connection with
letters of credit or amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) any lease of property by the Company or
any subsidiary as lessee which is reflected on the Company's consolidated
balance sheet as a capitalized lease in accordance with generally accepted
accounting principles, in the case of items of indebtedness under (i) through
(iii) above to the extent that any such items (other than reimbursement
obligations in connection with letters of credit) would appear as a liability on
the Company's consolidated balance sheet in accordance with generally accepted
accounting principles, and also includes, to the extent not otherwise included,
any obligation by the Company or any subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), indebtedness of another person (other than the
Company or any subsidiary) (it being understood that Debt shall be deemed to be
incurred by the Company or any subsidiary whenever the Company or such
subsidiary shall create, assume, guarantee or otherwise become liable in respect
thereof).
"Maximum Annual Service Charge" as of any date means the maximum amount
which may become payable in any period of 12 consecutive calendar months from
such date for interest on, and required amortization of, Debt. The amount
payable for amortization shall include the amount of any sinking fund or other
analogous fund for the retirement of Debt and the amount payable on account of
principal on any such Debt which matures serially other than at the final
maturity date of such Debt.
"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 asset(s).
"Total Assets" as of any date means the sum of (i) Undepreciated Real
Estate Assets and (ii) all other assets of the Company and its subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles (but excluding accounts receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost of real
estate assets of the Company and its subsidiaries on such date, before
depreciation and amortization, determined on a consolidated basis in accordance
with generally accepted accounting principles.
"Unencumbered Total Asset Value" as of any date means the sum of Total
Assets which are unencumbered by any mortgage, lien, charge, pledge or security
interest.
These covenants may not apply to any issuance of Subordinated Debt
Securities.
Existence. Except as described under "-- Merger, Consolidation or Sale of
Assets" below, the Company is required to do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and franchises; provided, however, that the Company is not obligated to preserve
any right or franchise if it determines that the preservation thereof is no
longer desirable in the conduct of its business and that the loss thereof is not
disadvantageous in any material respect to the holders of the debt securities
issued under the Indenture (Section 1005 of each Indenture).
Maintenance of Properties. The Company 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 judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times (Section 1006 of each Indenture).
Insurance. The Company will, and will cause each of its subsidiaries to,
keep all of its insurable properties adequately insured against loss or damage
with insurers of recognized responsibility in commercially reasonable amounts
and types. (Section 1007 of each Indenture).
Payment of Taxes and Other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i) all
material taxes, assessments and governmental
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<PAGE> 43
charges levied or imposed upon it or any subsidiary or upon the income, profits
or property of the Company or any subsidiary, and (ii) all material lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
lien upon the property of the Company or any subsidiary, unless such lien would
not have a material adverse effort upon such property; provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (i) whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings or (ii) for which the Company has set apart and maintains an
adequate reserve (Section 1008 of each Indenture).
Provision of Financial Information. If the Company is required to file
reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, the
Company will file such reports by the required date and, within 15 days of such
date, deliver copies of all such reports to the trustees for and transmit a copy
to each holder of debt securities offered by means of this prospectus. If the
Company is not required to file reports with the SEC pursuant to Section 13 or
15(d) of the Exchange Act, the Company will deliver to the applicable trustee
and transmit to each holder of debt securities offered by means of this
prospectus reports that contain substantially the same kind of information that
would have been included in annual and quarterly reports filed with the SEC had
the Company been required to file such reports such information to be delivered
or transmitted within 15 days after the same would have been required to be
filed with the SEC had the Company been required to file such reports.
Notwithstanding the foregoing, if the Company is not required to file reports
with the SEC because information about the Company is contained in the reports
filed by another entity with the SEC, the delivery to the trustee for the debt
securities offered by means of this prospectus of the reports filed by such
entity with the SEC and the transmittal by mail to all holders of such debt
securities of each annual and quarterly report filed with the SEC by such entity
within the time periods set forth in the preceding sentence shall be deemed to
satisfy the obligations of the Company to provide financial information under
the applicable provisions of the Indenture.
Additional Covenants. Any additional material covenants of the Company
contained in an Indenture for a series of debt securities offered by means of
this prospectus, or any deletions from or modifications of the covenants
described above, will be described in the prospectus supplement relating
thereto.
MERGER, CONSOLIDATION OR SALE
The Company may merge with or into, consolidate with, or sell, lease or
convey all or substantially all of its assets to, any other corporation, limited
partnership, limited liability company, company, real estate investment trust or
business trust, provided that (a) either the Company shall be the continuing
corporation or other entity, or the successor corporation or other entity (if
other than the Company) formed by or resulting from any such merger or
consolidation or which shall have received the transfer of such assets shall
expressly assume all of the obligations of the Company under the Indentures; (b)
immediately after giving effect to such transaction and treating any
indebtedness that becomes an obligation of the Company or any subsidiary as a
result thereof as having been incurred by the Company or such subsidiary at the
time of such transaction, no event of default under the Indentures, and no event
that, after notice or the lapse of time, or both, would become such an event of
default, shall have occurred and be continuing; and (c) an officer's certificate
and legal opinion covering such conditions shall be delivered to the trustees
(Sections 801 and 803 of each Indenture).
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture provides that the following events are "Events of Default"
with respect to any series of debt securities issued thereunder: (a) default for
30 days in the payment of any installment of interest or Additional Amounts on
any debt security of such series; (b) default in the payment of the principal of
(or premium, if any, on) any debt security of such series when due; (c) default
in making any sinking fund payment as required for any debt security of such
series; (d) default in the performance of any other covenant of the Company or a
guarantor contained in the applicable Indenture (other than a covenant added to
such Indenture solely for the benefit of a series of debt securities issued
thereunder other than such series), continued for 60 days after written notice
as provided in such Indenture; (e) a default in the payment of recourse
indebtedness of the Company or a guarantor which results in such indebtedness in
an aggregate
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principal amount exceeding $5,000,000 becoming or being declared due and payable
prior to the date on which it would otherwise have become due and payable, but
only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled within a specified period of time; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Company, a guarantor, any Significant Subsidiary of
the Company or the property of the Company or any such Significant Subsidiary;
(g) a default in the conversion of securities of that series, continued for 15
days after written notice as provided in the Indenture; (h) a guarantee of
securities of that series ceases to be in full force and effect or enforceable
in accordance with its terms; and (i) any other Event of Default provided with
respect to a particular series of debt securities (Section 501 of each
Indenture). The term "Significant Subsidiary" means each significant subsidiary
of the Company as defined in Regulation S-X promulgated under the Securities
Act. The prospectus supplement relating to a particular series of debt
securities may contain information relating to deletions from, modifications of
or additions to this list of events of default.
If an Event of Default under either Indenture with respect to debt
securities of any series offered by means of this prospectus at the time
outstanding occurs and is continuing, then in every such case the trustee or the
holders of not less than 25% in principal amount of the outstanding debt
securities of that series may declare the principal amount (or, if the debt
securities of that series are original issue discount securities, such portion
of the principal amount as may be specified in the terms thereof) of all of the
outstanding debt securities of that series to be due and payable immediately by
written notice thereof to the Company (and to the applicable trustee if given by
the holders). However, at any time after such a declaration of acceleration with
respect to debt securities of such series (or of all debt securities then
outstanding under the applicable Indenture, as the case may be) has been made,
but before a judgment or decree for payment of the money due has been obtained
by the applicable trustee, the holders of not less than a majority in principal
amount of outstanding debt securities of such series (or of all debt securities
then outstanding under the applicable Indenture, as the case may be) may rescind
and annul such declaration and its consequences if (a) the
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Company shall have deposited with the applicable trustee all required payments
of the principal of (and premium, if any) and interest, and any Additional
Amounts, on the debt securities of such series (or of all debt securities then
outstanding under the applicable Indenture, as the case may be), plus certain
fees, expenses, disbursements and advances of the trustee and (b) all Events of
Default, other than the non-payment of accelerated principal (or specified
portion thereof), with respect to debt securities of such series (or of all debt
securities then outstanding under the applicable Indenture, as the case may be)
have been cured or waived as provided in the applicable Indenture (Section 502
of each Indenture). Each Indenture also provides that the holders of not less
than a majority in principal amount of the outstanding debt securities of any
series (or of all debt securities then outstanding under the applicable
Indenture, as the case may be) may waive any past default with respect to such
series and its consequences, except a default (x) in the payment of the
principal of (or premium, if any) or interest or Additional Amounts on any debt
security of such series or (y) in respect of a covenant or provision contained
in the applicable Indenture that cannot be modified or amended without the
consent of the holders of all outstanding debt securities affected thereby
(Section 513 of each Indenture).
Each trustee is required to give notice to the holders of debt securities
within 90 days of a default under the applicable Indenture; provided, however,
that the trustee may withhold notice to the holders of any series of debt
securities of any default with respect to such series (except a default in the
payment of the principal of (or premium, if any) or interest payable on any debt
security of such series or in the payment of any sinking fund installment in
respect of any debt security of such series) if specified responsible officers
of the trustee consider such withholding to be in the interest of such holders
(Section 601 of each Indenture).
Each Indenture provides that no holders of debt securities of any series
offered by means of this prospectus may institute any proceedings, judicial or
otherwise, with respect to the applicable Indenture or for any remedy
thereunder, except in the case of failure of the trustee thereunder, for 60
days, to act after it has received a written request to institute proceedings in
respect of an Event of Default from the holders of not less than 25% in
principal amount of the outstanding debt securities of such series, as well as
an offer of indemnity reasonably satisfactory to it (Section 507 of each
Indenture). This provision will not prevent, however, any holder of such debt
securities from instituting suit for the enforcement of payment of the principal
of (and premium, if any) and interest on, and any Additional Amounts payable
with respect to, such debt securities at the respective due dates thereof
(Section 508 of each Indenture).
Subject to provisions in each Indenture relating to its duties in case of
default, each trustee is under no obligation to exercise any of its rights or
powers under the applicable Indenture at the request or direction of any holders
of any series of debt securities offered by means of this prospectus then
outstanding under such Indenture, unless such holders shall have offered to the
applicable trustee reasonable security or indemnity (Section 602 of each
Indenture). The holders of not less than a majority in principal amount of the
applicable outstanding debt securities of any series (or of all debt securities
then outstanding under the applicable Indenture, as the case may be) shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the trustee, or of 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 applicable Indenture, which
may involve the trustee in personal liability or which may be unduly prejudicial
to the holders of debt securities of such series not joining therein (Section
512 of each Indenture).
Within 120 days after the close of each fiscal year, the Company must
deliver to each trustee a certificate, signed by one of several specified
officers, as to his or her knowledge of the Company's compliance with all
conditions and covenants of the applicable Indenture and, in the event of any
noncompliance, specifying such noncompliance and the nature and status thereof
(Section 1010 of each Indenture).
MODIFICATION OF THE INDENTURES
Modifications and amendments of each Indenture may be made with the consent
of the holders of not less than a majority in principal amount of all debt
securities outstanding under the Indenture which are affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the holder of each such debt security
affected thereby, (a) change the stated
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<PAGE> 46
maturity of the principal of (or premium, if any), or any installment of
principal of or interest on, any such debt security; (b) reduce the principal
amount of, or the rate or amount of interest on, or any Additional Amounts
payable in respect of, or any premium payable on redemption of, or change any
obligation of the Company to pay any Additional Amounts set forth in the
Indenture relating to, any such debt security, or reduce the amount of principal
of an original issue discount security or indexed security that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the holder
of any such debt security; (c) change the place of payment, or the coin or
currency, for payment of principal of, or premium, if any, or interest on, or
any Additional Amounts payable with respect to any such debt security; (d)
impair the right to institute suit for the enforcement of any payment on or with
respect to any such debt security; (e) reduce the above-stated percentage of
outstanding debt securities of any series necessary to modify or amend the
applicable Indenture, to waive compliance with certain provisions thereof or
certain defaults and consequences thereunder or to reduce the quorum or voting
requirements set forth in such Indenture; (f) release any guarantor of such
security from its guarantee; or (g) modify any of the foregoing provisions or
any of the provisions relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect such action or
to provide that certain other provisions may not be modified or waived without
the consent of the holder of such debt security (Section 902 of each Indenture).
The holders of not less than a majority in principal amount of debt
securities outstanding under either Indenture have the right to waive compliance
by the Company with certain covenants in the applicable Indenture (Section 1012
of each Indenture).
Modifications and amendments of each Indenture may be made by the Company
and the applicable trustee without the consent of any holder of debt securities
issued thereunder for any of the following purposes: (i) to evidence the
succession of another person to the Company as obligor under the applicable
Indenture; (ii) to add to the covenants of the Company for the benefit of the
holders of all or any series of debt securities or to surrender any right or
power conferred upon the Company in the Indenture; (iii) to add Events of
Default for the benefit of the holders of all or any series of debt securities;
(iv) to add or change any provisions of the applicable Indenture to facilitate
the issuance of, or to liberalize certain terms of, debt securities in bearer
form, or to permit or facilitate the issuance of debt securities in
uncertificated form, provided that such action shall not adversely affect the
interests of the holders of the debt securities of any series in any material
respect; (v) to change or eliminate any provisions of the applicable Indenture,
provided that any such change or elimination shall become effective only when
there are no debt securities outstanding of any series issued thereunder created
prior thereto which are entitled to the benefit of such provision; (vi) to
secure the debt securities or provide a guarantee of the securities; (vii) to
establish the form or terms of debt securities of any series, including the
provisions and procedures, if applicable, for the conversion of such debt
securities into Common Stock or Preferred Stock of the Company; (viii) to
provide for the acceptance of appointment by a successor trustee or facilitate
the administration of the trusts under the applicable Indenture by more than one
trustee; (ix) to cure any ambiguity, defect or inconsistency in the applicable
Indenture; or (x) to supplement any of the provisions of the applicable
Indenture to the extent necessary to permit or facilitate defeasance and
discharge of any series of such debt securities, provided that such action will
not adversely affect the interests of the holders of the debt securities of any
series in any material respect (Section 901 of each Indenture).
Each Indenture provides that in determining whether the holders of the
requisite principal amount of outstanding debt securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of debt
securities, (i) the principal amount of an original issue discount security that
will be deemed to be outstanding will be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a debt security denominated in a foreign currency that will be deemed
outstanding will be the U.S. dollar equivalent, determined on the issue date for
such debt security, of the principal amount (or, in the case of an original
issue discount security, the U.S. dollar equivalent on the issue date of such
debt security of the amount determined as provided in (i) above), (iii) the
principal amount of an indexed security that will be deemed outstanding will be
the principal amount of such indexed security on the issue date, unless
otherwise provided with respect to such
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indexed security pursuant to Section 301 of the applicable Indenture, and (iv)
debt securities owned by the Company or any other obligor upon the debt
securities or any Affiliate of the Company or of such other obligor will be
disregarded (Section 101 of each Indenture).
Each Indenture contains provisions for convening meetings of the holders of
debt securities of a series (Section 1501 of each Indenture). A meeting may be
called by the trustee, by the Company, pursuant to a resolution adopted by its
Board of Directors, or by the holders of not less than 10% in principal amount
of the outstanding debt securities of such series, in any such case upon
satisfaction of any conditions and upon notice given as provided in the
applicable Indenture (Section 1502 of each Indenture). Except for any consent
that must be given by the holder of each debt security affected by certain
modifications and amendments of the applicable Indenture, any resolution
presented at a meeting or adjourned meeting duly reconvened at which a quorum is
present may be adopted by the affirmative vote of the holders of a majority in
principal amount of the outstanding debt securities of that series; provided,
however, that, except as referred to above, any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that may be made, given or taken by the holders of a specified
percentage, which is less than a majority, in principal amount of the
outstanding debt securities of a series may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote of
the holders of such specified percentage in principal amount of the outstanding
debt securities of that series. Any resolution passed or decision taken at any
meeting of holders of debt securities of any series duly held in accordance with
the Indenture will be binding on all holders of debt securities of that series.
The quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be persons holding or representing a majority in principal amount
of the outstanding debt securities of a series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver which
may be given by the holders of not less than a specified percentage in principal
amount of the outstanding debt securities of a series, the persons holding or
representing such specified percentage in principal amount of the outstanding
debt securities of such series will constitute a quorum (Section 1504 of each
Indenture).
Notwithstanding the provisions described above, if any action is to be
taken at a meeting of holders of debt securities of any series with respect to
any request, demand, authorization, direction, notice, consent, waiver or other
action that the applicable Indenture expressly provides may be made, given or
taken by the holders of a specified percentage in principal amount of all
outstanding debt securities affected thereby, or of the holders of such series
and one or more additional series: (i) there shall be no minimum quorum
requirement for such meeting and (ii) the principal amount of the outstanding
debt securities of such series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other action shall be taken
into account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or taken
under the applicable Indenture (Section 1504 of each Indenture).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to holders of any series of
debt securities that have not already been delivered to the trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such debt securities are payable in an amount sufficient to
pay the entire indebtedness on such debt securities in respect of principal (and
premium, if any) and interest and Additional Amounts payable to the date of such
deposit (if such debt securities have become due and payable) or to the stated
maturity or date of redemption or repayment, as the case may be (Section 401 of
each Indenture).
Each Indenture provides that, if the provisions of Article XIV of such
Indenture are made applicable to the debt securities of or within any series
pursuant to Section 301 of such Indenture, the Company may elect either (a) to
defease and be discharged from any and all obligations with respect to such debt
securities (except for the obligation to pay Additional Amounts, if any, upon
the occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such debt securities and the obligations to
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<PAGE> 48
register the transfer or exchange of such debt securities, to replace temporary
or mutilated, destroyed, lost or stolen debt securities, to maintain an office
or agency in respect of such debt securities and to hold moneys for payment in
trust) ("defeasance") (Section 1402 of each Indenture) or (b) to be released
from its obligations with respect to such debt securities under Sections 1004 to
1009, inclusive, of the applicable Indenture (being the restrictions described
under "-- Certain Covenants" above) or, if provided pursuant to Section 301 of
such Indenture, its obligations with respect to any other covenant, and any
omission to comply with such obligations will not constitute a default or an
Event of Default with respect to such debt securities ("covenant defeasance")
(Section 1403 of each Indenture), in either case upon the irrevocable deposit by
the Company with the applicable trustee, in trust, of an amount, in such
currency or currencies, currency unit or units or composite currency or
currencies in which such debt securities are payable at stated maturity, or
Government Obligations (as defined in the Indenture and described below), or
both, applicable to such debt securities which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any) and interest on
such debt securities, and any mandatory sinking fund or analogous payments
thereon, on the scheduled due dates therefor (Section 1404 of each Indenture).
Such a trust may be established only if, among other things, the Company
has delivered to the applicable trustee an opinion of counsel (as specified in
the applicable Indenture) to the effect that the holders of such debt securities
will not recognize income, gain or loss for U.S. federal income tax purposes as
a result of such defeasance or covenant defeasance and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance or covenant defeasance had not
occurred (Section 1404 of each Indenture).
"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 debt securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a person controlled or supervised by and acting as an agency or instrumentality
of the United States or such government which issued the foreign currency in
which the debt securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States or such other government, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and will also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such Government Obligation or a specific payment of interest on or
principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101 of each Indenture).
Unless otherwise provided in the applicable prospectus supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to debt securities of any series,
(a) the holder of a debt security of such series is entitled to, and does, elect
pursuant to Section 301 of the applicable Indenture or the terms of such debt
security to receive payment in a currency, currency unit or composite currency
other than that in which such deposit has been made in respect of such debt
security, or (b) a Conversion Event (as defined in the Indenture and described
below) occurs in respect of the currency, currency unit or composite currency in
which such deposit has been made, the indebtedness represented by such debt
security shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium, if any) and
interest on such debt security as they become due out of the proceeds yielded by
converting the amount so deposited in respect of such debt security into the
currency, currency unit or composite currency in which such debt security
becomes payable as a result of such election or such cessation of usage based on
the applicable market exchange rate (Section 1405 of each Indenture).
"Conversion Event" means the cessation of use of (i) a currency, currency unit
or composite currency both by the government of the country which issued such
currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community, (ii) the
ECU both within the European Monetary System and for the settlement of
transactions by public
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institutions of or within the European Communities or (iii) any currency unit or
composite currency other than the ECU for the purposes for which it was
established (Section 101 of each Indenture). Unless otherwise provided in the
applicable prospectus supplement, all payments of principal of (and premium, if
any) and interest on any debt security that is payable in a foreign currency
that ceases to be used by its government of issuance shall be made in U.S.
dollars.
In the event the Company effects covenant defeasance with respect to any
debt securities and such debt securities are declared due and payable because of
the occurrence of any Event of Default other than the Event of Default described
in clause (d) under "Events of Default, Notice and Waiver" with respect to
Sections 1004 to 1009, inclusive, of the applicable Indenture (which Sections
would no longer be applicable to such debt securities) or described in clause
(g) under "Events of Default, Notice and Waiver" with respect to any other
covenant as to which there has been covenant defeasance, the amount in such
currency, currency unit or composite currency in which such debt securities are
payable, and Government Obligations on deposit with the applicable trustee, will
be sufficient to pay amounts due on such debt securities at the time of their
stated maturity but may not be sufficient to pay amounts due on such debt
securities at the time of the acceleration resulting from such Event of Default.
However, the Company would remain liable to make payment of such amounts due at
the time of acceleration.
The applicable prospectus supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the debt
securities of or within a particular series.
SUBORDINATION
Upon any distribution to creditors of the Company in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
the subordinated debt securities will be subordinated to the extent provided in
the Subordinated Debt Securities Indenture in right of payment to the prior
payment in full of all Senior Debt (as defined in the Subordinated Debt
Securities Indenture and described below) (Sections 1701 and 1702 of the
Subordinated Debt Securities Indenture), but the obligation of the Company to
make payment of the principal of and interest on the subordinated debt
securities will not otherwise be affected (Section 1708 of the Subordinated Debt
Securities Indenture). No payment of principal or interest may be made on the
subordinated debt securities at any time if a default on Senior Debt exists that
permits the holders of such Senior Debt to accelerate its maturity and the
default is the subject of judicial proceedings or the Company receives notice of
the default (Section 1703 of the Subordinated Debt Securities Indenture). After
all Senior Debt is paid in full and until the subordinated debt securities are
paid in full, holders will be subrogated to the rights of holders of Senior Debt
to the extent that distributions otherwise payable to holders have been applied
to the payment of Senior Debt (Section 1707 of the Subordinated Debt Securities
Indenture). By reason of such subordination, in the event of a distribution of
assets upon insolvency, certain general creditors of the Company may recover
more, ratably, than holders of the subordinated debt securities.
Senior Debt is defined in the Subordinated Debt Securities Indenture as the
principal of and interest on, or substantially similar payments to be made by
the Company in respect of, the following, whether outstanding at the date of
execution of the Subordinated Debt Securities Indenture or thereafter incurred,
created or assumed: (a) indebtedness of the Company for money borrowed or
represented by purchase-money obligations, (b) indebtedness of the Company
evidenced by notes, debentures, or bonds, or other securities issued under the
provisions of an indenture, fiscal agency agreement or other instrument, (c)
obligations of the Company as lessee under leases of property either made as
part of any sale and leaseback transaction to which the Company is a party or
otherwise, (d) indebtedness of partnerships and joint ventures that is included
in the consolidated financial statements of the Company, (e) indebtedness,
obligations and liabilities of others in respect of which the Company is liable
contingently or otherwise to pay or advance money or property or as guarantor,
endorser or otherwise or which the Company has agreed to purchase or otherwise
acquire, and (f) any binding commitment of the Company to fund any real estate
investment or to fund any investment in any entity making such real estate
investment, in each case other than (1) any such indebtedness, obligation or
liability referred to in clauses (a) through (f) above as to which, in the
instrument creating or evidencing the same pursuant to which the same is
outstanding, it is provided that such indebtedness, obligation or
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liability is not superior in right of payment to the subordinated debt
securities or ranks pari passu with the subordinated debt securities, (2) any
such indebtedness, obligation or liability which is subordinated to indebtedness
of the Company to substantially the same extent as or to a greater extent than
the subordinated debt securities are subordinated, (3) any trade accounts
payable and (4) the subordinated debt securities (Section 101 of the
Subordinated Debt Securities Indenture). There are no restrictions in the
Subordinated Debt Securities Indenture upon the creation of additional Senior
Debt. However, the Senior Debt Securities Indenture contains limitations on
incurrence of indebtedness by the Company. See "-- Certain Covenants -- Senior
Debt Securities Indenture Limitations on Incurrence of Debt."
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DESCRIPTION OF COMMON STOCK
The Company has the authority to issue up to 250,000,000 shares of common
stock, par value $.01 per share (the "Common Stock"). On June 30, 1999, the
Company had approximately 88,404,000 shares of Common Stock outstanding.
The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock to which any prospectus supplement may
relate, including a prospectus supplement providing that Common Stock will be
issuable upon conversion or exchange of debt securities or preferred stock of
the Company or upon the exercise of warrants to purchase Common Stock issued by
the Company. The statements below describing the Common Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Charter and Bylaws and the Maryland
General Corporation Law.
Subject to the preferential rights of any other shares or series of capital
stock, holders of the Company's Common Stock will be entitled to receive
dividends when, as and if authorized and declared by the Board of Directors of
the Company, out of funds legally available therefor. Payment and declaration of
dividends on the Common Stock and purchases of shares thereof by the Company may
be subject to certain restrictions if the Company fails to pay dividends on any
of its Preferred Stock. See "Description of Preferred Stock." Upon the
distribution of assets in connection with any liquidation, dissolution or
winding up of the Company, holders of Common Stock will be entitled to share
equally and ratably in any assets available for distribution to them, after
payment or provision for payment of all known debts and liabilities of the
Company and any preferential amounts owing with respect to any outstanding
Preferred Stock. Subject to certain provisions of Maryland law and the Company's
Charter and Bylaws, each outstanding share of Common Stock entitles the holder
to one vote on all matters submitted to a vote of stockholders, including the
election of directors, and, except as otherwise required by law or except as
provided with respect to any other class or series of stock (such as the
Company's Series D Preferred Stock, the holders of which have the right to vote
with the holders of the Company's Common Stock as though part of the same
class), the holders of such shares will possess the exclusive voting power.
Holders of Common Stock will not have cumulative voting rights in the election
of directors, which means that holders of a majority of all of the shares of or
voting with the Company's Common Stock for the election of directors will be
able to elect all of the directors to be elected by such holders if they choose
to do so and, accordingly, the holders of the remaining Common Stock will be
unable to elect any directors. Holders of shares of Common Stock will not have
preemptive rights, which means they have no right to acquire any additional
shares of Common Stock that may be issued by the Company at a subsequent date.
Holders of Common Stock also will have no conversion, sinking fund, redemption,
preference or exchange rights. Subject to the provisions of the Company Charter
regarding the restrictions on transfer and limitations on ownership of the
Common Stock or the Preferred Stock, shares of the Common Stock will have equal
dividend, liquidation and other rights. The Common Stock will, when issued, be
fully paid and nonassessable and will not be subject to preemptive or other
similar rights.
RESTRICTIONS ON OWNERSHIP
With certain exceptions, the Company's Charter provides that no person may
own, actually or constructively, more than 9.8% by value of the Company's Common
Stock or Preferred Stock. See "Restrictions on Ownership of Capital Stock."
SHAREHOLDER RIGHTS PLAN
The Company has a Shareholder Rights Plan under which one preferred share
purchase right (a "Right") is attached to each outstanding share of the
Company's Common Stock. When exercisable, each Right entitles the registered
holder to purchase from the Company one one-thousandth of a share of the
Company's Series C Junior Participating Preferred Stock ("Series C Preferred
Stock") for an exercise price of $45, subject to certain anti-dilution
adjustments. Because of the nature of the dividend, liquidation and voting
rights, the value of one one-thousandth of a share of Series C Preferred Stock
purchasable upon exercise of each Right should approximate the value of one
share of the Company's Common Stock.
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The Rights will become exercisable only if a person or group acquires,
obtains the right to acquire or announces a tender offer to acquire 15% or more
of the Company's Common Stock. Shares of Series C Preferred Stock purchasable
upon exercise of the Rights will be entitled, when, as and if declared, to a
minimum preferential quarterly dividend payment of $1.00 per share but will be
entitled to an aggregate dividend of 1,000 times the dividend, if any, declared
per share of the Company's Common Stock. In the event of liquidation,
dissolution or winding up of the Company, the holders of the Series C Preferred
Stock will be entitled to a minimum liquidation payment of $1,000 per share
(plus any accrued but unpaid dividends), preferential to the Company's Common
Stock, but junior to the Company's 8 1/2% Series A Cumulative Convertible
Preferred Stock, 8 5/8% Series B Cumulative Redeemable Preferred Stock, 7.8%
Series D Cumulative Voting Step-Up Premium Rate Preferred Stock and Preferred
Stock ranking on a parity with such Preferred Stock as to distributions or
rights upon liquidation, dissolution or winding up of the affairs of the
Company, but will be entitled to an aggregate payment of 1,000 times the payment
made per share of Series C Preferred Stock. Each share of Series C Preferred
Stock will have 1,000 votes and will vote together with shares of the Company's
Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of the Company's Common Stock are exchanged, each
share of Series C Preferred Stock will be entitled to receive 1,000 times the
amount received per share of the Company's Common Stock. Shares of Series C
Preferred Stock are generally not redeemable. The Rights are protected by
customary
anti-dilution provisions.
Until a person or group acquires or announces a tender offer to acquire 15%
or more of the Common Stock, the Rights will be evidenced by the certificates
representing shares of Common Stock of the Company and will be transferred with
and only with such certificates. The surrender for transfer of any certificate
for shares of Common Stock will also constitute the transfer of the Rights
associated with the shares represented by such certificate. The Rights will
expire on October 8, 2003, unless earlier redeemed or exchanged by the Company
or terminated.
In the event that a person becomes an acquiring person or if the Company
were the surviving corporation in a merger with an acquiring person or any
affiliate or associate of an acquiring person and the Company's Common Stock was
not changed or exchanged, each holder of a Right, other than Rights that are or
were acquired or beneficially owned by the acquiring person (which Rights will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of the Company's Common Stock having a market value of two
times the then current exercise price under the Right. In the event that, after
a person has become an acquiring person, the Company were acquired in a merger
or other business combination transaction or more than 50% of its assets or
earning power were sold, proper provision shall be made so that each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof at
the then current exercise price under the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction would have
a market value of two times the then current exercise price under the Right.
At any time after a person becomes an acquiring person and prior to the
earlier of one of the events described in the last sentence of the previous
paragraph or the acquisition by such acquiring person of 50% or more of the
outstanding shares of the Company's Common Stock, the Board of Directors may
cause the Company to exchange the Rights (other than Rights owned by an
acquiring person which will have become void), in whole or in part, for that
number of shares of the Company's Common Stock having an aggregate value equal
to the spread (the excess of the value of the adjustment shares issuable upon
the exercise of a Right over the exercise price) per Right (subject to
adjustment).
The Rights may be redeemed in whole, but not in part, at a price of $.01
per Right by the Board of Directors at any time before the time that an
acquiring person has become such. The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the redemption price.
The Rights may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that acquires more than 15% of the
outstanding shares of Common Stock of the Company if certain
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events thereafter occur without the Rights having been redeemed. However,
because the Rights are redeemable by the Board of Directors in certain
circumstances, the Rights should not interfere with any merger or other business
combination approved by the Board of Directors.
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent for the Company's Common Stock is
BankBoston, N.A.
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DESCRIPTION OF PREFERRED STOCK
The Company is authorized to issue 25,000,000 shares of Preferred Stock,
par value $.01 per share (the "Preferred Stock"). As of June 30, 1999,
approximately 2,287,000 shares of Preferred Stock were issued and outstanding,
consisting of approximately 1,507,000 shares of 8 1/2% Series A Cumulative
Convertible Preferred Stock, 630,000 shares of 8 5/8% Series B Cumulative
Redeemable Preferred Stock and 150,000 of 7.8% Series D Cumulative Voting
Step-Up Premium Rate Preferred Stock. The latter two series of Preferred Stock
are traded as depositary shares, each depositary share representing one-tenth of
a share of Preferred Stock. As of the same date, 100,000 shares of Series C
Preferred Stock had been classified and were reserved for issuance under the
Company's shareholder rights plan. See "Description of Common
Stock -- Shareholder Rights Plan."
Under the Company's Charter, shares of Preferred Stock may be issued from
time to time, in one or more series as authorized by the Board of Directors.
Prior to issuance of shares of each series, the Board of Directors is required
by the Maryland General Corporation Law and the Company's Charter to adopt
resolutions and file Articles Supplementary (the "Articles Supplementary") with
the State Department of Assessments and Taxation of Maryland, fixing for each
such series the designations, powers, preferences and rights of the shares of
such series and the qualifications, limitations or restrictions thereon,
including, but not limited to, dividend rights, dividend rate or rates,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preferences as are permitted by Maryland law. The Board of Directors could
authorize the issuance of shares of Preferred Stock with terms and conditions
which could have the effect of discouraging a takeover or other transaction
which holders of some, or a majority, of such shares might believe to be in
their best interests or in which holders of some, or a majority, of such shares
might receive a premium for their shares over the then market price of such
shares.
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any supplement to this
prospectus may relate. The statements below describing the Preferred Stock are
in all respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Charter (including the applicable
Articles Supplementary) and Bylaws and the Maryland General Corporation Law.
GENERAL
Subject to limitations prescribed by Maryland law and the Company's Charter
and Bylaws, the Board of Directors is authorized to fix the number of shares
constituting each series of Preferred Stock and the designations and powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution of the Board of Directors or duly
authorized committee thereof. The Preferred Stock will, when issued, be fully
paid and nonassessable and will not have, or be subject to, any preemptive or
similar rights.
The prospectus supplement relating to the series of Preferred Stock offered
thereby will describe the specific terms of such securities, including:
(1) the title and stated value of such Preferred Stock;
(2) the number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such Preferred
Stock;
(3) the dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Stock;
(4) whether dividends shall be cumulative or non-cumulative and, if
cumulative, the date from which dividends on such Preferred Stock shall
accumulate;
(5) the procedures for any auction and remarketing, if any, for such
Preferred Stock;
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(6) the provisions for a sinking fund, if any, for such Preferred
Stock;
(7) the provisions for redemption, if applicable, of such Preferred
Stock;
(8) any listing of such Preferred Stock on any securities exchange;
(9) the terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock of the Company, including the
conversion price (or manner of calculation thereof) and conversion period;
(10) a discussion of federal income tax considerations applicable to
such Preferred Stock;
(11) any limitations on issuance of any series of Preferred Stock
ranking senior to or on a parity with such series of Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;
(12) in addition to those limitations described below, any other
limitations on actual and constructive ownership and restrictions on
transfer, in each case as may be appropriate to preserve the status of the
Company as a REIT; and
(13) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
RANK
Unless otherwise specified in the prospectus supplement relating to a
particular series of Preferred Stock, the Preferred Stock will, with respect to
dividend rights and rights upon liquidation, dissolution or winding up of the
Company, rank (i) senior to all classes or series of Common Stock of the
Company, and to all equity securities ranking junior to such Preferred Stock
with respect to dividend rights or rights upon liquidation, dissolution or
winding up of the Company; (ii) on a parity with all equity securities issued by
the Company the terms of which specifically provide that such equity securities
rank on a parity with the Preferred Stock with respect to dividend rights or
rights upon liquidation, dissolution or winding up of the Company; and (iii)
junior to any equity securities issued by the Company the terms of which
specifically provide that such equity securities rank senior to the Preferred
Stock with respect to dividend rights or rights upon liquidation, dissolution or
winding up of the Company. As used in the Company's Charter for these purposes,
the term "equity securities" does not include convertible debt securities.
DIVIDENDS
Unless otherwise specified in the prospectus supplement, the Preferred
Stock will have the rights with respect to payment of dividends set forth below.
Holders of shares of the Preferred Stock of each series shall be entitled
to receive, when, as and if declared and authorized by the Board of Directors of
the Company, out of assets of the Company legally available for payment, cash
dividends at such rates and on such dates as will be set forth in the applicable
prospectus supplement. Each such dividend shall be payable to holders of record
as they appear on the stock transfer books of the Company on such record dates
as shall be fixed by the Board of Directors of the Company.
Dividends on any series of the Preferred Stock may be cumulative or
non-cumulative, to be described in the applicable prospectus supplement.
Dividends, if cumulative, will accumulate from and after the date set forth in
the applicable prospectus supplement. If the Board of Directors of the Company
fails to declare a dividend payable on a dividend payment date on any series of
the Preferred Stock for which dividends are non-cumulative, then the holders of
such series of the Preferred Stock will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date.
If any shares of the Preferred Stock of any series are outstanding, no full
dividends shall be declared or paid or set apart for payment on the Preferred
Stock of the Company of any other series ranking, as to
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dividends, on a parity with or junior to the Preferred Stock of such series for
any period unless (i) if such series of Preferred Stock has a cumulative
dividend, full cumulative dividends have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof irrevocably
set apart for such payment on the Preferred Stock of such series for all past
dividend periods and the then current dividend period or (ii) if such series of
Preferred Stock does not have a cumulative dividend, full dividends for the then
current dividend period have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof irrevocably set apart for
such payment on the Preferred Stock of such series. When dividends are not paid
in full (or a sum sufficient for such full payment is not so irrevocably set
apart) upon the shares of Preferred Stock of any series and the shares of any
other series of preferred stock ranking on a parity as to dividends with the
Preferred Stock of such series, all dividends declared upon shares of Preferred
Stock of such series and any other series of preferred stock ranking on a parity
as to dividends with such Preferred Stock shall be declared pro rata so that the
amount of dividends declared per share on the Preferred Stock of such series and
such other series of preferred stock shall in all cases bear to each other the
same ratio that accrued and unpaid dividends per share on the shares of
Preferred Stock of such series (which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if such Preferred Stock
does not have a cumulative dividend) and such other series of preferred stock
bear to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on Preferred Stock of
such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
irrevocably set apart for payment for all past dividend periods and the then
current dividend period and (ii) if such series of Preferred Stock does not have
a cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof irrevocably set apart for payment for the then current
dividend period, no dividends (other than in Common Stock or other capital stock
ranking junior to the Preferred Stock of such series as to dividends and upon
liquidation, dissolution or winding up of the Company) shall be declared or paid
or set aside for payment or other distribution shall be declared or made upon
the Common Stock or any other capital stock of the Company ranking junior to or
on a parity with the Preferred Stock of such series as to dividends or upon
liquidation, dissolution or winding up of the Company, nor shall any Common
Stock or any other capital stock of the Company ranking junior to or on a parity
with the Preferred Stock of such series as to dividends or upon liquidation,
dissolution or winding up of the Company be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by the Company
(except by conversion into or exchange for other capital stock of the Company
ranking junior to the Preferred Stock of such series as to dividends and upon
liquidation, dissolution or winding up of the Company, and except for a
redemption or purchase or other acquisition of shares of Common Stock made for
purposes of an employee benefit plan of the Company or any subsidiary or as
provided for under the Company's Charter to protect the Company's status as a
REIT).
Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such series which remains payable.
If for any taxable year, the Company elects to designate as "capital gains
dividends" (as defined in Section 857 of the Internal Revenue Code) any portion
(the "Capital Gains Amount") of the total dividends (within the meaning of the
Internal Revenue Code) paid or made available for the year to holders of all
classes of capital stock, then the portion of the Capital Gains Amount that will
be allocable to the holders of Preferred Stock will be the Capital Gains Amount
multiplied by a fraction, the numerator of which shall be the total dividends
paid or made available to the holders of shares of Preferred Stock for the year
and the denominator of which shall be the total dividends.
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REDEMPTION
If so described in the applicable prospectus supplement, the shares of
Preferred Stock will be subject to mandatory redemption or redemption at the
option of the Company, in whole or in part, in each case upon the terms, at the
times and at the redemption prices set forth in such prospectus supplement.
The prospectus supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Stock does not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as described in the applicable prospectus supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of capital stock of the Company, the terms of such
Preferred Stock may provide that, if no such capital stock shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be converted into shares of the applicable capital
stock of the Company pursuant to conversion provisions specified in the
applicable prospectus supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of any series
of Preferred Stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof irrevocably set apart for
payment for all past dividend periods and the then current dividend period and
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
irrevocably set apart for payment for the then current dividend period, no
shares of any series of Preferred Stock shall be redeemed unless all outstanding
shares of Preferred Stock of such series are simultaneously redeemed; provided,
however, that the foregoing shall not prevent the purchase or acquisition of
shares of Preferred Stock of such series pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Preferred
Stock of such series, and, unless (i) if such series of Preferred Stock has a
cumulative dividend, full cumulative dividends on all outstanding shares of any
series of Preferred Stock have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof irrevocably set apart
for payment for all past dividend periods and the then current dividend period
and (ii) if such series of Preferred Stock does not have a cumulative dividend,
full dividends on the Preferred Stock of any series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof irrevocably set apart for payment for the then current dividend
period, the Company shall not purchase or otherwise acquire directly or
indirectly any shares of Preferred Stock of such series (except by conversion
into or exchange for capital stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation, dissolution
or winding up of the Company).
If fewer than all of the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
by such holders (with adjustments to avoid redemption of fractional shares) or
any other equitable method determined by the Company that will not result in
violation of the ownership limitations set forth in the Charter.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of a share of Preferred
Stock of any series to be redeemed at the address shown on the stock transfer
books of the Company. Each notice shall state: (i) the redemption date; (ii) the
number of shares and series of the Preferred Stock to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such Preferred
Stock are to be surrendered for payment of the redemption price; (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date; and (vi) the date upon which the holder's conversion rights, if any, as to
such shares shall terminate. If fewer than all the shares of Preferred Stock of
any series are to be redeemed, the notice mailed to each such holder thereof
shall also specify the number of shares of Preferred Stock to be redeemed from
each such holder. If notice of
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redemption of any shares of Preferred Stock has been given and if the funds
necessary for such redemption have been irrevocably set apart by the Company in
trust for the benefit of the holders of any shares of Preferred Stock so called
for redemption, then from and after the redemption date dividends will cease to
accrue on such shares of Preferred Stock, such shares of Preferred Stock shall
no longer be deemed outstanding and all rights of the holders of such shares
will terminate, except the right to receive the redemption price.
In addition, and the foregoing to the contrary notwithstanding, the shares
of Preferred Stock will be issued subject to the terms and provisions of the
Charter providing for a purchase option in favor of the Company in respect of
those shares, in order to protect the Company's status as a REIT. See
"Restrictions on Ownership of Capital Stock."
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Common Stock or any other class or series of capital
stock of the Company ranking junior to the Preferred Stock in the distribution
of assets upon any liquidation, dissolution or winding up of the Company, the
holders of each series of Preferred Stock shall be entitled to receive out of
assets of the Company legally available for distribution to stockholders
liquidating distributions in the amount of the liquidation preference per share
(set forth in the applicable prospectus supplement and Articles Supplementary),
plus an amount equal to all dividends accrued and unpaid thereon (which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock does not have a cumulative dividend). After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Preferred Stock will have no right or claim to any of
the remaining assets of the Company. In the event that, upon any such voluntary
or involuntary liquidation, dissolution or winding up, the legally available
assets of the Company are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of capital stock of the
Company ranking on a parity with the Preferred Stock in the distribution of
assets upon liquidation, dissolution or winding up of the Company, then the
holders of the Preferred Stock and all other such classes or series of capital
stock shall share ratably in any such distribution of assets in proportion to
the full liquidating distributions to which they would otherwise be respectively
entitled.
If liquidating distributions shall have been made in full to all holders of
shares of Preferred Stock, the remaining assets of the Company shall be
distributed among the holders of any other classes or series of capital stock
ranking junior to the Preferred Stock upon liquidation, dissolution or winding
up of the Company, according to their respective rights and preferences and in
each case according to their respective number of shares. For such purposes, the
consolidation or merger of the Company with or into any other corporation, or
the sale, lease, transfer or conveyance of all or substantially all of the
property or business of the Company, shall not be deemed to constitute a
liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as indicated in the applicable prospectus supplement and
Articles Supplementary.
Whenever dividends on any shares of Preferred Stock shall be in arrears for
six or more quarterly periods, whether or not consecutive, the number of
directors then constituting the Board of Directors of the Company, if not then
previously increased by reason of a similar arrearage with respect to any series
of Preferred Stock with like rights, will automatically be increased by two and
the holders of each series of Preferred Stock (voting separately as a class with
all other series of Preferred Stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of two
additional directors of the Company at a special meeting of the shares of
Preferred Stock of any series so in arrears or at the next annual meeting of
stockholders, and at each subsequent annual meeting at which their successors
are to be elected, until (i) if such series of Preferred Stock has a cumulative
dividend, all dividends accumulated on such shares
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of Preferred Stock for the past dividend periods and the then current dividend
period shall have been fully paid or declared and a sum sufficient for the
payment thereof irrevocably set apart for payment or (ii) if such series of
Preferred Stock does not have a cumulative dividend, four consecutive quarterly
dividends shall have been fully paid or declared and a sum sufficient for the
payment thereof irrevocably set apart for payment; whereupon, in either such
case, either such directors shall resign or their term of office shall expire,
and the number of directors constituting the Board of Directors shall be
decreased accordingly.
Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, the Company shall not, without the
affirmative vote or consent of the holders of at least 66 2/3% of the shares of
each series of Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting (such series voting separately as a
class), (i) authorize or create, or increase the authorized or issued amount of,
any class or series of capital stock ranking senior to such series of Preferred
Stock with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the Company or reclassify any
authorized capital stock of the Company into any such shares, or create,
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such shares; or (ii) amend, alter or repeal the provisions
of the Company's Charter (including the Articles Supplementary for such series
of Preferred Stock), whether by merger, consolidation or otherwise, so as to
materially and adversely affect any right, preference, privilege or voting power
of such series of Preferred Stock or the holders thereof; provided, however,
that any increase in the amount of the authorized Preferred Stock or the
creation or issuance of any other series of Preferred Stock, or any increase in
the amount of authorized shares of such series or any other series of Preferred
Stock, in each case ranking on a parity with or junior to the Preferred Stock of
such series with respect to payment of dividends and the distribution of assets
upon liquidation, dissolution or winding up of the Company, shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Stock shall have
been redeemed or called for redemption upon proper notice and sufficient funds
shall have been irrevocably deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which shares of any series of
Preferred Stock are convertible into Common Stock will be set forth in the
applicable prospectus supplement relating thereto. Such terms will include the
number of shares of Common Stock into which the Preferred Stock is convertible,
the conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such Preferred Stock.
RESTRICTIONS ON OWNERSHIP
With certain exceptions, the Company's Charter provides that no person may
own, actually or constructively, more than 9.8% by value of the Company's Common
Stock or Preferred Stock. See "Restrictions on Ownership of Capital Stock."
TRANSFER AGENT
The registrar and transfer agent for a particular series of Preferred Stock
will be set forth in the applicable prospectus supplement.
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DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts for depositary shares, each of which
depositary receipts will represent a fractional interest of a share of a
particular series of Preferred Stock, as specified in the applicable prospectus
supplement. Shares of Preferred Stock of each series represented by depositary
shares will be deposited under a separate Deposit Agreement among the Company,
the depositary named therein and the holders from time to time of the depositary
receipts. Subject to the terms of the Deposit Agreement, each owner of a
depositary receipt will be entitled, in proportion to the fractional interest of
a share of a particular series of Preferred Stock represented by the depositary
shares evidenced by such depositary receipt, to all the rights and preferences
of the Preferred Stock represented by such depositary shares (including
dividend, voting, conversion, redemption and liquidation rights).
The depositary shares will be evidenced by depositary receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Stock by the Company to the preferred stock
depositary, the Company will cause the preferred stock depositary to issue, on
behalf of the Company, the depositary receipts. Copies of the applicable form of
Deposit Agreement and depositary receipt may be obtained from the Company upon
request, and the statements made hereunder relating to the Deposit Agreement and
the depositary receipts to be issued thereunder are summaries of certain
provisions thereof and do not purport to be complete and are subject to, and
qualified in their entirety by reference to, all of the provisions of the
applicable Deposit Agreement and related depositary receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Stock to the record
holders of depositary receipts evidencing the related depositary shares in
proportion to the number of such depositary receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and other
information and to pay certain charges and expenses to the preferred stock
depositary.
In the event of a distribution other than in cash, the preferred stock
depositary will distribute property received by it to the record holders of
depositary receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the preferred stock depositary, unless the preferred stock
depositary determines that it is not feasible to make such distribution, in
which case the preferred stock depositary may, with the approval of the Company,
sell such property and distribute the net proceeds from such sale to such
holders.
No distribution will be made in respect of any depositary share to the
extent that it represents any Preferred Stock converted into other securities.
WITHDRAWAL OF STOCK
Upon surrender of the depositary receipts at the corporate trust office of
the preferred stock depositary (unless the related depositary shares have
previously been called for redemption or converted into other securities), the
holders thereof will be entitled to delivery at such office, to or upon such
holder's order, of the number of whole or fractional shares of the Preferred
Stock and any money or other property represented by the depositary shares
evidenced by such depositary receipts. Holders of depositary receipts will be
entitled to receive whole or fractional shares of the related Preferred Stock on
the basis of the proportion of Preferred Stock represented by each depositary
share as specified in the applicable prospectus supplement, but holders of such
shares of Preferred Stock will not thereafter be entitled to receive depositary
shares therefor. If the depositary receipts delivered by the holder evidence a
number of depositary shares in excess of the number of depositary shares
representing the number of shares of Preferred Stock to be withdrawn, the
preferred stock depositary will deliver to such holder at the same time a new
depositary receipt evidencing such excess number of depositary shares.
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REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems shares of Preferred Stock held by the
preferred stock depositary, the preferred stock depositary will redeem as of the
same redemption date the number of depositary shares representing shares of the
Preferred Stock so redeemed, provided the Company shall have paid in full to the
preferred stock depositary the redemption price of the Preferred Stock to be
redeemed plus an amount equal to any accrued and unpaid dividends thereon to the
date fixed for redemption. The redemption price per depositary share will be
equal to the corresponding proportion of the redemption price and any other
amounts per share payable with respect to the Preferred Stock. If fewer than all
the depositary shares are to be redeemed, the depositary shares to be redeemed
will be selected pro rata (as nearly as may be practicable without creating
fractional depositary shares) or by any other equitable method determined by the
Company that will not result in a violation of the ownership restrictions in the
Company's Charter applicable to owners of the Company's Common Stock and
Preferred Stock. See "Restrictions on Ownership of Capital Stock."
From and after the date fixed for redemption, all dividends in respect of
the shares of Preferred Stock so called for redemption will cease to accrue, the
depositary shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the depositary receipts evidencing
the depositary shares so called for redemption will cease, except the right to
receive any moneys payable upon such redemption and any money or other property
to which the holders of such depositary receipts were entitled upon such
redemption and surrender thereof to the preferred stock depositary.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the preferred stock depositary will mail the
information contained in such notice of meeting to the record holders of the
depositary receipts evidencing the depositary shares which represent such
Preferred Stock. Each record holder of depositary receipts evidencing depositary
shares on the record date (which will be the same date as the record date for
the Preferred Stock) will be entitled to instruct the preferred stock depositary
as to the exercise of the voting rights pertaining to the amount of Preferred
Stock represented by such holder's depositary shares. The preferred stock
depositary will vote the amount of Preferred Stock represented by such
depositary shares in accordance with such instructions, and the Company will
agree to take all reasonable action which may be deemed necessary by the
preferred stock depositary in order to enable the preferred stock depositary to
do so. The preferred stock depositary will abstain from voting the amount of
Preferred Stock represented by such depositary shares to the extent it does not
receive specific instructions from the holders of depositary receipts evidencing
such depositary shares. The preferred stock depositary shall not be responsible
for any failure to carry out any instruction to vote, or for the manner or
effect of any such vote made, as long as any such action or non-action is in
good faith and does not result from negligence or willful misconduct of the
preferred stock depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each depositary receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the depositary shares evidenced by such
depositary receipt, as set forth in the applicable prospectus supplement.
CONVERSION OF PREFERRED STOCK
The depositary shares, as such, are not convertible into Common Stock or
any other securities or property of the Company. Nevertheless, if so specified
in the applicable prospectus supplement relating to an offering of depositary
shares, the depositary receipts may be surrendered by holders thereof to the
preferred stock depositary with written instructions to the preferred stock
depositary to instruct the Company to cause conversion of the Preferred Stock
represented by the depositary shares evidenced by such depositary receipts into
whole shares of Common Stock, other shares of Preferred Stock of the Company or
other shares of stock, and the Company has agreed that upon receipt of such
instructions and any amounts payable in respect
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thereof, it will cause the conversion thereof utilizing the same procedures as
those provided for delivery of Preferred Stock to effect such conversion. If the
depositary shares evidenced by a depositary receipt are to be converted in part
only, a new depositary receipt or receipts will be issued for any depositary
shares not to be converted. No fractional shares of Common Stock will be issued
upon conversion, and if such conversion would result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Stock on the last
business day prior to the conversion.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares which
represent the Preferred Stock and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the preferred stock
depositary. However, any amendment that materially and adversely alters the
rights of the holders of depositary receipts or that would be materially and
adversely inconsistent with the rights granted to the holders of the related
Preferred Stock will not be effective unless such amendment has been approved by
the existing holders of at least 66 2/3% of the depositary shares evidenced by
the depositary receipts then outstanding. No amendment shall impair the right,
subject to certain exceptions in the Depositary Agreement, of any holder of
depositary receipts to surrender any depositary receipt with instructions to
deliver to the holder the related Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with law. Every
holder of an outstanding depositary receipt at the time any such amendment
becomes effective shall be deemed, by continuing to hold such receipt, to
consent and agree to such amendment and to be bound by the Deposit Agreement as
amended thereby.
The Deposit Agreement may be terminated by the Company upon not less than
30 days' prior written notice to the preferred stock depositary if (i) such
termination is necessary to preserve the Company's status as a REIT or (ii) a
majority of each series of Preferred Stock affected by such termination consents
to such termination, whereupon the preferred stock depositary shall deliver or
make available to each holder of depositary receipts, upon surrender of the
depositary receipts held by such holder, such number of whole or fractional
shares of Preferred Stock as are represented by the depositary shares evidenced
by such depositary receipts together with any other property held by the
preferred stock depositary with respect to such depositary receipts. The Company
has agreed that if the Deposit Agreement is terminated to preserve the Company's
status as a REIT, then the Company will use its best efforts to list the
Preferred Stock issued upon surrender of the related depositary shares on a
national securities exchange. In addition, the Deposit Agreement will
automatically terminate if (i) all outstanding depositary shares shall have been
redeemed, (ii) there shall have been a final distribution in respect of the
related Preferred Stock in connection with any liquidation, dissolution or
winding up of the Company and such distribution shall have been distributed to
the holders of depositary receipts evidencing the depositary shares representing
such Preferred Stock or (iii) each share of the related Preferred Stock shall
have been converted into securities of the Company not so represented by
depositary shares.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the preferred stock depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of depositary receipts will pay the fees and expenses of the
preferred stock depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the preferred stock depositary, any such resignation or removal to take effect
upon the appointment of a successor preferred stock depositary. A successor
preferred stock depositary must be appointed within 60 days after delivery of
the notice of resignation or removal and
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must be a bank or trust company having its principal office in the United States
and having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The preferred stock depositary will forward to holders of depositary
receipts any reports and communications from the Company which are received by
the preferred stock depositary with respect to the related Preferred Stock.
Neither the preferred stock depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under the Deposit Agreement. The obligations of the
Company and the preferred stock depositary under the Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of Preferred
Stock represented by the depositary shares), gross negligence or willful
misconduct, and the Company and the preferred stock depositary will not be
obligated to prosecute or defend any legal proceeding in respect of any
depositary receipts, depositary shares or shares of Preferred Stock represented
thereby unless satisfactory indemnity is furnished. The Company and the
preferred stock depositary may rely on written advice of counsel or accountants,
or information provided by persons presenting shares of Preferred Stock
represented thereby for deposit, holders of depositary receipts or other persons
believed in good faith to be competent to give such information, and on
documents believed in good faith to be genuine and signed by a proper party.
In the event the preferred stock depositary shall receive conflicting
claims, requests or instructions from any holders of depositary receipts, on the
one hand, and the Company, on the other hand, the preferred stock depositary
shall be entitled to act on such claims, requests or instructions received from
the Company.
RESTRICTIONS ON OWNERSHIP
Holders of depositary receipts will be subject to the ownership
restrictions of the Company's Charter which provides, with certain exceptions,
that no person may own, actually or constructively, more than 9.8% by value of
the Company's Common Stock or Preferred Stock. See "Restrictions on Ownership of
Capital Stock."
DESCRIPTION OF WARRANTS
The Company may offer by means of this prospectus warrants for the purchase
of its debt securities, Preferred Stock, depositary shares or Common Stock. The
Company may issue warrants separately or together with any other securities
offered by means of this prospectus, and the warrants may be attached to or
separate from such securities. Each series of warrants will be issued under a
separate warrant agreement (each, a "Warrant Agreement") to be entered into
between the Company and a warrant agent specified therein. The warrant agent
will act solely as an agent of the Company in connection with the warrants of
such series and will not assume any obligation or relationship of agency or
trust for or with any holders or beneficial owners of warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of the warrants in respect of which this prospectus is being
delivered: (1) the title and issuer of such warrants; (2) the aggregate number
of such warrants; (3) the price or prices at which such warrants will be issued;
(4) the currencies in which the price or prices of such warrants may be payable;
(5) the designation, amount and terms of the securities purchasable upon
exercise of such warrants; (6) the designation and terms of the other securities
with which such warrants are issued and the number of such warrants issued with
each such security; (7) if applicable, the date on and after which such warrants
and the securities purchasable upon exercise of such warrants will be separately
transferable; (8) the price or prices at which and currency or currencies in
which the securities purchasable upon exercise of such warrants may be
purchased; (9) the date on which the right to exercise such warrants shall
commence and the date on which such right shall expire; (10) the minimum or
maximum amount of such warrants which may be exercised at any one time;
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(11) information with respect to book-entry procedures, if any; (12) a
discussion of certain federal income tax considerations; and (13) any other
material terms of such warrants, including terms, procedures and limitations
relating to the exchange and exercise of such warrants.
DESCRIPTION OF RIGHTS
The Company may issue rights to its shareholders for the purchase of shares
of Common Stock. Each series of rights will be issued under a separate rights
agreement (a "Rights Agreement") to be entered into between the Company and a
bank or trust company, as rights agent, all as set forth in the prospectus
supplement relating to the particular issue of rights. The rights agent will act
solely as an agent of the Company in connection with the certificates relating
to the rights of such series and will not assume any obligation or relationship
of agency or trust for or with any holders of rights certificates or beneficial
owners of rights. The Rights Agreement and the rights certificates relating to
each series of rights will be filed with the SEC and incorporated by reference
as an exhibit to the Registration Statement of which this prospectus is a part.
The applicable prospectus supplement will describe the terms of the rights
to be issued, including the following, where applicable: (1) the date for
determining the shareholders entitled to the rights distribution; (2) the
aggregate number shares of Common Stock purchasable upon exercise of such rights
and the exercise price; (3) the aggregate number of rights being issued; (4) the
date, if any, on and after which such rights may be transferable separately; (5)
the date on which the right to exercise such rights shall commence and the date
on which such right shall expire; (6) any special United States federal income
tax consequences; and (7) any other terms of such rights, including terms,
procedures and limitations relating to the distribution, exchange and exercise
of such rights.
RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK
For the Company to continue to qualify as a REIT under the federal tax
code, its shares of stock must be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of 12 months or during a
proportionate part of a shorter taxable year. Also, not more than 50% of the
value of the outstanding shares of stock may be owned, directly or indirectly,
by five or fewer individuals (as defined in the federal tax code to include
certain entities such as qualified pension plans) during the last half of a
taxable year (other than the first year for which an election to be a REIT has
been made). See "Certain Federal Income Tax Considerations to the Company of its
REIT Election."
The Company's Charter, subject to certain exceptions, contains certain
restrictions on the number of shares of stock of the Company that a person may
own. The Charter prohibits any person from acquiring or holding, directly or
indirectly, shares of the Company's stock in excess of 9.8% (by value or by
number of shares, whichever is more restrictive, except only by value in the
case of any outstanding Preferred Stock) of the outstanding shares of each class
or series of stock of the Company (except in the case of the Series A Preferred
Stock and the Series D Preferred Stock, where the prohibition relates to the
stated percentage of all outstanding Equity Stock (as defined in the Indenture
and explained below) of the Company) (the "Ownership Limit"). The number and
value of shares of the outstanding Common Stock and Preferred Stock
(collectively, the "Equity Stock") is required to be determined in good faith,
which determination shall be conclusive for all purposes hereof.
The Company's Board of Directors, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel or other evidence satisfactory
to the Board of Directors and upon at least 15 days' written notice from a
transferee prior to the proposed transfer that, if consummated, would result in
the intended transferee beneficially owning shares in excess of the Ownership
Limit, and upon such other conditions as the Board of Directors may direct, may
exempt a person from the Ownership Limit (an "Excepted Holder"). In order to be
considered by the Board of Directors as an Excepted Holder, a person also must
not own, directly or indirectly, an interest in a tenant of the Company (or a
tenant of any entity owned or controlled by the Company) that would cause the
Company to own, directly or indirectly, more than a 9.9% interest in such a
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tenant. The person seeking an exemption must represent to the satisfaction of
the Board of Directors that it will not violate the aforementioned restriction.
The person also must agree that any violation or attempted violation of the
foregoing restriction will result in the automatic transfer of the share of
stock causing such violation to the Company (as defined below).
The Company Charter further prohibits (a) any person from beneficially or
constructively owning shares of stock of the Company that would result in the
Company being "closely held" under Section 856(h) of the federal tax code or
otherwise cause the Company to fail to qualify as a REIT and (b) any person from
transferring shares of stock of the Company if such transfer would result in
shares of stock of the Company being owned by fewer than 100 persons. Any person
who acquires or attempts or intends to acquire beneficial or constructive
ownership of shares of stock of the Company that will or may violate any of the
foregoing restrictions on transferability and ownership, or any person who would
have owned shares of the stock of the Company that resulted in a transfer of
shares to the Company, is required to give notice immediately to the Company and
provide the Company with such other information as the Company may request in
order to determine the effect of such transfer on the Company's status as a
REIT. The foregoing restrictions on transferability and ownership will not apply
if the Company's Board of Directors determines that it is no longer in the best
interests of the Company to attempt to qualify, or to continue to qualify, as a
REIT.
If any transfer of shares of stock of the Company occurs which, if
effective, would result in any person beneficially or constructively owning
shares of stock of the Company in excess or in violation of the above transfer
or ownership limitations (a "Purported Transferee"), then that number of shares
of stock of the Company the beneficial or constructive ownership of which
otherwise would cause such person to violate such limitations (rounded to the
nearest whole share) shall be automatically transferred to a trust (the "Trust")
for the exclusive benefit of one or more charitable beneficiaries (the
"Charitable Beneficiary"), and the Purported Transferee shall not acquire any
rights in such shares. Such automatic transfer shall be deemed to be effective
as of the close of business on the Business Day (as defined in the Company's
Charter) prior to the date of such violative transfer. Shares of stock held in
the Trust shall be issued and outstanding shares of stock of the Company. The
Purported Transferee shall not benefit economically from ownership of any shares
of stock held in the Trust, shall have no rights to dividends and shall not
possess any rights to vote or other rights attributable to the shares of stock
held in the Trust. The trustee of the Trust shall have all voting rights and
rights to dividends or other distributions with respect to shares of stock held
in the Trust, which rights shall be exercised for the exclusive benefit of the
Charitable Beneficiary. Any dividend or other distribution prior to the
discovery by the Company that shares of stock have been transferred to the
trustee of the Trust shall be paid by the recipient of such dividend or
distribution to the trustee upon demand, and any dividend or other distribution
authorized but unpaid shall be paid when due to the trustee. Any dividend or
distribution so paid to the trustee shall be held in trust for the Charitable
Beneficiary. The Purported Transferee shall have no voting rights with respect
to shares of stock held in the Trust and, subject to Maryland law, effective as
of the date that such shares of stock have been transferred to the Trust, the
trustee of the Trust shall have the authority (at the trustee's sole discretion)
(i) to rescind as void any vote cast by a Purported Transferee prior to the
discovery by the Company that such shares have been transferred to the Trust and
(ii) to recast such vote in accordance with the desires of the trustee of the
Trust acting for the benefit of the Charitable Beneficiary. However, if the
Company has already taken irreversible corporate action, then the trustee shall
not have the authority to rescind and recast such vote.
The trustee of the Trust may transfer the shares of stock held in the Trust
to a person, designated by the trustee, whose ownership of the shares will not
violate the Ownership Limitation or other limitations set forth in the Company
Charter. Upon such sale, the interest of the Charitable Beneficiary in the
shares sold shall terminate and the trustee shall distribute the net proceeds of
the sale to the Purported Transferee and to the Charitable Beneficiary as
follows. The Purported Transferee shall receive the lesser of (i) the price paid
by the Purported Transferee for the shares or, if the Purported Transferee did
not give value for the shares in connection with the event causing the shares to
be held in the Trust (e.g., a gift, devise or other such transaction), the
Market Price (as defined in the Company's Charter) of such shares on the day of
the event causing the shares to be held in the Trust and (ii) the price per
share received by the trustee from the sale or other disposition of the shares
held in the Trust. Any net sale proceeds in excess of the amount payable to the
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Purported Transferee shall be paid immediately to the Charitable Beneficiary.
If, prior to the discovery by the Company that shares of stock have been
transferred to the Trust, such shares are sold by a Purported Transferee, then
(i) such shares shall be deemed to have been sold on behalf of the Trust and
(ii) to the extent that the Purported Transferee received an amount for such
shares that exceeds the amount that such Purported Transferee was entitled to
receive pursuant to the aforementioned requirement, such excess shall be paid to
the trustee of the Trust upon demand.
In addition, shares of stock held in the Trust shall be deemed to have been
offered for sale to the Company, or its designee, at a price per share equal to
the lesser of (i) the price per share in the transaction that resulted in such
transfer to the Trust (or, in the case of a devise or gift, the Market Price at
the time of such devise or gift) and (ii) the Market Price on the date the
Company, or its designee, accepts such offer. The Company shall have the right
to accept such offer for a period of 90 days after the later of (i) the date of
the purported transfer resulting in a transfer to the Trust and (ii) the date
that the Board of Directors determines in good faith that such transfer
occurred. Upon such a sale to the Company, the interest of the Charitable
Beneficiary in the shares sold shall terminate and the trustee of the Trust
shall distribute the net proceeds of the sale to the Purported Transferee.
All certificates representing shares of the Common Stock and the Preferred
Stock will bear a legend referring to the restrictions described above.
Every owner of more than 5% (or such lower percentage as required by the
federal tax code or the regulations promulgated thereunder) of the number or
value of outstanding shares of Equity Stock of the Company, shall, within 30
days after January 1 of each year, give written notice to the Company stating
the name and address of such owner, the number of shares of each class and
series of stock of the Company which the owner constructively or beneficially
owns and a description of the manner in which such shares are held. Each such
owner shall provide to the Company such additional information as the Company
may request in order to determine the effect, if any, of such beneficial
ownership on the Company's status as a REIT and to ensure compliance with the
Ownership Limit. In addition, each stockholder shall upon demand be required to
provide to the Company such information as the Company may reasonably request in
order to determine the Company's status as a REIT and to comply with the
requirements of any taxing authority or governmental authority or to determine
such compliance.
These ownership limits could delay, defer or prevent a transaction or a
change in control of the Company that might involve a premium price for the
Equity Stock or otherwise be in the best interest of the Company's stockholders.
BOOK-ENTRY SECURITIES
The securities offered by means of this prospectus may be issued in whole
or in part in book-entry form, meaning that beneficial owners of the securities
will not receive certificates representing their ownership interests in the
securities, except in the event the book-entry system for the securities is
discontinued. Securities issued in book entry form will be evidenced by one or
more global securities that will be deposited with, or on behalf of, a
depositary identified in the applicable prospectus supplement relating to the
securities. The Depository Trust Company is expected to serve as depository.
Unless and until it is exchanged in whole or in part for the individual
securities represented thereby, a global security may not be transferred except
as a whole by the depository for the global security to a nominee of such
depository or by a nominee of such depository to such depository or another
nominee of such depository or by the depository or any nominee of such
depository to a successor depository or a nominee of such successor. Global
securities may be issued in either registered or bearer form and in either
temporary or permanent form. The specific terms of the depositary arrangement
with respect to a class or series of securities that differ from the terms
described here will be described in the applicable prospectus supplement.
Unless otherwise indicated in the applicable prospectus supplement, the
Company anticipates that the following provisions will apply to depository
arrangements.
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Upon the issuance of a global security, the depository for the global
security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual securities represented
by such global security to the accounts of persons that have accounts with such
depository, who are called "participants." Such accounts shall be designated by
the underwriters, dealers or agents with respect to the securities or by the
Company if the securities are offered and sold directly by the Company.
Ownership of beneficial interests in a global security will be limited to the
depository's participants or persons that may hold interests through such
participants. Ownership of beneficial interests in the global security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable depository or its nominee (with respect to
beneficial interests of participants) and records of the participants (with
respect to beneficial interests of persons who hold through participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and laws may impair
the ability to own, pledge or transfer beneficial interest in a global security.
So long as the depository for a global security or its nominee is the
registered owner of such global security, such depository or nominee, as the
case may be, will be considered the sole owner or holder of the securities
represented by such global security for all purposes under the applicable
Indenture or other instrument defining the rights of a holder of the securities.
Except as provided below or in the applicable prospectus supplement, owners of
beneficial interest in a global security will not be entitled to have any of the
individual securities of the series represented by such global security
registered in their names, will not receive or be entitled to receive physical
delivery of any such securities in definitive form and will not be considered
the owners or holders thereof under the applicable Indenture or other instrument
defining the rights of the holders of the securities.
Payments of amounts payable with respect to individual securities
represented by a global security registered in the name of a depository or its
nominee will be made to the depository or its nominee, as the case may be, as
the registered owner of the global security representing such securities. None
of the Company, its officers and directors or any trustee, paying agent or
security registrar for an individual series of securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
security for such securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the depository for a series of securities offered
by means of this prospectus or its nominee, upon receipt of any payment of
principal, premium, interest, dividend or other amount in respect of a permanent
global security representing any of such securities, will immediately credit its
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such global security
for such securities as shown on the records of such depository or its nominee.
The Company also expects that payments by participants to owners of beneficial
interests in such global security held through such participants will be
governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
"street name." Such payments will be the responsibility of such participants.
If a depository for a series of securities is at any time unwilling, unable
or ineligible to continue as depository and a successor depository is not
appointed by the Company within 90 days, the Company will issue individual
securities of such series in exchange for the global security representing such
series of securities. In addition, the Company may, at any time and in its sole
discretion, subject to any limitations described in the applicable prospectus
supplement relating to such securities, determine not to have any securities of
such series represented by one or more global securities and, in such event,
will issue individual securities of such series in exchange for the global
security or securities representing such series of securities.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
TO THE COMPANY OF ITS REIT ELECTION
GENERAL
The following discussion summarizes certain federal income tax
considerations to the Company. It is based on current law, and is for general
information only. It is not intended and should not be construed as tax advice.
The tax treatment of a holder of any of the securities offered under this
registration statement will vary depending upon the terms of the specific
securities acquired by such holder, as well as the holder's particular
situation, and this discussion does not attempt to address any aspects of
federal income taxation relating to holders of such securities. Certain federal
income tax considerations relevant to holders of the securities will be provided
in the applicable prospectus supplement relating to the issuance of such
securities.
The statements and opinions in this discussion are based on current
provisions of the Internal Revenue Code of 1986, as amended (which we sometimes
refer to as the "federal tax code" or the "Code" in this prospectus), existing,
temporary and currently proposed Treasury Regulations under the Code,
legislative history, existing administrative rulings and practices of the IRS
and judicial decisions. No assurance can be given that legislative, judicial or
administrative changes will not affect the accuracy of any of the following
statements. In addition, we have not requested and do not plan to request any
rulings from the IRS concerning our tax treatment. Accordingly, no assurance can
be given that the statements set forth herein (which do not bind the IRS or the
courts) will not be challenged by the IRS or sustained by the courts if so
challenged.
THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX PLANNING.
EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE, OWNERSHIP
AND SALE OF THE OFFERED SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, AND SALE, AND OF
POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY AS A REIT
General. Each of the Company's predecessor companies, New Plan Realty
Trust ("New Plan") and Excel Realty Trust, Inc. ("Excel"), elected to be taxed
as a REIT under Sections 856 through 860 of the Internal Revenue Code,
commencing with the year ended July 31, 1972 for New Plan and the year ended
December 31, 1987 for Excel. The Company believes that the predecessor companies
were organized and that the predecessor companies and the Company, since the
combination of the predecessor companies, have been operating in a manner so as
to qualify for taxation as REITs under the Internal Revenue Code. We intend to
continue to operate in such a manner. No assurance, however, can be given that
the Company will operate in a manner so as to qualify or remain qualified as a
REIT. Qualification and taxation as a REIT depends upon our ability to meet, on
a continuing basis, several tests regarding sources of income, distribution
levels and diversity of stock ownership, among others tests imposed under the
federal tax code on REITs, some of which are summarized below. While we intend
to operate so as to qualify as a REIT, given the highly complex nature of the
rules governing REITs, the ongoing importance of factual determinations and the
possibility of future changes in our circumstances, no assurance can be given
that we will so qualify for any particular year. See "-- Failure to Qualify"
below.
In the opinion of Altheimer & Gray, our tax counsel ("Counsel"), at all
times on or after January 1, 1995, (which we believe is the earliest year still
open under the applicable statute of limitations (including waivers thereof) for
examination by the Internal Revenue Service) we were organized in conformity
with the requirements for qualification as a REIT under the federal tax code and
our method of operation has enabled us to meet the requirements for
qualification as a REIT. Counsel's opinion is based on various assumptions and
is conditioned upon certain representations of us and others as to factual
matters. In addition, Counsel's opinion is based upon our factual
representations concerning our business and properties. Counsel has also relied
on the opinion of Latham & Watkins, former counsel to Excel. Unlike a tax
ruling, an opinion of counsel is not binding upon the IRS and no assurance can
be given that the IRS will not challenge our status. Moreover, such
qualification and taxation as a REIT depends upon our continued ability to meet
the various qualification tests imposed under the federal tax code. Counsel will
not review our compliance with the various
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REIT qualification tests on a periodic or continuing basis. Accordingly, no
assurance can be given that the actual results of our operation for any one
taxable year will satisfy such requirements. See "-- Failure to Qualify" below.
The following is a general summary of the federal tax code provisions that
govern the federal income tax treatment of a REIT. These provisions of the
federal tax code are highly technical and complex. This summary is qualified in
its entirety by the applicable provisions relating to REITs, Treasury
Regulations and their administrative and judicial interpretations, all of which
are subject to change, possibly with retroactive effect.
So long as we qualify for taxation as a REIT, we generally will not be
subject to federal corporate income tax on our net income that we distribute
currently to our stockholders. This treatment substantially eliminates the
"double taxation" (taxation at both the corporate and stockholder levels) that
generally results from an investment in a corporation. If we do not qualify as a
REIT, we would be taxed at rates applicable to corporations on all of our
income, whether or not distributed to our stockholders. Even if we qualify as a
REIT, we will be subject to federal income or excise tax as follows:
(i) we will be taxed at regular corporate rates on any undistributed
REIT taxable income and undistributed net capital gains other than retained
capital gains as discussed below;
(ii) under certain circumstances, we may be subject to the
"alternative minimum tax" on our items of tax preference, if any;
(iii) if we have (1) net income from the sale or other disposition of
"foreclosure property" (generally, property acquired by reason of a
foreclosure or otherwise on default of a loan secured by the property) that
is held primarily for sale to customers in the ordinary course of business
or (2) other nonqualifying net income from foreclosure property, we will be
subject to tax at the highest corporate rate on such income;
(iv) if we have net income from prohibited transactions (which are, in
general, certain sales or other dispositions of property (other than
dispositions of foreclosure property and dispositions of property that
occur due to involuntary conversion) held primarily for sale to customers
in the ordinary course of business), such income will be subject to a 100%
tax;
(v) if we should fail to satisfy the 75% gross income test or the 95%
gross income test (as discussed below), and nonetheless maintain our
qualification as a REIT because certain other requirements are met, we will
be subject to a 100% tax on the net income attributable to the greater of
the amount by which we fail the 75% or 95% test, multiplied by a fraction
intended to reflect our profitability;
(vi) if we should fail to distribute with respect to each calendar
year at least the sum of (1) 85% of our REIT ordinary income for such year,
(2) 95% of our REIT capital gain net income for such year, and (3) any
undistributed taxable income from prior years, we would be subject to a 4%
excise tax on the excess of such required distribution over the amounts
actually distributed; and
(vii) if we acquire any asset from a C corporation (i.e., generally a
corporation subject to full corporate-level tax) in a transaction in which
the basis of the asset in our hands is determined by reference to the basis
of the asset (or any other property) in the hands of the C corporation and
we subsequently recognize gain on the disposition of such asset during the
10-year period (the "Recognition Period") beginning on the date on which we
acquired the asset (or we first qualified as a REIT), then pursuant to
guidelines issued by the IRS, the excess of (1) the fair market value of
the asset as of the beginning of the applicable Recognition Period, over
(2) our adjusted basis in such asset as of the beginning of such
Recognition Period (the "Built-In Gain") will be subject to tax at the
highest regular corporate rate (the "Built-In Gain Rule").
Requirements for Qualification. The federal tax code defines a REIT as a
corporation, trust or association,
(1) that is managed by one or more trustees or directors;
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(2) the beneficial ownership of which is evidenced by transferable
shares, or by transferable certificates of beneficial interest;
(3) that would be taxable as a domestic corporation but for Sections
856 through 859 of the Internal Revenue Code;
(4) that is neither a financial institution nor an insurance company
subject to certain provisions of the Internal Revenue Code;
(5) that has the calendar year as its taxable year (unless it
qualifies to retain a different year under certain "grandfathered" rules.);
(6) the beneficial ownership of which is held by 100 or more persons;
(7) during the last half of each taxable year not more than 50% in
value of the outstanding stock of which is owned, directly or indirectly,
by five or fewer individuals (as defined in the Internal Revenue Code to
include certain entities); and
(8) that meets certain other tests, described below, regarding the
nature of its income and assets.
The Internal Revenue Code provides that conditions (1) through (5),
inclusive, must be met during the entire taxable year and that condition (6)
must be met during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. For purposes of
conditions (6) and (7), pension funds and certain other tax-exempt entities are
treated as individuals, subject to a "look-through" exception in the case of
condition (7).
We have satisfied conditions (6) and (7). In addition, our Charter includes
restrictions regarding the transfer of our Capital Stock that are intended to
assist us in continuing to satisfy the share ownership requirements described in
conditions (6) and (7) above. See "Restrictions on Ownership of Capital Stock"
below. In rendering its opinion that we are organized and operating in
conformity with the requirements for qualification as a REIT, Counsel is relying
on our representation that ownership of our stock satisfies condition (7) and
Counsel expresses no opinion as to whether the ownership restrictions contained
in the Charter assure that we will always satisfy condition (7) above. In
addition, we intend to continue to comply with the Treasury Regulations
requiring us to ascertain and maintain records which disclose the actual
ownership of our shares. Although a failure to ascertain the actual ownership of
our shares will not cause our disqualification as a REIT, a monetary fine may
result.
We have a number of "qualified REIT subsidiaries." A corporation that is a
"qualified REIT subsidiary" is not treated as a separate corporation for federal
income tax purposes, and all assets, liabilities and items of income, deduction
and credit of a "qualified REIT subsidiary" are treated as assets, liabilities
and items of the REIT. In applying the requirements described herein, any
"qualified REIT subsidiary" of ours will be ignored, and all assets, liabilities
and items of income, deduction and credit of such subsidiary will be treated as
our assets, liabilities and items of income, deduction and credit. Any
"qualified REIT subsidiary" of ours will therefore not be subject to federal
corporate income taxation, although such "qualified REIT subsidiary" may be
subject to state or local taxation.
In the case of a REIT that is a partner in a partnership, the REIT is
deemed to own its proportionate share of the assets of the partnership and is
deemed to receive the income of the partnership attributable to such share. In
addition, the character of the assets and gross income of the partnership shall
retain the same character in the hands of the REIT. Accordingly, our
proportionate share of the assets, liabilities and items of income of the
partnerships in which we are a partner are treated as assets, liabilities and
items of income of ours for purposes of applying the requirements described
herein. We have direct control of the partnerships in which we are a partner and
we have operated such partnerships and intend to continue to operate them in a
manner that is consistent with the requirements for qualification as a REIT.
Income Tests. In order to maintain qualification as a REIT, a company must
satisfy two gross income requirements on an annual basis.
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First, at least 75% of its gross income (excluding gross income from
prohibited transactions) for each taxable year must be derived directly or
indirectly from investments relating to real property or mortgages on real
property (including "rents from real property" and, in certain
circumstances, interest) or from certain types of temporary investments.
Second, at least 95% of its gross income (excluding gross income from
prohibited transactions) for each taxable year must be derived from the
same items which qualify under the 75% gross income test, and from
dividends, interest and gain from the sale or disposition of stock or
securities, or from any combination of the foregoing.
Rents received by a REIT will qualify as "rents from real property" in
satisfying the gross income requirements described above only if several
conditions are met. First, the amount of rent must not be based in whole or in
part on the income or profits of any person. However, an amount received or
accrued generally will not be excluded from the term "rents from real property"
solely by reason of being based on a fixed percentage or percentages of gross
receipts or sales. Second, rents received from a tenant will not qualify as
"rents from real property" in satisfying the gross income tests if the REIT, or
a direct or indirect owner of 10% or more of the REIT, directly or
constructively, owns 10% or more of such tenant (a "Related Party Tenant").
Third, if rent attributable to personal property, leased in connection with a
lease of real property, is greater than 15% of the total rent received under the
lease, then the portion of rent attributable to such personal property will not
qualify as "rents from real property." Finally, for rents received with respect
to a property to qualify as "rents from real property," they must not be
"impermissible tenant service income". That is, the REIT generally must not
operate or manage the property or furnish or render services to tenants, except
through an "independent contractor" who is adequately compensated and from whom
the REIT derives no revenue. The "independent contractor" requirement, however,
does not apply to the extent the services provided by the REIT are "usually or
customarily rendered" in connection with the rental of space for occupancy only
and are not otherwise considered "rendered to the occupant." However, a de
minimis rule may apply to certain non-customary services provided by a REIT.
Specifically, if the value of the non-customary service income with respect to a
property (valued at no less than 150% of the direct costs of performing such
services) is 1% or less of the total income derived from the property, then all
rental income except the non-customary service income will qualify as "rents
from real property."
We do not and will not charge rent that is based in whole or in part on the
income or profits of any person (except by reason of being based on a fixed
percentage or percentages of gross receipts or sales consistent with the rules
described above). We do not and will not rent any property to a Related Party
Tenant. We do not and will not derive rental income attributable to personal
property leased in connection with real property which exceeds 15% of the total
rents received with respect to such property.
Except for certain development, property management, administrative and
miscellaneous services, we do not and will not perform services which are not
usually or customarily rendered in connection with the rental of space for
occupancy only or which are considered to be rendered to the occupant of the
property, other than through an independent contractor from whom we derive no
revenue. Income derived from the development, property management,
administrative and miscellaneous services described in the preceding sentence
does not exceed 5% of our gross revenue. Excel Development Corporation ("EDV")
performs activities that cannot be performed by us, as fees relating to those
activities would not qualify as "good income" under the 75% and 95% tests. We
will derive dividends from EDV, which qualify under the 95% gross income test,
but not the 75% gross income test. We believe that the aggregate amount of any
nonqualifying income in any taxable year has not exceeded and will not exceed
the limit on nonqualifying income under the gross income test.
If we fail to satisfy one or both of the 75% or the 95% gross income tests
for any taxable year, we may nevertheless qualify as a REIT for such year if we
are entitled to relief under certain provisions of the Internal Revenue Code.
These relief provisions generally will be available if our failure to meet any
such tests was due to reasonable cause and not due to willful neglect, we attach
a schedule of the sources and nature of our income to our federal income tax
return and any incorrect information on the schedule was not due to fraud with
the intent to evade tax. It is not possible, however, to state whether in all
circumstances we would be
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entitled to the benefit of these relief provisions. As discussed above, even if
these relief provisions were to apply, a tax would be imposed on certain excess
net income.
Sales or Dispositions of Assets. As a REIT, we are subject to a tax of
100% on gain (i.e., the excess, if any, of the amount realized over our adjusted
basis in the property) from each sale of property (excluding, certain property
obtained through foreclosure) in which we are a dealer. In calculating its gain
subject to the 100% tax, we are not allowed to offset gains on sales of property
with losses on other sales of property in which we are a dealer.
Under the Internal Revenue Code, we would be deemed to be a dealer in any
property that we hold primarily for sale to customers in the ordinary course of
our business. Such determination is a factual inquiry, and absolute certainty of
our status generally cannot be provided. However, we will not be treated as a
dealer in real property for the 100% tax if (i) we have held the property for at
least four years for the production of rental income, (ii) capitalized
expenditures on the property in the four years preceding sale are less than 30%
of the net selling price of the property, and (iii) we either (a) have seven or
fewer sales of property (excluding certain property obtained through
foreclosure) for the year of sale or (b) the aggregate tax basis of property
sold during the year of sale is 10% or less of the aggregate tax basis of all of
our assets as of the beginning of the taxable year and substantially all of the
marketing and development expenditures with respect to the property sold are
made through an independent contractor from whom we derive no income. The sale
of more than one property to one buyer as part of one transaction constitutes
one sale. However, our failure to meet these "safe harbor" requirements does not
necessarily mean that we are a dealer in real property.
Based on these rules, if we sell a property that we have held for more than
four years and otherwise satisfy the "safe harbor" described in the preceding
paragraph, such sale will not result in the imposition of the 100% tax on the
gain. Because any dealer gain that is not covered by the safe harbor is subject
to the 100% tax, any sale not covered by the safe harbor creates a risk that we
will be considered to be a dealer in real property. Although any risk from a
single isolated sale may be small, the more regular, continuous, and frequent
our sales of assets are, the more likely we will be treated as a dealer with
respect to sales or dispositions of real property. Moreover, except for certain
sales of property obtained through foreclosure, all sales, including sales of
property held less than fours years, count toward the seven sales/10% tax basis
safe harbor for purposes of determining whether we qualify for the safe harbor
on any sales of property held for four years or more. Furthermore, once we have
exceeded the seven sales/10% tax basis safe harbor, gain from all sales and not
just the gain from sales in excess of such safe harbor are potentially subject
to the 100% tax.
We may be able to avoid triggering gain for purposes of the 100% tax on
real property we have held less than four years if we exchange such property for
other property in a transaction that qualifies as a like-kind exchange under the
Internal Revenue Code, because the like-kind exchange provisions result in the
deferral of gain. The like-kind exchange provisions of the Code, however, are
not available to us on any property that we hold primarily for sale rather than
for investment or the production of income. An exchange of property for tax
purposes that does not qualify for like-kind exchange treatment or some other
nonrecognition provision is treated the same as a sale for cash. We may dispose
of certain properties that we have held less than four years in transactions
intended to qualify as like-kind exchanges. However, the failure of the
transaction to qualify as a like-kind exchange could subject us to the 100% tax
on its gains, as described above.
Assets Tests. At the close of each quarter of its taxable year, a REIT
must also satisfy three tests relating to the nature of its assets:
(i) at least 75% of the value of its total assets must be represented
by real estate assets (including (1) its allocable share of real estate
assets held by partnerships in which it has an interest and (2) stock or
debt instruments purchased with the proceeds of a stock offering on
long-term (at least five years) debt offering of the REIT and held for not
more than one year following the receipt of such proceeds), cash, cash
items and government securities;
(ii) not more than 25% of its total assets may be represented by
securities other than those in the 75% asset class; and
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(iii) of the investments included in the 25% asset class, the value of
any one issuer's securities (other than an interest in a partnership or
shares of a "qualified REIT subsidiary" or another REIT) owned by a REIT
may not exceed 5% of the value of its total assets, and it may not own more
than 10% of any one issuer's outstanding voting securities (other than an
interest in a partnership or securities of a "qualified REIT subsidiary" or
another REIT).
Annual Distribution Requirements. In order to qualify as a REIT, a company
is required to distribute dividends (other than capital gain dividends) to its
stockholders in an amount at least equal to (i) the sum of (1) 95% of its "REIT
taxable income" (computed without regard to the dividends paid deduction and net
capital gain) and (2) 95% of its net income (after tax), if any, from
foreclosure property, minus (ii) the sum of certain items of noncash income. In
addition, if a REIT disposes of any asset subject to the Built-In Gain Rule
during its Recognition Period, it is required to distribute at least 95% of the
Built-In Gain (after payment of a corporate level tax), if any, recognized on
the disposition. Such distributions must be paid during the taxable year to
which they relate (or during the following taxable year, if declared before the
REIT timely files its tax return for the preceding year and paid on or before
the first regular dividend payment after such declaration). To the extent that a
REIT does not distribute all of its net capital gain or distributes at least
95%, but less than 100%, of its "REIT taxable income," as adjusted, it will be
subject to tax on the undistributed amount at regular corporate capital gains
rates and ordinary corporate tax rates. Furthermore, if a REIT fails to
distribute during each calendar year at least the sum of (i) 85% of its REIT
ordinary income for such year, (ii) 95% of its REIT capital gain income for such
year and (iii) any undistributed taxable income from prior periods, it will be
subject to a 4% excise tax on the excess of such amounts over the amounts
actually distributed.
We intend to make timely distributions sufficient to satisfy the annual
distribution requirements. In this regard, it is expected that our REIT taxable
income will be less than our cash flow due to the allowance of depreciation and
other noncash charges in our computation of REIT taxable income. It is possible,
however, that, from time to time, we may not have sufficient cash or other
liquid assets to meet the 95% distribution requirement due to timing differences
between the actual receipt of income and the actual payment of deductible
expenses and the inclusion of such income and deduction of such expenses in
arriving at our REIT taxable income, or due to any cash expenditures or
nondeductible expenses such as principal amortization or capital expenditures.
In the event that such circumstances do occur, we may find it necessary to
arrange for short-term, or possibly long-term, borrowings to permit the payment
of dividends to meet the 95% distribution requirement.
Under certain circumstances, we may be able to rectify a failure to meet
the distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year that may be included in our deduction for dividends
paid for the earlier year. Thus, we may be able to avoid being taxed on amounts
distributed as deficiency dividends. However, we would be required to pay to the
IRS interest based upon the amount of any deduction taken for deficiency
dividends.
Failure to Qualify. If we fail to qualify for taxation as a REIT in any
taxable year and special relief provisions do not apply, we will be subject to
tax (including any applicable alternative minimum tax) on our taxable income at
regular corporate rates. Payment of such corporate tax liability would
substantially reduce the cash available for distributions to stockholders.
Distributions to stockholders in any year in which we fail to qualify as a REIT
will not be deductible, nor will they be required to be made. In such event, to
the extent of current and accumulated earnings and profits, all distributions to
our stockholders will be taxable as ordinary income and, subject to certain
limitations in the Internal Revenue Code, corporate distributees may be eligible
for the "dividends received deduction." Unless entitled to relief under specific
statutory provisions, we also would be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
It is not possible to state whether in all circumstances we would be entitled to
such statutory relief.
40
<PAGE> 74
PLAN OF DISTRIBUTION
The Company may sell securities offered by means of this prospectus to one
or more underwriters for public offering and sale by them or may sell such
securities to investors directly or through agents. Any such underwriter or
agent involved in the offer and sale of such securities will be named in the
prospectus supplement relating to the securities.
Underwriters may offer and sell securities offered by means of this
prospectus at a fixed price or prices, which may be changed, at prices related
to the prevailing market prices at the time of sale or at negotiated prices. The
Company also may, from time to time, authorize underwriters acting as the
Company's agents to offer and sell securities by means of this prospectus upon
the terms and conditions as are set forth in the prospectus supplement relating
to such securities. In connection with a sale of securities offered by means of
this prospectus, underwriters may be deemed to have received compensation from
the Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of securities for whom they may act as
agent. Underwriters may sell securities offered by means of this prospectus to
or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of securities offered by means of this
prospectus, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the applicable
prospectus supplement. Underwriters, dealers and agents participating in the
distribution of the offered securities may be deemed to be underwriters, and any
discounts or commissions received by them and any profit realized by them upon
the resale of the offered securities may be deemed to be underwriting discounts
and commissions, under the Securities Act. Underwriters, dealers and agents may
be entitled, under agreements entered into with the Company, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act.
If so indicated in a prospectus supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutional
investors to purchase securities of the series to which such prospectus
supplement relates providing for payment and delivery on a future date specified
in such prospectus supplement. There may be limitations on the minimum amount
which may be purchased by any such institutional investor or on the portion of
the aggregate principal amount of the particular offered securities which may be
sold pursuant to such arrangements. Institutional investors to which such offers
may be made, when authorized, include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and such other institutions as may be approved by the Company. The
obligations of any such purchasers pursuant to such delayed delivery and payment
arrangements will not be subject to any conditions except that (i) the purchase
by an institution of the particular securities offered shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject, and (ii) if the particular securities are
being sold to underwriters, the Company shall have sold to such underwriters the
total principal amount of such securities or number of warrants less the
principal amount or number thereof, as the case may be, covered by such
arrangements. Underwriters will not have any responsibility in respect of the
validity of such arrangements or the performance of the Company or such
institutional investors thereunder.
The Company may agree to sell securities to an underwriter for a delayed
public offering and may further agree to adjustments before the public offering
to the underwriters' purchase price for the securities based on changes in the
market value of the securities. The prospectus supplement relating to any such
public offering will contain information on the number of securities to be sold,
the manner of sale or other distribution, and other material facts relating to
the public offering.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
41
<PAGE> 75
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to pages F-1 through F-51 of the Annual Report on Form 10-K/A of the
Company for the year ended December 31, 1998 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the securities offered by means of this prospectus has been
passed upon for the Company by Hogan & Hartson L.L.P., New York, New York. The
description of the federal income tax considerations contained in this
prospectus is based upon the opinion of Altheimer & Gray, Chicago, Illinois.
42
<PAGE> 76
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YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS SUPPLEMENT, THE ATTACHED PROSPECTUS AND THE
APPLICABLE PRICING SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT, THE ATTACHED PROSPECTUS OR THE
APPLICABLE PRICING SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THE APPLICABLE DOCUMENT.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
About this Prospectus Supplement; Pricing
Supplements............................. S-2
Risk Factors.............................. S-3
Description of Notes...................... S-5
Special Provisions Relating to Foreign
Currency Notes.......................... S-20
Certain United States Federal Income Tax
Considerations.......................... S-22
Plan of Distribution...................... S-29
Legal Matters............................. S-31
Glossary.................................. S-31
PROSPECTUS
About this Prospectus..................... 2
Where to Find Additional Information...... 2
The Company............................... 3
Use of Proceeds........................... 3
Description of Debt Securities............ 4
Description of Common Stock............... 18
Description of Preferred Stock............ 21
Description of Depositary Shares.......... 27
Description of Warrants................... 30
Description of Rights..................... 31
Restrictions on Ownership of Capital
Stock................................... 31
Book-Entry Securities..................... 33
Certain Federal Income Tax Considerations
to the Company of its REIT Election..... 35
Plan of Distribution...................... 41
Experts................................... 42
Legal Matters............................. 42
</TABLE>
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$325,000,000
NEW PLAN EXCEL
REALTY TRUST, INC.
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
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PROSPECTUS SUPPLEMENT
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SALOMON SMITH BARNEY
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PRUDENTIAL SECURITIES
SEPTEMBER 10, 1999
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