<PAGE> 1
As filed with the Securities and Exchange Commission on May 24, 1996
REGISTRATION NO. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
CARRAMERICA REALTY CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
MARYLAND 52-1796339
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
</TABLE>
1700 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20006
(202) 624-7500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
THOMAS A. CARR
1700 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20006
(202) 624-7500
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
--------------------
COPIES TO:
J. WARREN GORRELL, JR.
DAVID W. BONSER
HOGAN & HARTSON L.L.P.
COLUMBIA SQUARE
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as possible after the effective date of this Registration Statement and from
time to time as determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE PRICE PER OFFERING PRICE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1) SECURITY (2) (2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities...................
Preferred Stock (3)...............
Common Stock...................... $600,000,000 (5) $600,000,000 $208,697
Common Stock Warrants.............
==============================================================================================================================
</TABLE>
(Footnotes on the following page)
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
(Footnotes continued from previous page)
(1) This Registration Statement also covers contracts which may be issued
by the Registrant under which the counterparty may be required to
purchase Debt Securities, Preferred Stock, Common Stock or Common
Stock Warrants. Such contracts would be issued with the Debt
Securities, Preferred Stock, Common Stock and/or Common Stock Warrants
covered hereby. In addition, Securities registered hereunder may be
sold separately, together or as units with other Securities registered
hereunder.
(2) Estimated solely for purposes of calculating the registration fee. No
separate consideration will be received for Common Stock or Preferred
Stock that are issued upon conversion of Debt Securities or Preferred
Stock or upon exercise of Common Stock Warrants registered hereunder,
as the case may be. The aggregate maximum offering price of all
Securities issued pursuant to this Registration Statement will not
exceed $600,000,000.
(3) Subject to footnote (2), there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may from time to
time be issued at indeterminate prices or issuable upon conversion of
Debt Securities.
(4) Subject to footnote (2), there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may from time to
time be issued at indeterminate prices or issuable upon conversion of
Debt Securities or Preferred Stock registered hereunder or upon
exercise of Common Stock Warrants registered hereunder, as the case
may be.
(5) Omitted pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1993, as amended.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 24, 1996
PROSPECTUS
$600,000,000
CARRAMERICA REALTY CORPORATION
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK AND COMMON STOCK WARRANTS
--------------------
CarrAmerica Realty Corporation (the "Company") may from time to time offer
in one or more series its (i) unsecured debt securities ("Debt Securities"),
(ii) preferred stock ("Preferred Stock"), (iii) common stock, $.01 par value
("Common Stock"), and (iv) warrants exercisable for Common Stock ("Common Stock
Warrants"), with an aggregate public offering price of up to $600,000,000 (or
its equivalent based on the exchange rate at the time of sale) in amounts, at
prices and on terms to be determined at the time of offering. The Debt
Securities, Preferred Stock, Common Stock and Common Stock Warrants
(collectively, the "Offered Securities") may be offered, separately or
together, in separate series, in amounts, at prices and on terms to be
described in one or more supplements to this Prospectus (each a "Prospectus
Supplement").
The specific terms of the Securities in respect of which this Prospectus
is being delivered will be set forth in the applicable Prospectus Supplement
and will include, where applicable: (i) in the case of Debt Securities, the
specific title, aggregate principal amount, currency, form (which may be
registered or bearer, or certificated or global), authorized denominations,
maturity, rate (or manner of calculation thereof) and time of payment of
interest, any terms for redemption at the option of the Company or repayment at
the option of the holder, any terms for any sinking fund payments, any terms
for conversion into Preferred Stock or Common Stock of the Company, covenants
and any public offering price; (ii) in the case of Preferred Stock, the
specific title and stated value, any dividend, liquidation, redemption,
conversion, voting and other rights, and any public offering price; (iii) in
the case of Common Stock, any public offering price; and (iv) in the case of
Common Stock Warrants, the specific title and aggregate number, and the issue
price and the exercise price. In addition, such specific terms may include
limitations on direct or beneficial ownership and restrictions on transfer of
the Securities, in each case as may be appropriate to preserve the status of
the Company as a real estate investment trust for federal income tax purposes.
The applicable Prospectus Supplement also will contain information, where
applicable, about certain U.S. federal income tax considerations relating to,
and any listing on a securities exchange of, the Securities covered by such
Prospectus Supplement.
The Securities may be offered directly, through agents designated from
time to time by the Company, or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of any of the Securities, their
names, and any applicable purchase price, fee, commission or discount
arrangement with, between or among them, will be set forth, or will be
calculable from the information set forth, in an accompanying Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of a Prospectus Supplement describing the method and terms of the
offering of such Securities.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR CERTAIN FACTORS RELATING TO AN
INVESTMENT IN THE SECURITIES.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------------
The date of this Prospectus is ________, 1996
<PAGE> 4
THE COMPANY
CarrAmerica Realty Corporation (together with one or more of its
subsidiaries, the "Company") is one of the largest owners and operators of
office properties in the Washington D.C. metropolitan area. The Company is
pursuing a new national business strategy that includes developing, acquiring,
owning and operating quality office properties throughout the United States in
suburban growth markets. The Company is a self-administered and self-managed
real estate investment trust ("REIT") that, as of April 30, 1996, owned
interests in a portfolio of 36 operating office buildings containing a total of
approximately 6.5 million rentable square feet.
At a special meeting held on February 26, 1996, the stockholders of the
Company approved the investment by a wholly-owned subsidiary of Security
Capital U.S. Realty ("U.S. Realty") of approximately $250 million in the
Company (the "U.S. Realty Transaction"). The transaction was effected through
the sale and issuance of 11,627,907 shares of the Company's common stock, par
value $.01 per share ("Common Stock"), to U.S. Realty in a private sale
transaction that was consummated on April 30, 1996. Concurrently with the
closing of the U.S. Realty Transaction, the Company changed its name from Carr
Realty Corporation to CarrAmerica Realty Corporation.
In connection with the U.S. Realty Transaction, the Company has changed
its operating structure from an "UPREIT," which is an operating structure where
all assets are held and all activities are conducted through an "operating
partnership," to a structure that permits the Company to hold future
investments directly and through other affiliated partnerships. The Company
will continue to control Carr Realty, L.P., an operating partnership, as the
sole general partner thereof and the holder, as of April 30, 1996, of
approximately 74% of the limited partnership interests therein ("Units"). Carr
Realty, L.P. will continue to hold the office properties and other assets it
owned immediately before such change. However, it is contemplated that future
acquisitions of office properties will be made primarily by the Company
directly, rather than through Carr Realty, L.P. (although the Company is not
precluded from making future investments through Carr Realty, L.P. or other
newly formed similar entities). As a result, the Company will not only have a
controlling interest in Carr Realty, L.P., but also direct ownership of office
properties and other assets. This new structure is sometimes referred to as a
"DownREIT."
Consistent with the Company's new national focus and structure, in March
1996, the Company acquired eight office properties totaling approximately
287,000 square feet of office space in Orange County, California, three office
properties totaling approximately 261,000 square feet in Reston, Virginia and
six office properties totaling approximately 1,082,000 square feet in San
Francisco's East Bay Area.
The Company employed approximately 385 employees, including 285 on-site
building employees, as of April 30, 1996.
The Company is a Maryland corporation that was formed in July 1992. The
principal executive offices of the Company are located at 1700 Pennsylvania
Avenue, Washington, D.C. 20006, and its telephone number is (202) 624-7500.
-2-
<PAGE> 5
RISK FACTORS
Prospective investors should carefully consider, among other factors, the
matters described below.
REAL ESTATE INVESTMENT RISKS
General. Real property investments are subject to varying degrees of
risk. The yields available from equity investments in real estate and the
Company's ability to service debt will depend in large part on the amount of
income generated, expenses incurred and capital expenditures required. The
Company's income from office properties may be adversely affected by a number
of factors, including the general economic climate and local real estate
conditions, such as an oversupply of, or a reduction in demand for, office
space in the area and the attractiveness of the properties to tenants. In
addition, income from properties and real estate values also are affected by
such factors as the cost of compliance with government regulation, including
zoning and tax laws, the potential for liability under applicable laws,
interest rate levels and the availability of financing. Certain significant
expenditures associated with each equity investment by the Company in a
property (such as mortgage payments, if any, real estate taxes and maintenance
costs) also are generally not reduced when circumstances cause a reduction in
income from the property.
Debt Financing. The Company is subject to the risks associated with debt
financing, including the risk that the cash provided by the Company's operating
activities will be insufficient to meet required payments of principal and
interest, the risk of rising interest rates on the Company's floating rate
debt, the risk that the Company will not be able to prepay or refinance
existing indebtedness on its properties (which generally will not have been
fully amortized at maturity) or that the terms of such refinancing will not be
as favorable as the terms of existing indebtedness. In the event the Company
is unable to secure refinancing of such indebtedness on acceptable terms, the
Company might be forced to dispose of properties upon disadvantageous terms,
which might result in losses to the Company and might adversely affect the cash
flow available for distribution to equity holders or debt service. In
addition, if a property or properties are mortgaged to secure payment of
indebtedness and the Company is unable to meet mortgage payments, the mortgage
securing the property could be foreclosed upon by, or the property could be
otherwise transferred to, the mortgagee with a consequent loss of income and
asset value to the Company.
Renewal of Leases and Reletting of Space. The Company is subject to the
risks that upon expiration of leases for space located at its properties, the
leases may not be renewed, the space may not be relet or the terms of the
renewal or reletting (including the cost of required renovations or concessions
to tenants) may be less favorable than current lease terms. Although the
Company has established an annual budget for renovation and reletting costs
that it believes are reasonable in light of each property's situation, no
assurance can be given that this budget will be sufficient to cover these
costs. If the Company is unable to promptly relet or renew leases for all or
substantially all of the space at its properties, if the rental rates upon such
renewal or reletting are significantly lower than expected, or if the Company's
reserves for these purposes prove inadequate, then the Company's cash provided
by operating activities and ability to make expected distributions to
shareholders or debt service payments could be adversely affected.
Possible Environmental Liabilities. Under various Federal, state and
local laws, ordinances and regulations, a current or previous owner or operator
of real estate may be required to investigate and clean up certain hazardous
substances released at the property, and may be held liable to a governmental
entity or to third parties for property damage and for investigation and
cleanup costs incurred by such parties in connection with the contamination.
In addition, some environmental laws create a lien on the contaminated site in
favor of the government for damages and costs it incurs in connection with the
contamination. The presence of contamination or the failure to remediate
contamination may adversely affect the owner's ability to sell or lease real
estate or to borrow using the real estate as collateral. The owner or operator
of a site may be liable under
-3-
<PAGE> 6
common law to third parties for damages and injuries resulting from
environmental contamination emanating from the site. The Company has not been
notified by any governmental authority of any material non-compliance,
liability or other claim in connection with any of its properties and the
Company is not aware of any other material environmental condition with respect
to any of its properties. No assurance, however, can be given that no prior
owner created any material environmental condition not known to the Company,
that no material environmental condition with respect to any property has
occurred during the Company's ownership thereof, or that future uses or
conditions (including, without limitation, changes in applicable environmental
laws and regulations) will not result in imposition of environmental liability.
CONFLICTS OF INTEREST
Certain members of the Company's board of directors (the "Board") and
officers own Units of Carr Realty, L.P. and, thus, may have interests that
conflict with shareholders with respect to business decisions affecting the
Company and Carr Realty, L.P. In particular, a holder of Units may suffer
different and/or more adverse tax consequences than the Company upon the sale
or refinancing of some of the properties as a result of unrealized gain
attributable to certain properties. These Unit holders and the Company,
therefore, may have different objectives regarding the appropriate pricing and
timing of any sale or refinancing of properties. Although the Company, as the
sole general partner of Carr Realty, L.P., has the exclusive authority as to
whether and on what terms to sell or refinance an individual property, these
Unit holders might seek to influence the Company not to sell or refinance the
properties, even though such sale might otherwise be financially advantageous
to the Company, or may seek to influence the Company to refinance a property
with a higher level of debt than would be in the best interests of the Company.
Although the Company believes that the change in operational structure from an
"UPREIT" to a "DownREIT" should reduce, over time, these potential conflicts of
interest, assets will continue to be owned by Carr Realty, L.P., diminishing
the effects of this structural modification.
ACQUISITION AND DEVELOPMENT RISKS
The Company intends to continue acquiring and developing office properties
in markets where it believes that such acquisition or development is consistent
with the business strategies of the Company. Acquisitions entail risks that
investments will fail to perform in accordance with expectations and that
judgments with respect to the costs of improvements to bring an acquired
property up to standards established for the market position intended for that
property will prove inaccurate, as well as general investment risks associated
with any new real estate investment. See "Real Estate Investment Risks" above.
New office development also is subject to a number of risks, including
construction delays or cost overruns that may increase project costs, financing
risks as described above, the failure to meet anticipated occupancy or rent
levels, failure to receive required zoning, occupancy and other governmental
permits and authorizations and changes in applicable zoning and land use laws,
which may result in the incurrence of development costs in connection with
projects that are not pursued to completion. In addition, because the Company
must distribute 95% of its taxable income in order to maintain its
qualification as a REIT, the Company anticipates that new acquisitions and
developments will be financed primarily through periodic equity offerings,
lines of credit or other forms of secured or unsecured construction financing.
If permanent debt or equity financing is not available on acceptable terms to
refinance such new acquisitions or developments are undertaken without
permanent financing, further acquisitions or development activities may be
curtailed or cash available for distribution to shareholders or to meet debt
service obligations may be adversely affected.
CHANGE IN BUSINESS STRATEGY
The Company's move toward a more national business focus represents a
significant shift in the business strategy of the Company. Although the Board
believes that such a shift in strategy is
-4-
<PAGE> 7
warranted in light of the opportunities that the U.S. Realty Transaction
represents, there is no assurance that the Company's efforts to establish a
national office REIT will be successful.
SUBSTANTIAL OWNERSHIP OF COMMON STOCK
As of April 30, 1996, U.S. Realty owned 46.5% of the outstanding shares of
the Company's common stock (39% of the common stock on a fully-diluted basis),
and U.S. Realty has the right to nominate a proportionate number of the
directors of the Board based upon its ownership of stock on a fully-diluted
basis, rounded down to the nearest whole number (but in no event more than 40%
of the directors). As a result, U.S. Realty is the largest single stockholder
of the Company, while no other stockholder is permitted to own more than 5% of
the Company's common stock, subject to certain exceptions set forth in the
Articles of Incorporation or approved by the Board. Although certain
standstill provisions preclude U.S. Realty from increasing its percentage
interest in the Company for a period of at least five years (subject to certain
exceptions) and the Articles of Incorporation preclude it from increasing such
percentage interest thereafter, and U.S. Realty agreed to certain limitations
on its voting rights with respect to its shares of Common Stock, U.S. Realty
nonetheless has a substantial influence over the affairs of the Company as a
result of the U.S. Realty Transaction. This concentration of ownership in one
stockholder could potentially be disadvantageous to other stockholders'
interests.
LIMITATIONS ON CORPORATE ACTIONS
In conjunction with the U.S. Realty Transaction, the Company agreed to
certain limitations on its operations, including restrictions relating to
incurrence of additional indebtedness, retention of third-party managers for
the Company's properties, investments in properties other than office
buildings, issuances of Units by Carr Realty, L.P., ownership of assets
indirectly, and certain other matters. The Company may take actions relating
to these matters only with the consent of U.S. Realty. Although the Company
does not believe that the limitations imposed on the Company's activities will
materially impair the Company's ability to conduct its business, there can be
no assurance that these limitations will not adversely affect the Company's
operations in the future.
MANAGEMENT, LEASING AND BROKERAGE RISKS
The Company is subject to the risks associated with the property
management, leasing and brokerage businesses. These risks include the risk
that management contracts or service agreements with third-party owners will be
lost to competitors, that a property will be sold and the Company will lose the
contract, that contracts will not be renewed upon expiration or will not be
renewed on terms consistent with current terms and that leasing and brokerage
activity generally may decline. Each of these developments could adversely
affect the ability of the Company to make expected distributions to
shareholders or debt service payments.
LACK OF VOTING CONTROL OF OPERATING SUBSIDIARIES
The Company does not have voting control of Carr Real Estate Services,
Inc. ("Carr Services, Inc."), Carr Real Estate Services of Northern Virginia,
Inc. ("CRESNOVA") or Carr Development & Construction, Inc. ("Carr Development &
Construction") (collectively, the "Operating Subsidiaries"). The capital stock
of Carr Services, Inc., which conducts fee-based management and leasing in the
Washington, D.C. metropolitan area, is divided into two classes: voting common
stock, approximately 92% and 8% of which is held by The Oliver Carr Company
("OCCO") and Carr Realty, L.P., respectively, and nonvoting preferred stock,
approximately 95% and 5% of which is held by Carr Realty, L.P. and OCCO,
respectively. OCCO, as the holder of 92% of the voting common stock, has the
ability to elect the board of directors of Carr Services, Inc.
-5-
<PAGE> 8
The capital stock of CRESNOVA, which conducts fee-based management and
leasing in northern Virginia, is divided into two classes: voting common
stock, 92% and 8% of which is held by OCCO and Carr Realty, L.P., respectively,
and nonvoting common stock, 100% of which is held by Carr Realty, L.P. OCCO,
as the holder of 92% of the voting common stock, has the ability to elect the
board of directors of CRESNOVA.
The capital stock of Carr Development & Construction, Inc. which conducts
fee-based development, is divided into two classes: voting common stock, 99%
and 1% of which is held by OCCO and the Company, respectively, and nonvoting
common stock, 96% and 4% of which is held by the Company and OCCO,
respectively. OCCO, as the holder of 99% of the voting common stock, has the
ability to elect the board of directors of Carr Development & Construction
after the terms of the initial directors expire.
Oliver T. Carr, Jr., who is Chairman of the Board and Chief Executive
Officer and a significant stockholder of the Company, beneficially owns a
majority of the voting stock of OCCO, which will control the election of
directors of the Operating Subsidiaries. Although neither the Company's right
to receive preferred distributions with respect to its preferred stock of Carr
Services, Inc. nor the terms of the promissory notes made by each of the
Operating Subsidiaries and held by Carr Realty, L.P. or the Company, as
applicable, can be changed by OCCO, the Company will not be able to elect
directors of each of the Operating Subsidiaries, and its ability to influence
the day-to-day decisions of the Operating Subsidiaries is limited. As a
result, the board of directors and management of each of the Operating
Subsidiaries may implement business policies or decisions that might not have
been implemented by persons elected by the Company and that are adverse to the
interests of the Company or that lead to adverse financial results, which could
adversely impact the Company's operating income and funds from operations.
CHANGES IN POLICIES
The major policies of the Company, including its policies with respect to
development, acquisitions, financing, growth, operations, debt capitalization
and distributions, are determined by its Board. Although it has no present
intention to do so, the board may amend or revise these and other policies from
time to time without a vote of the shareholders of the Company. A change in
these policies could adversely affect the Company's financial condition,
results of operations, funds available for distributions to shareholders, debt
service or the market price of the Securities. The Company cannot change its
policy of seeking to maintain its qualification as a REIT without the approval
of the holders of a majority of the Common Stock.
CERTAIN TAX RISKS
Tax Liabilities as a Consequence of the Failure to Qualify as a REIT. The
Company believes that it has operated so as to qualify as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"), commencing with its
taxable year ended December 31, 1993, and intends to continue to so operate.
No assurance, however, can be given that the Company has so qualified or will
be able to remain so qualified. Qualification as a REIT involves the
application of highly technical and complex Code provisions as to which there
are only limited judicial and administrative interpretations. Certain facts
and circumstances that may be wholly beyond the Company's control may affect
its ability to qualify or to continue to qualify as a REIT. In addition, no
assurance can be given that new legislation, Treasury Regulations,
administrative interpretations or court decisions will not significantly change
the tax laws with respect to the qualification as a REIT or the Federal income
consequences of such qualification to the Company. If the Company fails to
qualify as a REIT, it will be subject to Federal income tax (including any
applicable alternative minimum tax) on its taxable income at regular corporate
rates. In addition, unless entitled to relief under certain statutory
provisions, the Company would be disqualified from treatment as a REIT for the
four taxable years following the year during which qualification is lost. The
additional tax incurred in such event would
-6-
<PAGE> 9
significantly reduce the cash flow available for distribution to shareholders
and to meet debt service obligations. See "Federal Income Tax
Considerations--Taxation of the Company."
REIT Distribution Requirements and Potential Impact of Borrowings. To
obtain the favorable tax treatment associated with qualifying as a REIT under
the Code, the Company generally is required each year to distribute to its
shareholders at least 95% of its net taxable income. See "Federal Income Tax
Considerations-Taxation of the Company (Annual Distribution Requirements)." In
addition, the Company will be subject to a 4% nondeductible excise tax on the
amount, if any, by which certain distributions paid by it with respect to any
calendar year are less than the sum of 85% of its ordinary income, 95% of its
capital gain net income and 100% of its undistributed income from prior years.
Differences in timing between the receipt of income, the payment of expenses
and the inclusion of such income and the deduction of such expenses in arriving
at taxable income (of the Company or Carr Realty, L.P.), or the effect of
nondeductible capital expenditures, the creation of reserves or required debt
or amortization payments, could require the Company, directly or through Carr
Realty, L.P., to borrow funds on a short-term basis to meet the distribution
requirements that are necessary to achieve the tax benefits associated with
qualifying as a REIT. In such instances, the Company might need to borrow
funds in order to avoid adverse tax consequences even if management believed
that then prevailing market conditions were not generally favorable for such
borrowings.
Other Tax Liabilities. Even if the Company qualifies as a REIT, the
Company and certain of its subsidiaries will be subject to certain Federal,
state and local taxes on its income and property. See "Federal Income Tax
Considerations--Taxation of the Company and Other Tax Considerations."
Consequences of Failure of the Carr Realty, L.P. to be Treated as a
Partnership. The Company believes that the Carr Realty, L.P. and each other
partnership and limited liability company in which it holds an interest are
properly treated as partnerships for Federal income tax purposes. See "Federal
Income Tax Considerations Other Tax Considerations (Effect of Tax Status of
Carr Realty, L.P. and Other Partnerships on REIT Status)." If the Internal
Revenue Service (the "IRS") were to challenge successfully the tax status of
Carr Realty, L.P., or any other partnership in which the Company holds an
interest, as a partnership for Federal income tax purposes, Carr Realty, L.P.
or the affected partnership would be taxable as a corporation. In such event,
since the value of the Company's ownership interest in Carr Realty, L.P.
exceeds, and the value of Carr Realty, L.P.'s ownership interest in the
affected partnership could exceed, 5% of the Company's assets, the Company
could cease to qualify as a REIT. See "Federal Income Tax Considerations
Taxation of the Company (Asset Tests)." In addition, the imposition of a
corporate tax on Carr Realty, L.P. or any of the other partnerships in which it
holds an interest would reduce the amount of funds available for distribution
to the Company and its stockholders.
SPECIAL CONSIDERATIONS FOR FOREIGN INVESTORS
In order to assist the Company in qualifying as a "domestically controlled
REIT," the Articles of Incorporation contain certain provisions generally
preventing foreign investors (other than U.S. Realty and its affiliates) from
acquiring additional shares of the Company's capital stock if, as a result of
such acquisition, the Company would fail to qualify as a "domestically
controlled REIT." See "Federal Income Tax Considerations--Taxation of Holders
of Common Stock--Taxation of Non-U.S. Shareholders." Accordingly, an
acquisition of the Company's capital stock would not likely be a suitable
investment for Non-U.S. Shareholders other than U.S. Realty.
PRICE FLUCTUATIONS OF THE COMMON STOCK AND TRADING VOLUME; SHARES AVAILABLE FOR
FUTURE SALE
A number of factors may adversely influence the price of the Company's
Common Stock in the public markets, many of which are beyond the control of the
Company. These factors include possible increases in market interest rates,
which may lead purchasers of Common Stock to demand
-7-
<PAGE> 10
a higher annual yield from distributions by the Company in relation to the
price paid for Common Stock, the relatively low daily trading volume of REITs
in general, including the Common Stock and any inability of the Company to
invest the proceeds of a future offering of Securities in a manner that will
increase earnings per share. Sales of a substantial number of shares of Common
Stock, or the perception that such sales could occur, could adversely affect
prevailing market prices for shares. The Company also may issue shares of
Common Stock (subject to the Ownership Limit, as defined below) upon redemption
of Units issued in connection with the formation of the Company and subsequent
acquisitions. In addition, 1,416,900 shares of Common Stock of the Company
have been issued or reserved for issuance pursuant to stock and unit options,
and these shares will be available for sale in the public markets from time to
time pursuant to exemptions from registration requirements or upon
registration. No prediction can be made about the effect that future sales of
Common Stock will have on the market prices of shares.
POSSIBLE ADVERSE CONSEQUENCES OF LIMITS ON OWNERSHIP OF SHARES
In order to assist the Company in maintaining its qualification as a REIT,
the Articles of Incorporation contain certain provisions generally limiting the
ownership of shares of capital stock by any single shareholder to 5% of the
outstanding Common Stock and/or 5% of any class or series of Preferred Stock
(with exceptions for persons who received more than 5% of the equity of the
Company pursuant to the contribution of assets to the Company in connection
with the initial public offering of the Company and U.S. Realty and its
affiliates). The Board could waive this restriction if it were satisfied that
ownership in excess of the above ownership limit would not jeopardize the
Company's status as a REIT and the Board otherwise decided such action would be
in the best interests of the Company. Capital stock acquired or transferred in
breach of the limitation will be automatically transferred to a trust for the
benefit of a designated charitable beneficiary. See "Description of Common
Stock--Restrictions on Transfer" for additional information regarding the
limits on ownership of shares of capital stock.
RESTRICTIONS ON ACQUISITION AND CHANGE IN CONTROL
Various provisions of the Company's Articles of Incorporation, as amended
(the "Articles of Incorporation"), restrict the possibility for acquisition or
change in control of the Company, even if such acquisition or change in control
were in the shareholders' interest, including the Ownership Limit, the
staggered terms of the Company's directors and the ability of the Board to
authorize the issuance of preferred stock without stockholder approval.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the
net proceeds from the sale of the Offered Securities will be used for the
acquisition and development of additional office properties, as suitable
opportunities arise, for the repayment of certain outstanding indebtedness at
such time, for capital improvements to property and for working capital and
other general corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the three months
ending March 31, 1996 was 1.64, and for the period from February 16, 1993
(commencement of operations) to December 31, 1993 and for the years ended
December 31, 1994 and 1995 was 1.75, 1.81, and 1.91 respectively.
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income (loss) before
gains from sales of property and
-8-
<PAGE> 11
extraordinary items plus fixed charges. Fixed charges consist of interest
expense (including interest costs capitalized), the amortization of debt
issuance costs and rental expense deemed to represent interest expense. There
was no preferred stock outstanding for any of the periods shown above.
Accordingly, the ratio of earnings to combined fixed charges and preferred
stock dividends is identical to the ratio of earnings to fixed charges.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which this Prospectus and any applicable Prospectus
Supplement may relate. The particular terms of the Debt Securities being
offered and the extent to which such general provisions may apply will be set
forth in the applicable indenture or in one or more indentures supplemental
thereto and described in a Prospectus Supplement relating to such Debt
Securities. The forms of the Senior Indenture (as defined herein) and the
Subordinated Indenture (as defined herein) have been filed as exhibits to the
Registration Statement of which this Prospectus is a part.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company
and may be either senior Debt Securities ("Senior Securities") or subordinated
Debt Securities ("Subordinated Securities"). The Debt Securities will be
issued under one or more indentures (the "Indentures"). Senior Securities and
Subordinated Securities will be issued pursuant to separate indentures
(respectively, a "Senior Indenture" and a "Subordinated Indenture"), in each
case between the Company and a trustee (a "Trustee"). The Indentures will be
subject to and governed by the Trust Indenture Act of 1939, as amended (the
"TIA"). The statements made under this heading relating to the Debt Securities
and the Indentures are summaries of the anticipated provisions thereof, do not
purport to be complete and are qualified in their entirety by reference to the
Indentures and such Debt Securities. All section references appearing herein
are to sections of each Indenture unless otherwise indicated and capitalized
terms used but not defined below shall have the respective meanings set forth
in each Indenture.
The indebtedness represented by Subordinated 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."
Except as set forth in the applicable Indenture or in one or more
indentures supplemental thereto and described in a Prospectus Supplement
relating thereto, the 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 the Company or as established in the applicable Indenture or in one or
more indentures supplemental to such 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.
It is anticipated that each Indenture will provide that there may be more
than one Trustee thereunder, each with respect to one or more series of Debt
Securities. Any Trustee under an Indenture may resign or be removed with
respect to one or more series of Debt Securities, and a successor Trustee may
be appointed to act with respect to such series. In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a director of a trust under the
applicable Indenture separate and apart from the trust administered by any
other Trustee, and, except as otherwise indicated herein, any action described
herein to be taken by each 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 applicable Indenture.
-9-
<PAGE> 12
The Prospectus Supplement relating to any series of Debt Securities being
offered will contain the specific terms thereof, including, without limitation:
(1) The title of such Debt Securities and whether such Debt
Securities are Senior Securities or Subordinated Securities;
(2) The aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) The percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount thereof, the
portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof;
(4) If convertible in whole or in part into Common Stock or
Preferred Stock, the terms on which such Debt Securities are convertible,
including the initial conversion price or rate (or method for determining the
same), the portion that is convertible and the conversion period, and any
applicable limitations on the ownership or transferability of the Common Stock
or Preferred Stock receivable on conversion;
(5) The date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be payable;
(6) 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;
(7) The date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the dates on which any such
interest will be payable, the regular record dates for such interest payment
dates, or the method by which such dates shall be determined, the persons to
whom such interest shall be payable, and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30-day months;
(8) The place or places where the principal of (and premium, if
any) and interest, if any, on such Debt Securities will be payable, where such
Debt Securities may be surrendered for conversion or registration of transfer
or exchange and where notices or demands to or upon the Company in respect of
such Debt Securities and the applicable Indenture may be served;
(9) The period or periods within which, the price or prices at
which and the other 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;
(10) 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 period or periods
within which or the date and dates on which, the price or prices at which and
the other terms and conditions upon which such Debt Securities will be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(11) 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;
(12) 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 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;
-10-
<PAGE> 13
(13) Any additions to, modifications of or deletions from the terms
of such Debt Securities with respect to Events of Default or covenants set
forth in the applicable Indenture;
(14) Whether such Debt Securities will be issued in certificate or
book-entry form;
(15) 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;
(16) The applicability, if any, of the defeasance and covenant
defeasance provisions of Article Fourteen of the applicable Indenture;
(17) Whether and under what circumstances the Company will pay any
additional amounts 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; and
(18) Any other terms of such Debt Securities not inconsistent with
the provisions of the applicable Indenture (Section 301).
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Special federal income tax, accounting
and other considerations applicable to Original Issue Discount Securities will
be described in the applicable Prospectus Supplement.
Except as set forth in the applicable Indenture or in one or more
indentures supplemental thereto, the applicable Indenture will not contain any
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. Restrictions on ownership and transfers of the
Company's Common Stock and Preferred Stock are designed to preserve its status
as a REIT and, therefore, may act to prevent or hinder a change of control.
See "Description of Preferred Stock Restrictions on Ownership" and "Description
of Common Stock Restrictions on Transfer." Reference is made to the applicable
Prospectus Supplement for information with respect to any deletions from,
modifications of or additions to the Events of Default or covenants of the
Company that are described below, including any addition of a covenant or other
provision providing event risk or similar protection.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series of
Debt Securities will be payable at the corporate trust office of the Trustee,
the address of which will be stated in the applicable Prospectus Supplement;
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
applicable register for such 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).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable regular record
date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to
-11-
<PAGE> 14
the Holder of such Debt Security not less than ten days prior to such Special
Record Date, or may be paid at any time in any other lawful manner, all as more
completely described in the Indenture (Section 307).
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Trustee
referred to above. In addition, subject to certain limitations imposed upon
Debt Securities issued in book-entry form, the Debt Securities of any series
may be surrendered for conversion or registration of transfer or exchange
thereof at the corporate trust office of the applicable Trustee. Every Debt
Security surrendered for conversion, registration of transfer or exchange must
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. If
the applicable Prospectus Supplement refers to any transfer agent (in addition
to the applicable Trustee) initially designated by the Company with respect to
any series of Debt Securities, the Company may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Company will be
required to maintain a transfer agent in each place of payment for such series.
The Company may at any time designate additional transfer agents with respect
to any series of Debt Securities (Section 1002).
Neither the Company nor any Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of
Debt Securities of that series to be redeemed and ending at the close of
business on the day of mailing of the relevant notice of redemption; (ii)
register the transfer of or exchange any Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any Debt Security being
redeemed in part; or (iii) issue, register the transfer of or exchange any Debt
Security that 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).
MERGER, CONSOLIDATION OR SALE
The Company will be permitted to consolidate with, or sell, lease or
convey all or substantially all of its assets to, or merge with or into, any
other entity provided that (a) either the Company shall be the continuing
entity, or the successor entity (if other than the Company) formed by or
resulting from any such consolidation or merger or which shall have received
the transfer of such assets shall expressly assume payment of the principal of
(and premium, if any) and interest on all of the Debt Securities and the due
and punctual performance and observance of all of the covenants and conditions
contained in each Indenture; (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 Subsidiary at the time of such transaction, no Event of Default
under the Indentures, and no event which, after notice or the lapse of time, or
both, would become such an Event of Default, shall have occurred and be
continuing; and (c) an officer's certificate and legal opinion covering such
conditions shall be delivered to each Trustee (Sections 801 and 803).
CERTAIN COVENANTS
Existence. Except as described above under "Merger, Consolidation or
Sale", the Company will be required to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
(by articles of incorporation, by-laws and statute) and franchises; provided,
however, that the Company shall not be required to preserve any right or
franchise if it determines
-12-
<PAGE> 15
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.
Maintenance of Properties. The Company will be required to cause all of
its material properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and 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 1007); provided, however, that
the Company shall not be prevented from selling or otherwise disposing for
value its properties in the ordinary course of business.
Insurance. The Company will be required to, and will be required to cause
each of its Subsidiaries, defined below, to, keep all of its insurable
properties insured against loss or damage at least equal to their then full
insurable value with insurers of recognized responsibility and, if described in
the applicable Prospectus Supplement, having a specified rating from a
recognized insurance rating service (Section 1008).
Payment of Taxes and Other Claims. The Company will be required to pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or property of
the Company or any Subsidiary, and (ii) all lawful claims for labor, materials
and supplies which, if unpaid, might by law become a lien upon the property of
the Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings (Section 1009).
Provision of Financial Information. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act, the Company will be required, to
the extent permitted under the Exchange Act, to file with the Commission the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to such Sections 13 or
15(d) if the Company were so subject (the "Financial Information"), such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Company would have been required so
to file such documents if the Company were so subject. The Company also will
in any event (x) within 15 days of each Required Filing Date (i) transmit by
mail to all Holders of Debt Securities, as their names and addresses appear in
the Security Register, without cost to such Holders, copies of the Financial
Information and (ii) file with the Trustee copies of the Financial Information,
and (y) if filing such documents by the Company with the Commission is not
permitted under the Exchange Act, promptly upon written request and payment of
the reasonable cost of duplication and delivery, supply copies of such
documents to any prospective Holder (Section 1010).
ADDITIONAL COVENANTS AND/OR MODIFICATIONS TO THE COVENANTS DESCRIBED ABOVE
Any additional covenants of the Company and/or modifications to the
covenants described above with respect to any Debt Securities or series
thereof, including any covenants relating to limitations on incurrence of
indebtedness or other financial covenants, will be set forth in the applicable
Indenture or an indenture supplemental thereto and described in the Prospectus
Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture will provide that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (i)
default for 30 days in the payment of any
-13-
<PAGE> 16
installment of interest on any Debt Security of such series; (ii) default in
the payment of principal of (or premium, if any, on) any Debt Security of such
series at its maturity; (iii) default in making any sinking fund payment as
required for any Debt Security of such series; (iv) default in the performance
or breach of any other covenant or warranty of the Company contained in the
applicable Indenture (other than a covenant added to the 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 the
applicable Indenture; (v) default in the payment of an aggregate principal
amount exceeding $10,000,000 of any indebtedness of the Company or any
mortgage, indenture or other instrument under which such indebtedness is issued
or by which such indebtedness is secured, such default having occurred after
the expiration of any applicable grace period and having resulted in the
acceleration of the maturity of such indebtedness, but only if such
indebtedness is not discharged or such acceleration is not rescinded or
annulled; (vi) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the Company or any
Significant Subsidiary, as defined below, or either of its property; and (vii)
any other Event of Default provided with respect to a particular series of Debt
Securities (Section 501).
"Significant Subsidiary" means any Subsidiary that is a "significant
subsidiary" (within the meaning of Regulation S-X promulgated under the
Securities Act) of the Company.
"Subsidiary" means a corporation, partnership or entity such as a limited
liability company, in which a majority of the outstanding voting stock or
partnership interests, as the case may be, is owned or controlled, directly or
indirectly, by the Company or by one or more other Subsidiaries of the Company.
For the purposes of this definition, "voting stock" means stock having voting
power for the election of directors, or managers or other voting members of the
governing body of such entities, whether at all times or only so long as no
senior class of stock has such voting power by reason of any contingency. The
term "Subsidiary" does not include Carr Services, Inc., CRESNOVA, or Carr
Development & Construction as the Company does not own or control a majority of
the outstanding voting stock of such entities.
If an Event of Default under any Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the applicable Trustee or the Holders of not less than 25%
of the principal amount of the Outstanding Debt Securities of that series will
have the right to declare the principal amount (or, if the Debt Securities of
that series are Original Issue Discount Securities or indexed securities, such
portion of the principal amount as may be specified in the terms thereof) of
all the 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 any 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 Company shall have
deposited with the applicable Trustee all required payments of the principal of
(and premium, if any) and interest 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
applicable 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 such Indenture (Section 502). Each Indenture also will provide 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 on any Debt
Security of such series or (y) in respect of a covenant or
-14-
<PAGE> 17
provision contained in the applicable Indenture that cannot be modified or
amended without the consent of the Holder of each Outstanding Debt Security
affected thereby (Section 513).
Each Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the applicable Indenture unless
such default shall have been cured or waived; provided, however, that such
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 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 such Trustee
consider such withholding to be in the interest of such Holders (Section 601).
Each Indenture will provide that no Holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the cases of failure of
the applicable Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an Event of Default from the
Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it (Section 507). This provision will not prevent, however,
any Holder of Debt Securities from instituting suit for the enforcement of
payment of the principal of (and premium, if any) and interest on such Debt
Securities at the respective due dates thereof (Section 508).
Subject to provisions in each Indenture relating to its duties in case of
default, no Trustee will be under any obligation to exercise any of its rights
or powers under an Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under such Indenture, unless such
Holders shall have offered to the Trustee thereunder reasonable security or
indemnity (Section 602). The Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of any series (or of all Debt
Securities then Outstanding under an 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 applicable Trustee, or of exercising any trust or
power conferred upon such Trustee. However, a Trustee may refuse to follow any
direction which is in conflict with any law or the applicable Indenture, which
may involve such Trustee in personal liability or which may be unduly
prejudicial to the Holders of Debt Securities of such series not joining
therein (Section 512).
Within 120 days after the close of each fiscal year, the Company will be
required to deliver to each Trustee a certificate, signed by one of several
specified officers, stating whether or not such officer has knowledge of any
default under the applicable Indenture and, if so, specifying each such default
and the nature and status thereof (Section 1011).
MODIFICATION OF THE INDENTURES
Modifications and amendments of an Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities issued under such 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 maturity of the principal
of, or any installment of interest (or premium, if any) on, any such Debt
Security; (b) reduce the principal amount of, or the rate or amount of interest
on, or any premium payable on redemption of, any such Debt Security, or reduce
the amount of principal of an Original Issue Discount 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 or premium, if any, or interest on
any such Debt Security; (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any such Debt Security; (e)
reduce the above-stated percentage of Outstanding Debt Securities of any series
necessary to modify or amend the applicable Indenture, to
-15-
<PAGE> 18
waive compliance with certain provisions thereof or certain defaults and
consequences thereunder or to reduce the quorum or voting requirements set
forth in the applicable Indenture; or (f) modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain past
defaults or certain covenants, except to increase the 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).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities of each series affected thereby will have the right to waive
compliance by the Company with certain covenants in such Indenture (Section
1013).
Modifications and amendments of an Indenture will be permitted to be made
by the Company and the respective Trustee thereunder without the consent of any
Holder of Debt Securities for any of the following purposes: (i) to evidence
the succession of another person to the Company as obligor under such
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 an 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 an Indenture, provided that any such
change or elimination shall become effective only when there are no Debt
Securities Outstanding of any series created prior thereto which are entitled
to the benefit of such provision; (vi) to secure the Debt 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 an Indenture by more than one Trustee;
(ix) to cure any ambiguity, defect or inconsistency in an Indenture, provided
that such action shall not adversely affect the interests of Holders of Debt
Securities of any series issued under such Indenture in any material respect;
or (x) to supplement any of the provisions of an Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of
such Debt Securities, provided that such action shall not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect (Section 901).
Each Indenture will provide 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 shall be deemed to be Outstanding shall 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 any Debt Security denominated in a foreign currency that shall be deemed
Outstanding shall 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 shall be deemed Outstanding shall
be the principal face amount of such indexed security at original issuance,
unless otherwise provided with respect to such indexed security pursuant to 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 shall be disregarded.
Each Indenture will contain provisions for convening meetings of the
Holders of Debt Securities of a series (Section 501). A meeting will be
permitted to be called at any time by the applicable Trustee, and also, upon
request, by the Company or the Holders of at least 10% in principal amount of
the Outstanding Debt Securities of such series, in any such case upon notice
-16-
<PAGE> 19
given as provided in the Indenture. Except for any consent that must be given
by the Holder of each Debt Security affected by certain modifications and
amendments of an 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 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 an 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.
Notwithstanding the foregoing provisions, each Indenture will provide
that 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 and other action that such 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 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 such Indenture.
SUBORDINATION
The terms and conditions, if any, upon which the Debt Securities are
subordinated to other indebtedness of the Company will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include a
description of the indebtedness ranking senior to the Debt Securities, the
restrictions on payments to the Holders of such Debt Securities while a default
with respect to such senior indebtedness in continuing, the restrictions, if
any, on payments to the Holders of such Debt Securities following an Event of
Default, and provisions requiring Holders of such Debt Securities to remit
certain payments to holders of senior indebtedness.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may be permitted under the applicable Indenture to discharge
certain obligations to Holders of any series of Debt Securities issued
thereunder that have not already been delivered to the applicable 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 to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or redemption
date, as the case may be.
-17-
<PAGE> 20
Each Indenture will provide that, if the provisions of Article Fourteen
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 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) or (b) to be released from its obligations
with respect to such Debt Securities under certain specified sections of
Article Ten of such Indenture as specified in the applicable Prospectus
Supplement and any omission to comply with such obligations shall not
constitute an Event of Default with respect to such Debt Securities ("covenant
defeasance") (Section 1403), 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 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 without
reinvestment 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.
Such a trust will only be permitted to be established 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
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such opinion of
counsel, in the case of defeasance, will be required to refer to and be based
upon a ruling of the Internal Revenue Service or a change in applicable U.S.
federal income tax law occurring after the date of the Indenture (Section
1404).
"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 of America or such government which issued
the foreign currency in which the Debt Securities of such series are payable,
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation of the United States of America or such government, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall 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).
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 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 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 will 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
-18-
<PAGE> 21
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. "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 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.
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 (iv) under "Events of Default, Notice and Waiver" with
respect to certain specified sections of Article Ten of each Indenture (which
sections would no longer be applicable to such Debt Securities as a result of
such covenant defeasance) or described in clause (vii) 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 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.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Stock or Preferred Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Common Stock or Preferred
Stock, the conversion price (or manner of calculation thereof), 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 restrictions on conversion, including restrictions
directed at maintaining the Company's REIT status.
REDEMPTION OF SECURITIES
The Indenture provides that the Debt Securities may be redeemed at any
time at the option of the Company, in whole or in part, at the redemption
price, except as may otherwise be provided in connection with any Debt
Securities or series thereof.
From and after notice has been given as provided in the Indenture, if
funds for the redemption of any Debt Securities called for redemption shall
have been made available on such redemption date, such Debt Securities will
cease to bear interest on the date fixed for such redemption specified in such
notice, and the only right of the Holders of the Debt Securities will be to
receive payment of the redemption price.
-19-
<PAGE> 22
Notice of any optional redemption of any Debt Securities will be given to
Holders at their addresses, as shown in the Company's books and records, not
more than 60 nor less than 30 days prior to the date fixed for redemption. The
notice of redemption will specify, among other items, the redemption price and
the principal amount of the Debt Securities held by such Holder to be redeemed.
If the Company elects to redeem Debt Securities, it will notify the
Trustee at least 45 days prior to the redemption date (or such shorter period
as satisfactory to the Trustee) of the aggregate principal amount of Debt
Securities to be redeemed and the redemption date. If less than all the Debt
Securities are to be redeemed, the Trustee shall select the Debt Securities to
be redeemed pro rata, by lot or in such manner as it shall deem fair and
appropriate.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depository identified in the applicable
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
The specific terms of the depository arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such series.
DESCRIPTION OF PREFERRED STOCK
The Company is authorized to issue 15,000,000 shares of Preferred Stock.
As of April 30, 1996, there were no shares of Preferred Stock outstanding.
Under the Company's Articles of Incorporation, the Board may from time to
time establish and issue one or more series of Preferred Stock. The Board may
classify or reclassify any unissued Preferred Stock by setting or changing the
number, designation, preference, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption of such series (a "Designating Amendment").
The following description of the Preferred Stock sets forth certain
general terms and provisions of the Preferred Stock to which any Prospectus
Supplement 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 Articles of Incorporation and the
Company's bylaws (the "Bylaws").
GENERAL
The Board is empowered by the Company's Articles of Incorporation to
designate and issue from time to time one or more series of Preferred Stock
without shareholder approval. The Board may determine the relative rights,
preferences and privileges of each series of Preferred Stock so issued.
Because the Board has the power to establish the preferences and rights of each
series of Preferred Stock, it may afford the holders of any series of Preferred
Stock preferences, powers and rights, voting or otherwise, senior to the rights
of holders of Common Stock. The Preferred Stock will, when issued, be fully
paid and nonassessable.
The Prospectus Supplement relating to any Preferred Stock offered thereby
will contain the specific terms thereof, including, without limitation:
(1) The title and stated value of such Preferred Stock;
-20-
<PAGE> 23
(2) The number of such shares of 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) The date from which dividends on such Preferred Stock will
accumulate, if applicable;
(5) The procedures for any auction and remarketing, if any, for
such Preferred Stock;
(6) The provision for a sinking fund, if any, for such Preferred
Stock;
(7) The provision 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);
(10) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(11) A discussion of federal income tax considerations applicable
to such Preferred Stock;
(12) The relative ranking and preferences of such Preferred Stock
as to dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;
(13) 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; and
(14) Any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to preserve the
status of the Company as a REIT.
RANK
Unless otherwise specified in the Prospectus Supplement, 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; (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; and (iii) junior to all
equity securities issued by the Company the terms of which specifically provide
that such equity securities rank senior to the Preferred Stock. The term
"equity securities" does not include convertible debt securities.
DIVIDENDS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board, out of assets of the Company legally
available for payment, cash dividends (or dividends in kind or in other
property if expressly permitted and described in the applicable Prospectus
Supplement) at such rates and on such dates as will be set forth in the
applicable
-21-
<PAGE> 24
Prospectus Supplement. Each such dividend will be payable to holders of record
as they appear on the stock transfer books of the Company on such record dates
as are fixed by the Board.
Dividends on any series of Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement.
Dividends, if cumulative, will be cumulative from and after the date set forth
in the applicable Prospectus Supplement. If the Board 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.
Unless otherwise specified in the Prospectus Supplement, if any shares of
Preferred Stock of any series are outstanding, no full dividends will be
declared or paid or set apart for payment on any capital stock of the Company
of any other series ranking, as to 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 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 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 set apart) upon 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 Preferred Stock
of such series and any other series of Preferred Stock ranking on a parity as
to dividends with such Preferred Stock will be declared pro rata so that the
amount of dividends declared per share of Preferred Stock of such series and
such other series of Preferred Stock will in all cases bear to each other the
same ratio that accrued dividends per share on the Preferred Stock of such
series (which will not include any accumulation in respect of unpaid dividends
for prior dividend periods if such Preferred Stock do 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, will 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
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 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) will be declared or paid or set aside for payment or other
distribution 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, nor will 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 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 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).
If for any taxable year, the Company elects to designate as "capital gains
dividends" (as defined in Section 857 of the Code) any portion (the "Capital
Gains Amount") of the dividends (within
-22-
<PAGE> 25
the meaning of the Code) paid or made available for the year to holders of all
classes of shares of beneficial interest (the "Total Dividends"), then the
portion of the Capital Gains Amount that will be allocable to the holders of
shares of Preferred Stock will be the Capital Gains Amount multiplied by a
fraction, the numerator of which shall be the total dividends (within the
meaning of the Code) 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.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the 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 will 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 will 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 specified 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 will
automatically and mandatorily be converted into 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 Preferred
Stock of any series shall have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for payment
for all past dividend periods and the current dividend period and (ii) if such
series of Preferred Stock does not have a cumulative dividend, full dividends
of the Preferred Stock of any series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for the then current dividend period, no Preferred Stock of
any series shall be redeemed unless all outstanding Preferred Stock of such
series are simultaneously redeemed; provided, however, that the foregoing shall
not prevent the purchase or acquisition of Preferred Stock of such series to
preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock of
such series. In addition, 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 set apart for payment
for all past dividends 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
set apart for payment for the then current dividend period, the Company will
not purchase or otherwise acquire directly or indirectly any 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); provided, however, that the foregoing will not prevent
the purchase or acquisition of Preferred Stock of such series to preserve the
REIT status of the Company or pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding Preferred Stock of such series.
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
-23-
<PAGE> 26
may be redeemed pro rata from the holders of record of such shares in
proportion to the number of such shares held or for which redemption is
requested by such holder (with adjustments to avoid redemption of fractional
shares) or by lot in a manner determined by the Company.
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 Preferred Stock of
any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice will state: (i) the redemption date; (ii) the number
of shares and series of 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 of the Preferred Stock of any series
are to be redeemed, the notice mailed to each such holder thereof will also
specify the number shares of Preferred Stock to be redeemed from each such
holder. If notice of redemption of any Preferred Stock has been given and if
the funds necessary for such redemption have been set aside by the Company in
trust for the benefit of the holders of any Preferred Stock so called for
redemption, then from and after the redemption date dividends will cease to
accrue on such Preferred Stock, and all rights of the holders of such shares
will terminate, except the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Company, then, before any distribution or payment is 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), plus an amount equal to
all dividends accrued and unpaid thereon (which will 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 available assets of the
Company are insufficient to pay the amount of the liquidating distributions on
all outstanding 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, 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 Preferred Stock, the remaining assets of the Company will 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,
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, trust or entity, or
the sale, lease or conveyance of all or substantially all of the property or
business of the Company, will not be deemed to constitute a liquidation,
dissolution or winding up of the Company.
VOTING RIGHTS
Holders of Preferred Stock will not have any voting rights, except as set
forth below or as otherwise from time to time required by law or as indicated
in the applicable Prospectus Supplement.
-24-
<PAGE> 27
Whenever dividends on any Preferred Stock shall be in arrears for six or
more consecutive quarterly periods, the holders of such 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 called by the holders of record of at least ten percent (10%) of any
series of Preferred Stock so in arrears (unless such request is received less
than 90 days before the date fixed for the next annual or special meeting of
the shareholders) or at the next annual meeting of shareholders, and at each
subsequent annual meeting until (i) if such series of Preferred Stock has a
cumulative dividend, all dividends accumulated on such shares 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
set aside for payment or (ii) if such series of Preferred Stock do not have a
cumulative dividend, four consecutive quarterly dividends shall have been fully
paid or declared and a sum sufficient for the payment thereof set aside for
payment. In such case, the entire Board will be increased by two directors.
Unless provided otherwise for any series of Preferred Stock, so long as
any shares of Preferred Stock remain outstanding, the Company will not, without
the affirmative vote or consent of the holders of at least two-thirds of each
series of shares 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 prior to such series of
Preferred Stock with respect to the payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up or reclassify any authorized
capital stock of the Company into 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
Articles of Incorporation or the Designating Amendment for such series of
Preferred Stock, whether by merger, consolidation or otherwise (an "Event"), 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, with respect to the occurrence of any of the Events set
forth in (ii) above, so long as the shares of Preferred Stock remain
outstanding with the terms thereof materially unchanged, taking into account
that upon the occurrence of an Event, the Company may not be the surviving
entity, the occurrence of any such Event will not be deemed to materially and
adversely affect such rights, preferences, privileges or voting power of
holders of Preferred Stock and provided further that (x) any increase in the
amount of the authorized Preferred Stock or the creation or issuance of any
other series of Preferred Stock, or (y) 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 or the distribution of assets upon
liquidation, dissolution or winding up, will 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 Preferred Stock of such series shall
have been redeemed or called for redemption and sufficient funds shall have
been deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred Stock
is 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 are 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 series of Preferred Stock.
-25-
<PAGE> 28
RESTRICTIONS ON OWNERSHIP
As discussed below under "Description of Common Stock Restrictions on
Transfer-- Ownership Limits," for the Company to qualify as a REIT under the
Code, not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (as defined in the Code to
include certain entities) during the last half of a taxable year. To assist
the Company in meeting this requirement, the Articles of Incorporation provide
that no holder of Preferred Stock may own, or be deemed to own by virtue of
certain attribution provisions of the Code, more than 5% of any class or series
of Preferred Stock and/or more than 5% of the issued and outstanding shares of
Common Stock, subject to certain exceptions specified in the Articles of
Incorporation. See "Description of Common Stock--Restrictions on
Transfer--Ownership Limits."
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Preferred Stock will be set forth
in the applicable Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
GENERAL
The Company is authorized to issue 90,000,000 shares of Common Stock. The
outstanding Common Stock entitles the holder to one vote on all matters
presented to shareholders for a vote. Holders of Common Stock have no
preemptive rights. At April 30, 1996, there were 25,200,469 shares of Common
Stock outstanding.
Shares of Common Stock currently outstanding are listed for trading on the
New York Stock Exchange (the "NYSE"). The Company will apply to the NYSE to
list the additional Common Stock to be sold pursuant to any Prospectus
Supplement, and the Company anticipates that such shares will be so listed.
Subject to such preferential rights as may be granted by the Board in
connection with the future issuance of Preferred Stock, holders of Common Stock
are entitled to one vote per share on all matters to be voted on by
stockholders and are entitled to receive ratably such dividends as may be
declared on the Common Stock by the Board in its discretion from funds legally
available therefor. In the event of the liquidation, dissolution or winding up
of the Company, holders of Common Stock are entitled to share ratably in all
assets remaining after payment of all debts and other liabilities and any
liquidation preference of the holders of Preferred Stock. Holders of Common
Stock have no subscription, redemption, conversion or preemptive rights.
Matters submitted for stockholder approval generally require a majority vote of
the shares present and voting thereon.
Advance Notice of Director Nominations and New Business. The Bylaws of
the Company provide that, with respect to an annual meeting of stockholders,
the proposal of business to be considered by stockholders may be made only (i)
by or at the direction of the Board or (ii) by a stockholder who is entitled to
vote at the meeting and who has complied with the advance notice procedures set
forth in the Bylaws. In addition, with respect to any meeting of stockholders,
nominations of persons for election to the Board may be made only (i) by or at
the direction of the Board or (ii) by any stockholder of the Company who is
entitled to vote at the meeting and has complied with the advance notice
provisions set forth in the Bylaws.
-26-
<PAGE> 29
RESTRICTIONS ON TRANSFER
Ownership Limits. The Company's Articles of Incorporation contain certain
restrictions on the number of shares of Common Stock that individual
shareholders may own. For the Company to qualify as a REIT under the Code, no
more than 50% in value of its outstanding capital stock may be owned, directly
or indirectly, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of a taxable year (other than the first
year) or during a proportionate part of a shorter taxable year. The capital
stock also must be beneficially owned by 100 or more persons during at least
335 days of a taxable year or during a proportionate part of a shorter taxable
year. Because the Company intends to maintain its qualification as a REIT, the
Company's Articles of Incorporation contain certain restrictions on the
ownership and transfer of capital stock, including Common Stock, intended to
ensure compliance with these requirements.
Subject to certain exceptions specified in the Articles of
Incorporation, no holder may own, or be deemed to own by virtue of certain
attribution provisions of the Code, more than (A) 5% of the issued and
outstanding shares of Common Stock ("Common Stock Ownership Limit") and/or (B)
more than 5% of any class or series of Preferred Stock. (This limit, in
addition to the Existing Holder Limit, the Special Shareholder Limit, and the
Non U.S. Shareholder Limit, all as defined below, are referred to collectively
herein as the "Ownership Limits.") Existing Holders, including Clark
Enterprises Inc., The Equitable Life Assurance Society of the United States,
Equitable Variable Life Insurance Company, FW REIT, L.P., The Oliver Carr
Company, Oliver T. Carr, Jr., or A. James Clark, are not subject to the Common
Stock Ownership Limit, but they are subject to special ownership limitations
(the "Existing Holder Limit"). Furthermore, U.S. Realty and its affiliates are
not subject to the Common Stock Ownership Limit, but are subject to a special
ownership limit of 48% of the outstanding shares of Common Stock and 48% of the
outstanding shares of each class or series of preferred stock of the Company
(the "Special Shareholder Limit"). Furthermore, all holders are prohibited
from acquiring any capital stock if such acquisition would cause five
beneficial owners of capital stock to beneficially own in the aggregate more
than 50% in value of the outstanding capital stock.
In addition to the above restrictions on ownership of shares of capital
stock of the Company, in order to assist the Company in qualifying as a
"domestically controlled REIT," the Articles of Incorporation contain certain
provisions preventing any Non-U.S. Shareholder, as defined below (other than
U.S. Realty and its affiliates), from acquiring additional shares of the
Company's capital stock if, as a result of such acquisition, the Company would
fail to qualify as a "domestically controlled REIT" (computed assuming that
U.S. Realty owns the maximum percentage of the Company's capital stock that it
is permitted to own under the Special Shareholder Limit) ("Non-U.S. Shareholder
Limit"). A Non-U.S. Shareholder is a nonresident alien individual, foreign
corporation, foreign partnership and any other foreign shareholder. For a
discussion of the taxation of a Non-U.S. Shareholder and the requirements for
the Company to qualify as a "domestically controlled REIT, see "Federal Income
Tax Considerations--Taxation of Holders of Common Stock--Taxation of Non-U.S.
Shareholders." The Company is unlikely to be able to advise a prospective
Non-U.S. Shareholder that its purchase of any shares of the Company's capital
stock would not violate this prohibition, thereby subjecting such prospective
Non-U.S. Shareholder to the adverse consequences described below under
"Violation of Ownership Limitations." Accordingly, an acquisition of the
Company's capital stock would not likely be a suitable investment for Non-U.S.
Shareholders other than U.S. Realty.
The Board may increase the Ownership Limits from time to time, but may not
do so to the extent that after giving effect to such increase five beneficial
owners of shares of capital stock could beneficially own in the aggregate more
than 49.5% of the Company's outstanding shares of capital stock. The Board, in
its sole discretion, may waive the Ownership Limits with respect to a holder if
such holder's ownership will not then or in the future jeopardize the Company's
status as a REIT.
-27-
<PAGE> 30
Violation of Ownership Limits. The Articles of Incorporation provide
that, if any holder of capital stock of the Company purports to transfer shares
to a person or there is a change in the capital structure of the Company and
either the transfer or the change in capital structure would result in the
Company failing to qualify as a REIT, or such transfer or the change in capital
structure would cause the transferee to hold shares in excess of the applicable
Ownership Limit (including the Non-U.S. Shareholder Limit), then the capital
stock being transferred (or in the case of an event other than a transfer, the
capital stock beneficially owned) that would cause one or more of the
restrictions on ownership or transfer to be violated will be automatically
transferred to a trust for the benefit of a designated charitable beneficiary.
The purported transferee of such shares shall have no right to receive
dividends or other distributions with respect to such shares and shall have no
right to vote such shares. Any dividends or other distributions paid to such
purported transferee prior to the discovery by the Company that the shares have
been transferred to a trust shall be paid upon demand to the trustee of the
trust for the benefit of the charitable beneficiary. The trustee of the trust
will have all rights to dividends with respect to the shares of capital stock
held in trust, which rights will be exercised for the exclusive benefit of the
charitable beneficiary. Any dividends or distributions paid over to the
trustee will be held in trust for the charitable beneficiary. The trustee
shall designate a transferee of such stock so long as such shares of stock
would not violate the Ownership Limitations in the hands of such designated
transferee. Upon the sale of such shares, the purported transferee shall
receive the lesser of (A) (i) the price per share such purported transferee
paid for the capital stock in the purported transfer that resulted in the
transfer of shares of capital stock to the trust, or (ii) if the transfer or
other event that resulted in the transfer of shares of capital stock to the
trust was not a transaction in which the purported record transferee of shares
of capital stock gave full value for such shares, a price per share equal to
the market price on the date of the purported transfer or other event that
resulted in the transfer of the shares to the trust, and (B) the price per
share received by the trustee from the sale or disposition of the shares held
in the trust.
All certificates representing Common 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
Code or regulations thereunder) of the issued and outstanding shares of Common
Stock must file a written notice with the Company containing the information
specified in the Articles of Incorporation no later than December 31 of each
year. In addition, each shareholder shall upon demand be required to disclose
to the Company in writing such information as the Company may request in good
faith in order to determine the Company's status as a REIT.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Common Stock is Boston EquiServe.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of Common
Stock. Common Stock Warrants may be issued independently or together with any
other Securities offered by any Prospectus Supplement and may be attached to or
separate from such Securities. Each series of Common Stock Warrants will be
issued under a separate warrant agreement (each, a "Warrant Agreement") to be
entered into between the Company and a warrant agent specified in the
applicable Prospectus Supplement (the "Warrant Agent"). The Warrant Agent will
act solely as an agent of the Company in connection with the Common Stock
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 Common Stock
Warrants. The following sets forth certain general terms and provisions of the
Common Stock Warrants offered hereby. Further terms of the Common Stock
Warrants and the applicable Warrant Agreements will be set forth in the
applicable Prospectus Supplement.
-28-
<PAGE> 31
The applicable Prospectus Supplement will describe the terms of the Common
Stock Warrants in respect of which this Prospectus is being delivered,
including, where applicable, the following: (1) the title of such Common Stock
Warrants; (2) the aggregate number of such Common Stock Warrants; (3) the price
or prices at which such Common Stock Warrants will be issued; (4) the
designation, number and terms of the shares of Common Stock purchasable upon
exercise of such Common Stock Warrants; (5) the designation and terms of the
other Securities offered thereby with which such Common Stock Warrants are
issued and the number of such Common Stock Warrants issued with each such
Security offered thereby; (6) the date, if any, on and after which such Common
Stock Warrants and the related Common Stock will be separately transferable;
(7) the price at which each of the shares of Common Stock purchasable upon
exercise of such Common Stock Warrants may be purchased; (8) the date on which
the right to exercise such Common Stock Warrants shall commence and the date on
which such right shall expire; (9) the minimum or maximum number of such Common
Stock Warrants which may be exercised at any one time; (10) information with
respect to book entry procedures, if any; (11) a discussion of certain federal
income tax considerations; and (12) any other terms of such Common Stock
Warrants, including terms, procedures and limitations relating to the exchange
and exercise of such Common Stock Warrants.
FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a description of certain Federal income tax consequences
to the Company and the holders of Common Stock, Preferred Stock and Common
Stock Warrants of the treatment of the Company as a REIT under applicable
provisions of the Code. The following discussion, which is not exhaustive of
all possible tax considerations, does not give a detailed discussion of any
state, local or foreign tax considerations. Nor does it discuss all of the
aspects of Federal income taxation that may be relevant to a prospective
shareholder in light of his or her particular circumstances or to certain types
of shareholders (including insurance companies, tax-exempt entities, financial
institutions or broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) who are subject to special
treatment under the Federal income tax laws. As used in this section, the term
"Company" refers solely to CarrAmerica Realty Corporation.
EACH PROSPECTIVE PURCHASER 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 STOCK IN AN ENTITY ELECTING TO BE TAXED AS A REIT,
INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH
PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL CHANGES IN APPLICABLE
TAX LAWS.
TAXATION OF THE COMPANY
General. The Company, which is considered a corporation for Federal
income tax purposes, has elected to be taxed as a REIT under Sections 856
through 860 of the Code effective as of its taxable year ending December 31,
1993. The Company believes that it is organized and has operated in such a
manner as to qualify for taxation as a REIT under the Code, and the Company
intends to continue to operate in such a manner. No assurance, however, can be
given that the Company has operated in a manner so as to qualify as a REIT or
that it will continue to operate in such a manner in the future. Qualification
and taxation as a REIT depends upon the Company's ability to meet on a
continuing basis, through actual annual operating results, distribution levels
and diversity of stock ownership, the various qualification tests imposed under
the Code on REITs, some of which are summarized below. While the Company
intends to operate so that it qualifies as a RElT, given the highly complex
nature of the rules governing REITs, the ongoing importance of factual
determinations, and the possibility of future changes in circumstances of the
Company, no assurance
-29-
<PAGE> 32
can be given that the Company satisfies such tests or will continue to do so.
See "Failure to Qualify" below.
The following is a general summary of the Code provisions that govern the
Federal income tax treatment of a REIT and its shareholders. These provisions
of the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, Treasury Regulations and
administrative and judicial interpretations thereof.
If the Company qualifies for taxation as a REIT, it generally will not be
subject to Federal corporate income taxes on net income that it distributes
currently to shareholders. However, the Company will be subject to Federal
income tax on any income that it does not distribute and will be subject to
Federal income tax in certain circumstances on certain types of income even
though that income is distributed.
Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) that is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares of
stock, or by transferable certificates of beneficial interest; (3) that would
be taxable as a domestic corporation, but for Sections 856 through 859 of the
Code; (4) that is neither a financial institution nor an insurance company
subject to certain provisions of the Code; (5) the beneficial ownership of
which is held by 100 or more persons; (6) that 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
Code to include certain entities); and (7) that meets certain other tests,
described below, regarding the nature of its income and assets. The Code
provides that conditions (l) through (4), inclusive, must be met during the
entire taxable year and that condition (5) must be met during at least 335 days
of a taxable year of 12 months, or during a proportionate part of a taxable
year of less than 12 months. The Company's Articles of Incorporation contain
restrictions regarding the transfer of its capital stock that are intended to
assist the Company in continuing to satisfy the stock ownership requirements
described in (5) and (6) above. See "Description of Common Stock-Restrictions
on Transfer."
Income Tests. In order to maintain qualification as a REIT, there are
three gross income requirements that must be satisfied annually. First, at
least 75% of the REIT's 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 the REIT's
gross income (excluding gross income from prohibited transactions) for each
taxable year must be derived from the same items which qualify under the 75%
income test, and from dividends, interest and gain from the sale or disposition
of stock or securities, or from any combination of the foregoing. Third,
short-term gain from the sale or other disposition of stock or securities, gain
from prohibited transactions and gain on the sale or other disposition of real
property held for less than four years (apart from involuntary conversions and
sales of foreclosure property) must represent less than 30% of the REIT's gross
income (including gross income from prohibited transactions) for each taxable
year.
Rents received by the Company will qualify as "rents from real property"
in satisfying the gross income requirements for a REIT described above only if
several conditions (related to the identity of the tenant, the computation of
the rent payable, and the nature of the property leased) are met. The Company
does not anticipate receiving rents in excess of 1% of gross revenue that fail
to meet these conditions. In addition, for rents received to qualify as
"rents from real property," the Company generally must not operate or manage
the property or furnish or render services to tenants, other than through an
"independent contractor" from whom the Company derives no revenue. The
"independent contractor" requirement, however, does not apply to the extent the
services provided by the Company are "usually or customarily rendered" in
connection with the rental space for occupancy only and are not otherwise
considered "rendered to the occupant." The Company will provide certain
services with respect to the properties through entities that do not
-30-
<PAGE> 33
satisfy the "independent contractor" requirements described above. The Company
has received a ruling from the IRS that the provision of certain services will
not cause the rents received with respect to the properties to fail to qualify
as "rents from real property." Based upon the IRS ruling and its experience in
the office rental market, the Company believes that all services provided to
tenants will be considered "usually or customarily rendered" in connection with
the rental of office space for occupancy, although there is no assurance that
the IRS will not contend otherwise. If the Company contemplates providing
services, either directly, or through another entity, in the future that
reasonably might be expected not to meet the "usual or customary" standard, it
will arrange to have such services provided by an independent contractor from
which the Company will receive no income.
The Company may receive fees in consideration of the performance of
management and administrative services with respect to properties that are not
owned entirely by the Company. A portion of such management and administrative
fees (corresponding to that portion of a property owned by a third party)
generally will not qualify under the 75% or 95% gross income tests. The
Company also may receive other types of income with respect to the properties
that it owns that will not qualify for the 75% or 95% gross income tests. The
Company believes, however, that the aggregate amount of such fees and other
non-qualifying income in any taxable year will not cause the Company to exceed
the limits on non-qualifying income under the 75% and 95% gross income tests.
If the Company fails to satisfy one or both of the 75% or the 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code. It
is not possible, however, to state whether in all circumstances the Company
would be entitled to the benefit of these relief provisions. Even if these
relief provisions were to apply, however, a tax would be imposed with respect
to the "excess net income"' attributable to the failure to satisfy the 75% and
95% gross income tests.
Asset Tests. The Company, at the close of each quarter of its taxable
year, must also satisfy three tests relating to the nature of its assets: (i)
at least 75% of the value of the Company's total assets must be represented by
"real estate assets," cash, cash items and government securities; (ii) not more
than 25% of the Company's total assets may be represented by securities other
than those in the 75% asset class; and (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, shares of a "qualified REIT subsidiary" or another
REIT, but including any unsecured debt of Carr Realty, L.P.) owned by the
Company may not exceed 5% of the value of the Company's total assets, and the
Company may not own more than 10% of any one issuer's outstanding voting
securities (other than an interest in a partnership, shares of a "qualified
REIT subsidiary" or another REIT). By virtue of its ownership of Units, the
Company will be considered to own its pro rata share of the assets of Carr
Realty, L.P., including the securities of Carr Services, Inc., and CRESNOVA.
(Carr Services, Inc., CRESNOVA and Carr Development & Construction are referred
to collectively herein as the "Non-qualified REIT Subsidiaries.") Neither Carr
Realty, L.P. nor the Company will own more than 10% of the voting securities of
any Non-qualified REIT Subsidiary. In addition, the Company and its senior
management believe that the Company's pro rata share of the value of the
securities of each of such Non-qualified REIT Subsidiary and of any unsecured
debt of Carr Realty, L.P. owned by the Company will not exceed 5% of the total
value of the Company's assets. There can be no assurance, however, that the
IRS might not contend otherwise. Although the Company plans to take steps to
ensure that it continues to satisfy the 5% test, there can be no assurance that
such steps will be successful or will not require a reduction in the Company's
overall interest in one or more of the Non-qualified REIT Subsidiaries.
Annual Distribution Requirements. To qualify as a REIT, the Company
generally must distribute to its shareholders at least 95% of its income each
year. In addition, the Company will be subject to tax on the undistributed
amount at regular capital gains and ordinary corporate tax rates and also may
be subject to a 4% excise tax on undistributed income in certain events.
-31-
<PAGE> 34
Failure to Qualify. If the Company fails to qualify for taxation as a
REIT in any taxable year, the Company will be subject to tax (including any
applicable alternative minimum tax) on its taxable income at regular corporate
rates. Unless entitled to relief under specific statutory provisions, the
Company also will 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 the Company would be entitled to
such statutory relief.
TAXATION OF HOLDERS OF COMMON STOCK
Taxation of Taxable Domestic Shareholders. As long as the Company
qualifies as a REIT, distributions made to the Company's taxable domestic
shareholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by them as
ordinary income, and corporate shareholders will not be eligible for the
dividends received deduction as to such amounts. For purposes of determining
whether distributions on the shares of Common Stock are out of current or
accumulated earnings and profits, the earnings and profits of the Company will
be allocated first to shares of Preferred Stock, if any, and second to the
shares of Common Stock. There can be no assurance that the Company will have
sufficient earnings and profits to cover distributions on any shares of
Preferred Stock. Distributions that are designated as capital gain dividends
will be taxed as long-term capital gains (to the extent they do not exceed the
Company's actual net capital gain for the taxable year) without regard to the
period for which the shareholder has held its stock. However, corporate
shareholders may be required to treat up to 20% of certain capital gain
dividends as ordinary income. Distributions in excess of current or
accumulated earnings and profits will not be taxable to a shareholder to the
extent that they do not exceed the adjusted basis of the shareholder's shares
of Common Stock, but rather will reduce the adjusted basis of such shares of
Common Stock. To the extent that such distributions exceed the adjusted basis
of a shareholder's shares of Common Stock, they will be included in income as
long-term capital gain (or short-term capital gain if the shares of Common
Stock have been held for one year or less), assuming the shares of Common Stock
are a capital asset in the hands of the shareholder. In addition, any dividend
declared by the Company in October, November or December of any year payable to
a stockholder of record on a specific date in any such month shall be treated
as both paid by the Company and received by the stockholder on December 31 of
such year, provided that the dividend is actually paid by the Company during
January of the following calendar year. Stockholders may not include in their
individual income tax returns any net operating losses or capital losses of the
Company.
In addition, distributions from the Company and gain from the disposition
of shares of Common Stock will not be treated as "passive activity" income and
therefore stockholders will not be able to apply losses from "passive
activities" to offset such income.
In general, a domestic shareholder will realize capital gain or loss on
the disposition of shares of Common Stock equal to the difference between (i)
the amount of cash and the fair market value of any property received on such
disposition and (ii) the shareholder's adjusted basis of such shares of Common
Stock. Such gain or loss generally will constitute long-term capital gain or
loss if the shareholder has held such shares for more than one year. Loss upon
a sale or exchange of shares of Common Stock by a shareholder who has held
such shares of Common Stock for six months or less (after applying certain
holding period rules) will be treated as a long-term capital loss to the extent
of distributions from the Company required to be treated by such shareholder as
long-term capital gain.
Backup Withholding. The Company will report to its domestic
Shareholders and the IRS the amount of dividends paid during each calendar
year, and the amount of tax withheld, if any, with respect thereto. Under the
backup withholding rules, a stockholder may be subject to backup withholding at
the rate of 31% with respect to dividends paid unless such holder (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (b) provides a taxpayer identification number and
certifies as to no loss of exemption from backup withholding. Amounts withheld
as backup withholding will be creditable against the stockholder's
-32-
<PAGE> 35
income tax liability. In addition, the Company may be required to withhold a
portion of capital gain distributions made to any Shareholders who fail to
certify their non-foreign status to the Company. See " Taxation of Non-U.S.
Shareholders" below. The Company will report to its domestic Shareholders and
the IRS the amount of dividends paid during each calendar year, and the amount
of tax withheld, if any, with respect thereto. In addition, the Company may be
required to withhold a portion of capital gain distributions made to any
Shareholders who fail to certify their non-foreign status to the Company. See
" Taxation of Non-U.S. Shareholders" below. Additional issues may arise
pertaining to information reporting and backup withholding with respect to
Non-U.S. Shareholders (persons other than (i) citizens or residents of the
United States, (ii) corporations, partnerships or other entities created or
organized under the laws of the United States or any political subdivision
thereof, and (iii) estates or trusts the income of which is subject to United
States Federal income taxation regardless of its source) and Non-U.S.
Shareholders should consult their tax advisors with respect to any such
information reporting and backup withholding requirements.
Taxation of Tax-Exempt Shareholders. As a general rule, amounts
distributed to a tax-exempt entity do not constitute "unrelated business
taxable income" ("UBTI"), and thus distributions by the Company to a
stockholder that is a tax-exempt entity should also not constitute UBTI,
provided that the tax-exempt entity has not financed the acquisition of its
shares of Common Stock with "acquisition indebtedness" within the meaning of
the Code and the shares of Common Stock is not otherwise used in an unrelated
trade or business of the tax-exempt entity. However, under the Revenue
Reconciliation Act of 1993, distributions by a REIT to a tax-exempt employee's
pension trust that owns more than 10 percent of the REIT will be treated as
UBTI in an amount equal to the percentage of gross income of the REIT that is
derived from an "unrelated trade or business" (determined as if the REIT were a
pension trust) divided by the gross income of the REIT for the year in which
the dividends are paid. This rule only applies, however, if (i) the percentage
of gross income of the REIT that is derived from an unrelated trade or business
for the year in which the dividends are paid is at least five percent, (ii) the
REIT qualifies as a REIT only because the pension trust is not treated as a
single individual for purposes of the "five-or-fewer rule" (see " Taxation of
the Company (Requirements for Qualification)" above), and (iii) (A) one pension
trust owns more than 25 percent of the value of the REIT or, (B) a group of
pension trusts individually holding more than 10 percent of the value of the
REIT collectively own more than 50 percent of the value of the REIT. The
Company currently does not expect that this rule will apply.
Taxation of Non-U.S. Shareholders. The rules governing U.S. Federal
income taxation of nonresident alien individuals, foreign corporations, foreign
partnerships and other foreign shareholders (collectively, "Non-U.S.
Shareholders") are complex, and no attempt will be made herein to provide more
than a limited summary of such rules. Prospective Non-U.S. Shareholders should
consult with their own tax advisors to determine the impact of U.S. Federal,
state and local income tax laws with regard to an investment in Common Stock,
including any reporting requirements.
Distributions that are not attributable to gain from sales or exchanges by
the Company of U.S. real property interests and not designated by the Company
as capital gain dividends will be treated as dividends of ordinary income to
the extent that they are made out of current or accumulated earnings and
profits of the Company. Such distributions, ordinarily, will be subject to a
withholding tax equal to 30% of the gross amount of the distribution unless an
applicable tax treaty reduces that tax. Distributions in excess of current and
accumulated earnings and profits of the Company will not be taxable to a
Non-U.S. Shareholder to the extent that they do not exceed the adjusted basis
of the shareholder's Common Stock, but rather will reduce the adjusted basis of
such Common Stock. To the extent that such distributions exceed the adjusted
basis of a Non-U.S. Shareholder's Common Stock, they will give rise to tax
liability if the Non-U.S. Shareholder would otherwise be subject to tax on any
gain from the sale or disposition of his Common Stock as described below (in
which case they also may be subject to a 30% branch profits tax if the
shareholder is a foreign corporation). If it cannot be determined at the time
a distribution is made whether or not such distribution will be in excess of
current or accumulated earnings and profits, the entire
-33-
<PAGE> 36
distribution will be subject to withholding at the rate applicable to
dividends. However, the Non-U.S. Shareholder may seek a refund of such amounts
from the IRS if it is subsequently determined that such distribution was, in
fact, in excess of current or accumulated earnings and profits of the Company.
For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real
property interests will be taxed to a Non-U.S. Shareholder under the provisions
of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") at the
normal capital gain rates applicable to U.S. shareholders (subject to
applicable alternative minimum tax and a special alternative minimum tax in the
case of nonresident alien individuals). Also, distributions subject to FIRPTA
may be subject to a 30% branch profits tax in the hands of a corporate Non-U.S.
Shareholder not entitled to treaty relief or exemption. The Company is
required by applicable Treasury Regulations to withhold 35% of any distribution
that is or could be designated by the Company as a capital gain dividend. The
amount withheld is creditable against the Non-U.S. Shareholder's FIRPTA tax
liability.
Gain recognized by a Non-U.S. Shareholder upon a sale of Common Stock
generally will not be taxed under FIRPTA if the Company is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by foreign persons. Following the U.S. Realty Transaction, U.S.
Realty, a Luxembourg corporation, holds approximately 46.5% in value of the
securities of the Company. In the event that U.S. Realty and other
stockholders of the Company who are Non-U.S. Shareholders own collectively 50%
or more, in value, of the outstanding stock of the Company, the Company would
cease to be a "domestically controlled REIT."
If the Company does not qualify as a "domestically controlled REIT," a
Non-U.S. Shareholder's sale of securities of the Company generally still will
not be subject to U.S. tax under FIRPTA as a sale of a U.S. real property
interest, provided that (i) the securities are "regularly traded" (as defined
by the applicable Treasury regulations) on an established securities market,
and (ii) the selling Non-U.S. Shareholder held 5% or less of the Company's
outstanding securities at all times during a specified testing period. The
Company believes the Common Stock would be considered to be "regularly traded"
for this purpose, and the Company has no actual knowledge of any Non-U.S.
Shareholder (other than U.S. Realty) that holds in excess of 5% of the
Company's stock. In order to assist the Company in qualifying as a
"domestically controlled REIT," the Articles of Incorporation contain certain
provisions preventing any Non-U.S. Shareholder (other than U.S. Realty and its
affiliates) from acquiring additional shares of the Company's capital stock if,
as a result of such acquisition, the Company would fail to qualify as a
"domestically controlled REIT" (computed assuming that U.S. Realty owns the
maximum percentage of the Company's capital stock that it is permitted to own
under the Special Shareholder Limit). The Company is unlikely to be able to
advise a prospective Non-U.S. Shareholder that its purchase of any shares of
the Company's capital stock would not violate this prohibition, thereby
subjecting such prospective Non-U.S. Shareholder to the adverse consequences
described under "Description of Common Stock--Restrictions on
Transfer--Violation of Ownership Limitations." Accordingly, an acquisition of
the Company's capital stock would not likely be a suitable investment for
Non-U.S. Shareholders other than U.S. Realty.
If the gain on the sale of Common Stock were to be subject to tax under
FIRPTA, the Non-U.S. Shareholder would be subject to the same treatment as U.S.
shareholders with respect to such gain (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals), and the purchaser of the Common Stock would be required to
withhold and remit to the IRS 10% of the purchase price.
-34-
<PAGE> 37
TAXATION OF HOLDERS OF PREFERRED STOCK OR COMMON STOCK WARRANTS
Additional Tax Consequences for Holders of Preferred Stock or Common Stock
Warrants. If the Company offers one or more series of Preferred Stock or
Common Stock Warrants, then there may be tax consequences for the holders of
such Securities not discussed herein. For a discussion of any such additional
consequences, see the applicable Prospectus Supplement.
OTHER TAX CONSIDERATIONS
Effect of Tax Status of Carr Realty, L.P. and Other Partnerships on REIT
Qualification. The Company believes that Carr Realty, L.P. and each other
partnership and limited liability company in which it holds an interest are
properly treated as partnerships for tax purposes (and not as associations
taxable as corporations). If, however, Carr Realty, L.P. were treated as an
association taxable as a corporation, the Company would cease to qualify as a
REIT. If any of the other partnerships were treated as an association taxable
as a corporation and the Company's interest in such partnership exceeded 10% of
the partnership's voting interests or the value of such interest exceeded 5% of
the value of the Company's assets, the Company would cease to qualify as a
REIT. Furthermore, in such a situation, any partnership treated as a
corporation would be subject to corporate income taxes, and distributions from
any such partnership to the Company would be treated as dividends, which are
not taken into account in satisfying the 75% gross income test described above
and which therefore could make it more difficult for the Company to meet the
75% asset test described above. Finally, in such a situation, the Company
would not be able to deduct its shares of any losses generated by any such
partnership in computing its taxable income.
Tax Allocations with Respect to the Properties. Carr Realty, L.P. was
formed by way of contributions of appreciated property. When property is
contributed to a partnership in exchange for an interest in the partnership,
the partnership generally takes a carryover basis in that property for tax
purposes equal to the adjusted basis of the contributing partner in the
property, rather than a basis equal to the fair market value of the property at
the time of contribution (this difference is referred to as "Book-Tax
Difference"). The Carr Realty, L.P. partnership agreement requires allocations
of income, gain, loss and deduction with respect to the contributed Property be
made in a manner consistent with the special rules in 704(c) of the Code and
the regulations thereunder, which will tend to eliminate the Book-Tax
Differences with respect to the contributed Properties over the life of Carr
Realty, L.P. However, because of certain technical limitations, the special
allocation rules of Section 704(c) may not always entirely eliminate the
Book-Tax Difference on an annual basis or with respect to a specific taxable
transaction such as a sale. Thus, the carryover basis of the contributed
Properties in the hands of Carr Realty, L.P. could cause the Company (i) to be
allocated lower amounts of depreciation and other deductions for tax purposes
than would be allocated to the Company if all Properties were to have a tax
basis equal to their fair market value at the time the Properties were
contributed to Carr Realty, L.P., and (ii) possibly to be allocated taxable
gain in the event of a sale of such contributed Properties in excess of the
economic or book income allocated to the Company as a result of such sale.
Non-Qualified REIT Subsidiaries. The Non-qualified REIT subsidiaries do
not qualify as REITs and thus pays Federal, state and local income taxes
(including District of Columbia franchise tax) on their net income at normal
corporate rates. To the extent the Non-qualified REIT subsidiaries are
required to pay Federal, state and local income taxes, the case available for
distribution to stockholders will be reduced accordingly.
State and Local Taxes; District of Columbia Unincorporated Business Tax.
The Company and its stockholders may be subject to state or local taxation in
various state or local jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of the Company
and its stockholders may not conform to the Federal income tax consequences
discussed above. In this regard, the District of Columbia imposes an
unincorporated business income tax, at the rate of 10.25%, on the "District of
Columbia taxable income" of partnerships doing
-35-
<PAGE> 38
business in the District of Columbia. Because many of the Properties owned by
Carr Realty, L.P. are located in the District of Columbia, the Company's share
of the "District of Columbia taxable income" of Carr Realty, L.P. will be
subject to this tax. Carr Realty, L.P. has taken steps to attempt to reduce
the amount of income that is considered "District of Columbia taxable income,"
but it is likely that at least some portion of the income attributable to the
Properties located in the District of Columbia will be subject to the District
of Columbia tax. To the extent Carr Realty, L.P. is required to pay the
District of Columbia unincorporated business income tax, the cash available for
distribution to the Company and, therefore, to its stockholders as dividends
will be reduced accordingly. This tax would not apply if the Company were to
own and operate its assets directly, rather than through Carr Realty, L.P.;
however, the Company's ability to eliminate Carr Realty, L.P. and thus own
directly the assets currently owned by Carr Realty, L.P. is severely limited.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell Securities in or through underwriters for public
offer and sale by them, and also may sell Securities offered hereby to
investors directly or through agents. Any such underwriter or agent involved
in the offer and sale of the Securities will be named in the applicable
Prospectus Supplement.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the
time of sale or at negotiated prices. The Company may also offer and sell the
Securities in exchange for one or more of its then outstanding issues of debt
or convertible debt securities. The Company also may, from time to time,
authorize underwriters acting as the Company's agents to offer and sell
Securities upon terms and conditions set forth in the applicable Prospectus
Supplement. In connection with the sale of the Securities, underwriters may be
deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements to be entered into with
the Company, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
at the public offering price set forth in such Prospectus Supplement pursuant
to delayed delivery contracts ("Contracts") providing for payment and delivery
on the date or dates stated in such Prospectus Supplement. Each Contract will
be for an amount not less than, and the aggregate principal amount of
Securities sold pursuant to Contracts shall be not less nor more than, the
respective amounts stated in the applicable Prospectus Supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
will in all cases be subject to the approval of the Company.
-36-
<PAGE> 39
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Securities covered by its Contracts shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject, and (ii) if the Securities are being sold
to underwriters, the Company shall have sold to such underwriters the total
principal amount of the Securities less the principal amount thereof covered by
Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
Subsidiaries in the ordinary course of business.
PARTICIPATION RIGHTS
In conjunction with the U.S. Realty Transaction, so long as U.S. Realty
owns at least 25% of the outstanding Common Stock of the Company on a fully
diluted basis, U.S. Realty will be entitled (except in certain limited
circumstances), upon compliance with certain specified conditions, to a
participation right to purchase or subscribe for, either as part of such
issuance or in a concurrent issuance, a total number of shares of Common Stock
or Preferred Stock, as the case may be, equal to up to 30% (or 35% in certain
circumstances) of the total number of shares or of Common Stock or Preferred
Stock, as applicable, proposed to be issued by the Company pursuant hereto. All
purchases pursuant to such participation rights will be at the same price and
on the same terms and conditions as are applicable to other purchasers
hereunder. The Company also may permit U.S. Realty to purchase additional
shares of Common Stock if approved by the Board.
LEGAL MATTERS
The legality of the Debt Securities, the Preferred Stock, the Common Stock
and the Common Stock Warrants offered hereby will be passed upon for the
Company by Hogan & Hartson L.L.P., Washington, D.C. Certain federal tax
matters will be passed upon for the Company by Hogan & Hartson L.L.P.,
Washington, D.C.
EXPERTS
The consolidated financial statements and financial statement schedule of
the Company and the combined financial statements of the Carr Group, each
incorporated herein by reference, have been incorporated in reliance upon the
reports of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected at the Public Reference Section maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and the
following regional offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. In addition, the Company's Common Stock are
listed on the New York Stock Exchange and such reports, proxy statements and
other information concerning the Company can be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
-37-
<PAGE> 40
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement"), of which this Prospectus is a part, under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other documents are not necessarily complete, and in each instance, reference
is made to the copy of such contract or documents filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the Securities, reference is hereby made to the
Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1995;
2. The Company's Current Report on Form 8-K dated March 29, 1996 and
filed with the Commission on April 10, 1996 pursuant to the Exchange Act, and a
Form 8-K/A related thereto and filed with the Commission on May 14, 1996,
relating to the purchase of AT&T Center located in Alameda County, California;
3. The Company's Current Report on Form 8-K dated April 30, 1996 and
filed with the Commission on May 16, 1996 pursuant to the Exchange Act,
relating to the closing of the U.S. Realty Transaction;
4. The Company's Current Report on Form 8-K dated May 24, 1996 and filed
with the Commission on May 24, 1996 pursuant to the Exchange Act, related to
certain pro forma financial information; and
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996.
All documents filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to termination
of the offering of all Securities to which this Prospectus relates shall be
deemed to be incorporated by reference in this Prospectus and shall be part
hereof from the date of filing of such document.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus (in the case of a statement in a previously filed
document incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of
Securities or in any other subsequently filed document that is also
incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus or any accompanying Prospectus Supplement. Subject to the
foregoing, all information appearing in this Prospectus and each accompanying
Prospectus Supplement is qualified in its entirety by the information appearing
in the documents incorporated by reference.
-38-
<PAGE> 41
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon their
written or oral request, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference in such documents).
Written requests for such copies should be addressed to Secretary, CarrAmerica
Realty Corporation, 1700 Pennsylvania Ave., N.W., Washington, D.C. 20006,
telephone number (202) 624-7500.
-39-
<PAGE> 42
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses payable
by the Company in connection with the issuance and distribution of the
securities being registered:
<TABLE>
<S> <C>
Registration Fee . . . . . . . . . . . . $206,897
Printing and Duplicating Expenses . . . *
Legal Fees and Expenses . . . . . . . . *
Accounting Fees and Expenses . . . . . . *
Blue Sky Fees and Expenses . . . . . . . *
Miscellaneous . . . . . . . . . . . . . *
Total . . . . . . . . . . . . . $ *
================
</TABLE>
---------------------
* To be supplied by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's officers and directors are and will be indemnified under
Maryland and Delaware law, the charter and by-laws of the Company, the
partnership agreement of Carr Realty, L.P. and the partnership agreement of
CarrAmerica Realty, L.P.
The charter and by-laws of the Company require that the Company shall, to
the fullest extent permitted by Section 2-418 of the Maryland General
Corporation Law (the "MGCL") as in effect from time to time, indemnify any
person who is or was, or is the personal representative of a deceased person
who was, a director or officer of the Company against any judgments, penalties,
fines, settlements and reasonable expenses and any other liabilities; provided,
that, unless applicable law otherwise requires, indemnification shall be
contingent upon a determination, by the Board by a majority vote of a quorum
consisting of directors not, at the time, parties to the proceeding, or, if
such a quorum cannot be obtained, then by a majority vote of a committee of the
Board consisting solely of two or more directors not, at the time, parties to
such proceeding and who were duly designated to act in the matter by a majority
vote of the full Board in which the designated directors who are parties may
participate or by special legal counsel selected by and if directed by the
Board as set forth above, that indemnification is proper in the circumstances
because such director, officer, employee, or agent has met the applicable
standard of conduct prescribed by Section 2-418(b) of the MGCL.
Under Maryland law, a corporation formed in Maryland is permitted to
limit, by provision in its charter, the liability of directors and officers so
that no director or officer of the Company shall be liable to the Company or to
any shareholder for money damages except to the extent that (i) the director or
officer actually received an improper benefit in money, property or services,
for the amount of the benefit or profit in money, property or services actually
received, or (ii) a judgment or other final adjudication adverse to the
director or officer is entered in a proceeding based on a finding in a
proceeding that the director's or officer's action was the result of active and
deliberate dishonesty and was material to the cause of action adjudicated in
the proceeding.
The partnership agreements of Carr Realty, L.P. and CarrAmerica Realty,
L.P. also provide for indemnification of the Company and their officers and
directors against any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or
II-1
<PAGE> 43
proceedings, civil, criminal, administrative or investigative, that relate to
the operations of the partnership as set forth in the partnership agreements in
which any indemnitee may be involved, or is threatened to be involved, unless
it is established that (i) the act or mission of the indemnitee was material to
the matter giving rise to the proceeding and either was committed in bad faith
or was the result of active and deliberate dishonesty, (ii) the indemnitee
actually received an improper personal benefit in money, property or services,
or (iii) in the case of a criminal proceeding, the indemnitee had cause to
believe that the act or omission was unlawful. The termination of any
proceeding by judgment, order or settlement does not create a presumption that
the indemnitee did not meet the requisite standard of conduct set forth in the
respective partnership agreement section on indemnification. The termination
of any proceeding by conviction or upon a plea of nolo contendere or its
equivalent, or an entry of an order of probation prior to judgment creates a
rebuttable presumption that the indemnitee acted in a manner contrary to that
specified in the indemnification section of the partnership agreements. Any
indemnification pursuant to one of the partnership agreements may only be made
out of the assets of that respective partnership.
Item 16. Exhibits
3.1 * - Articles of Amendment and Restatement of
Incorporation of the Company
3.2 * - By-laws of the Company
4.1 ** - Form of Indenture between the Company and Trustee
5.1 ** - Opinion of Hogan & Hartson L.L.P.
8.1 ** - Opinion of Hogan & Hartson L.L.P. regarding
certain tax matters
12.1 ** - Computation of Ratio of Earnings to Fixed Charges
23.1 - Consent of KMPG Peat Marwick, L.L.P.
23.2 ** - Consent of Hogan & Hartson L.L.P. (included in
Exhibit 5)
23.3 ** - Consent of Hogan & Hartson L.L.P. (included in
Exhibit 8.1)
24.1 - Powers of Attorney
25.1 ** - Statement of Eligibility of Trustee on Form T-1
-----------------
* Incorporated by reference to the same numbered exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
** To be filed by amendment.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
II-2
<PAGE> 44
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) above do not apply
if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the Offered
Securities offered herein, and the offering of such Offered Securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the Offered Securities being registered which remain
unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the Offered Securities offered therein, and the offering of such
Offered Securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to existing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 45
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Washington, D.C., on May 24, 1996.
CARRAMERICA REALTY
CORPORATION,
a Maryland corporation
By: /s/ OLIVER T. CARR, JR.
--------------------------
Oliver T. Carr
Chairman of the Board of
Directors, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
below on May 23, 1996:
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
* Chairman of the Board, Chief Executive
-------------------------------- Officer and Director (principal executive
Oliver T. Carr, Jr. officer)
* President, Chief Operating Officer and
-------------------------------- Director
Thomas A. Carr
* Director
--------------------------------
Andrew F. Brimmer
* Director
--------------------------------
George R. Puskar
* Director
--------------------------------
Robert O. Carr
* Director
--------------------------------
A. James Clark
</TABLE>
II-4
<PAGE> 46
<TABLE>
<S> <C>
* Director
--------------------------------
Douglas T. Healy
* Director
--------------------------------
Wesley S. Williams
* Director
--------------------------------
William D. Sanders
* Director
--------------------------------
Anthony R. Manno, Jr.
*By: /s/ ANDREA F. BRADLEY
----------------------------
Andrea F. Bradley
As Attorney-in-Fact
(See Exhibit 24.1)
</TABLE>
II-5
<PAGE> 47
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description of Exhibit Numbered Page
- ------ ---------------------- -------------
<S> <C>
3.1 * - Articles of Incorporation of the Company
3.2 * - By-laws of the Company
4.1 ** - Form of Indenture between the Company and the
Trustee
5.1 ** - Opinion of Hogan & Hartson L.L.P.
8.1 ** - Opinion of Hogan & Hartson L.L.P. regarding certain
tax matters
12.1 ** - Computation of Ratios of Earnings to Fixed Charges
23.1 - Consent of KMPG Peat Marwick, L.L.P.
23.2 ** - Consent of Hogan & Hartson L.L.P. (included in
Exhibit 5)
23.3 ** - Consent of Hogan & Hartson L.L.P. (included in
Exhibit 8.1)
24.1 - Powers of Attorney
25.1 ** - Statement of Eligibility of Trustee on Form T-1
</TABLE>
-------------------
* Incorporated by reference to the same numbered exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as filed with the Commission on April 1,
1996.
** To be filed by amendment.
II-6
<PAGE> 1
EXHIBIT 23.1
[KPMG PEAT MARWICK LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
CarrAmerica Realty Corporation:
We consent to incorporation by reference in the registration statement dated
May 24, 1996 on Form S-3 of CarrAmerica Realty Corporation of our reports on
the financial statements and related schedule of CarrAmerica Realty Corporation
and the financial statements of the Carr Group, which reports appear in the
December 31, 1995 annual report on Form 10-K of CarrAmerica Realty Corporation
and we consent to the reference to our firm under the heading "Experts" in the
registration statement.
/s/ KPMG PEAT MARWICK LLP
Washington, D.C.
May 24, 1996
<PAGE> 1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 20, 1996
/s/ Anthony R. Manno, Jr.
-------------------------
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 20, 1996
/s/ A. James Clark
------------------
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 21, 1996
/s/ Thomas A. Carr
------------------
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 20, 1996
/s/ George R. Puskar
--------------------
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 21, 1996
/s/ Robert O. Carr
------------------
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 17, 1996
/s/ Oliver T. Carr, Jr.
-----------------------
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 17, 1996
/s/ Wesley S. Williams, Jr.
---------------------------
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 17, 1996
/s/ Andrew F. Brimmer
---------------------
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 20, 1996
/s/ Douglas T. Healy
--------------------
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Thomas A. Carr and Brian K.
Fields, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, to execute and deliver in the undersigned's name
and on the undersigned's behalf a Registration Statement on Form S-3, any
additional registration statement relating to the foregoing and filed pursuant
to Rule 462 under the Securities Act of 1933, as amended (the "Act"), and any
and all amendments thereto (including post-effective amendments), and to file
the same, with all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and to execute, deliver and file any
other documents and instruments in the undersigned's name or on the
undersigned's behalf which said attorneys-in-fact and agents, or either of
them, may determine to be necessary or advisable to comply with the Act and any
rules or regulations promulgated thereunder, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person; and the undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents, or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of the power of
attorney granted hereby.
DATED: May 20, 1996
/s/ William D. Sanders
----------------------
