<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
OHIO
(State or other jurisdiction of incorporation or organization)
<CAPTION>
OHIO 34-1723097
<S> <C>
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
34555 CHAGRIN BLVD.
MORELAND HILLS, OHIO 44022
(216) 247-4700
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------
SCOTT A. WOLSTEIN, PRESIDENT
DEVELOPERS DIVERSIFIED REALTY CORPORATION
34555 CHAGRIN BLVD.
MORELAND HILLS, OHIO 44022
(216) 247-4700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ALBERT T. ADAMS, ESQ.
DAVID A. BRUSCINO, ESQ.
BAKER & HOSTETLER
3200 NATIONAL CITY CENTER
1900 EAST NINTH STREET
CLEVELAND, OHIO 44114
(216) 621-0200
<CAPTION>
ALBERT T. ADAMS, ESQ. DOUGLAS A. SGARRO, ESQ.
BAKER & HOSTETLER ONE WORLD TRADE CENTER
3200 NATIONAL CITY CENTER 58TH FLOOR
1900 EAST NINTH STREET NEW YORK, NEW YORK 10048
CLEVELAND, OHIO 44114 (212) 839-5300
(216) 621-0200
<CAPTION>
DAVID A. BRUSCINO, ESQ. BROWN & WOOD
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
<CAPTION>
TITLE OF EACH PROPOSED MAXIMUM
CLASS OF SECURITIES AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED(1) PRICE(2)(3) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
Debt Securities.....................................................................
Preferred Shares, without par value(4)..............................................
Depositary Shares representing Preferred Shares, without par value(4)(5)............ $314,384,175 $108,408.34(7)(8)
Common Shares, without par value(6).................................................
Common Shares Warrants..............................................................
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Offered Securities registered hereunder may be sold separately, together or
as units with other Offered Securities registered hereunder.
(2) In U.S. Dollars or the equivalent thereof denominated in one or more foreign
currencies or units of two or more foreign currencies or composite
currencies (such as European Currency Units).
(3) Estimated solely for purposes of calculating the registration fee. No
separate consideration will be received for Common Shares or Preferred
Shares that are issued upon conversion of Debt Securities, Preferred Shares
or Depositary Shares registered hereunder as the case may be. The aggregate
maximum offering price of all Offered Securities issued pursuant to this
Registration Statement will not exceed $314,384,175.
(4) Such indeterminate number of Preferred Shares and Depositary Shares
representing Preferred Shares as may from time to time be issued at
indeterminate prices or upon conversion of Debt Securities. "Preferred
Shares" include (i) Class A Cumulative Preferred Shares, without par value,
(ii) Class B Cumulative Preferred Shares, without par value, (iii) Class C
Cumulative Preferred Shares, without par value, (iv) Class D Cumulative
Preferred Shares, without par value, (v) Class E Cumulative Preferred
Shares, without par value, and (vi) Noncumulative Preferred Shares, without
par value.
(5) To be represented by Depositary Receipts representing an interest in all or
a specified portion of a Preferred Share.
(6) Such indeterminate number of Common Shares as may from time to time be
issued at indeterminate prices or upon conversion of Debt Securities,
Preferred Shares or Depositary Shares registered hereunder or upon exercise
of the Common Share Warrants registered hereunder, as the case may be.
(7) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
(8) The amount of the registration fee does not include $29,523 which has
previously been paid to the Commission for registration fees relating to
$85,615,825 aggregate principal amount of securities registered pursuant to
Registration Statement Nos. 33-90182 and 33-94182 and unissued as of the
date hereof.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
IN ACCORDANCE WITH RULE 429, THE PROSPECTUS CONTAINED IN THIS REGISTRATION
STATEMENT ALSO RELATES TO THE COMPANY'S REGISTRATION STATEMENTS ON FORM S-3 (NO.
33-90182) AND (NO. 33-94182) FILED WITH THE SECURITIES AND EXCHANGE AND
COMMISSION ON MARCH 9, 1995, AND JUNE 30, 1995, RESPECTIVELY.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
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.
PROSPECTUS
SUBJECT TO COMPLETION
JUNE 7, 1996
DEVELOPERS DIVERSIFIED REALTY CORPORATION
$400,000,000
DEBT SECURITIES, PREFERRED SHARES, DEPOSITARY SHARES, COMMON SHARES AND COMMON
SHARE WARRANTS
Developers Diversified Realty Corporation (the "Company") may from time to
time offer in one or more series (i) its unsecured debt securities (the "Debt
Securities"), which may be senior debt securities ("Senior Securities") or
subordinated debt securities ("Subordinated Securities"), (ii) whole or
fractional Preferred Shares (collectively, "Preferred Shares"), (iii) Preferred
Shares represented by depositary shares ("Depositary Shares"), (iv) common
shares, without par value ("Common Shares"), or (v) warrants to purchase Common
Shares ("Common Share Warrants"), with an aggregate public offering price of up
to $400,000,000, on terms to be determined at the time or times of offering. The
Debt Securities, Preferred Shares, Depositary Shares, Common Shares and Common
Share Warrants (collectively, the "Offered Securities") may be offered,
separately or together, in separate classes or series, in amounts, at prices and
on terms to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, when 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, terms for redemption at the option of the Company or
repayment at the option of the holder thereof, terms for sinking fund payments,
terms for conversion into Preferred Shares or Common Shares, and any public
offering price; (ii) in the case of Preferred Shares, the specific class,
series, title and stated value, any dividend, liquidation, redemption,
conversion, voting and other rights, and any initial public offering price;
(iii) in the case of Depositary Shares, the whole or fractional Preferred Shares
represented by each such Depositary Share; (iv) in the case of Common Shares,
any initial public offering price; and (v) in the case of Common Share Warrants,
the duration, offering price, exercise price and detachability features. In
addition, such specific terms may include limitations on direct or beneficial
ownership and restrictions on transfer of the Offered Securities, in each case
as may be appropriate to preserve the status of the Company as a real estate
investment trust ("REIT") for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, when
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by that Prospectus Supplement.
The Offered 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 Offered
Securities, their names and any applicable purchase price, fee, commission or
discount arrangement between or among them will be set forth in or will be
calculable from the information set forth in the applicable Prospectus
Supplement. No Offered Securities may be sold without delivery of the applicable
Prospectus Supplement describing the method and terms of the offering of those
Offered Securities. See "Plan of Distribution" for possible indemnification
arrangements with underwriters, dealers and agents.
------------------------
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.
------------------------
, 1996
<PAGE> 3
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR AN APPLICABLE PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER,
DEALER OR AGENT. THIS PROSPECTUS AND ANY APPLICABLE PROSPECTUS SUPPLEMENT DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
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, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement, the exhibits and schedules forming a part thereof and the reports,
proxy statements and other information filed by the Company with the Commission
in accordance with the Exchange Act can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. 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
Shares are listed on the New York Stock Exchange and similar information
concerning the Company can be inspected and copied at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement (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
Offered Securities. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain portions of which have been omitted
as permitted by the rules and regulations of the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the Offered 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 with the
Commission and are incorporated herein by reference:
a. Annual Report on Form 10-K for the fiscal year ended December 31,
1995;
b. The description of the Company's Common Shares contained in the
Company's Registration Statement on Form 8-A dated January 26, 1993;
c. Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1996;
d. Current Report on Form 8-K dated May 8, 1995;
e. Current Report on Form 8-K dated November 3, 1995;
f. Current Report on Form 8-K dated December 1, 1995; and
g. Current Report on Form 8-K dated May 31, 1996.
2
<PAGE> 4
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Offered Securities shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the date
of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom this Prospectus has been delivered, upon the written or oral request of
such person, a copy of any and all documents incorporated by reference in this
Prospectus (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to Developers Diversified Realty Corporation, 34555
Chagrin Boulevard, Moreland Hills, Ohio 44022, Attn: Joan U. Allgood, Vice
President and General Counsel, telephone number (216) 247-4700.
THE COMPANY
The Company, a self-administered and self-managed real estate investment
trust, was formed in November 1992 by the principals of the affiliates
comprising the Developers Diversified Group ("DDG") to continue the business of
DDG by acquiring, developing, redeveloping, owning, leasing and managing
shopping centers and business centers. The Company believes that its portfolio
of shopping center properties is one of the largest (measured by total GLA)
currently held by any publicly traded REIT. The Company completed its initial
public offering of its Common Shares in February 1993 (the "IPO"). The Company's
executive offices are located at 34555 Chagrin Boulevard, Moreland Hills, Ohio
44022, and its telephone number is (216) 247-4700.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Offered Securities
for general corporate purposes, which may include the acquisition of properties
(including using the net proceeds for possible portfolio or asset acquisitions
or in business combinations) as suitable opportunities arise, the expansion and
improvement of certain properties in the Company's portfolio and the repayment
of certain indebtedness.
DESCRIPTION OF DEBT SECURITIES
The Senior Securities will be issued under an Indenture dated as of May 1,
1994, as amended or supplemented from time to time (the "Senior Indenture"),
between the Company and National City Bank, as Trustee. The Subordinated
Securities are to be issued under an Indenture dated as of May 1, 1994, as
amended or supplemented from time to time (the "Subordinated Indenture"),
between the Company and Chemical Bank, as Trustee. The Senior Indenture and the
Subordinated Indenture are sometimes referred to herein collectively as the
"Indentures" and each individually as an "Indenture."
The Indentures have been incorporated by reference as exhibits to the
Registration Statement of which this Prospectus is a part and are available for
inspection at the respective corporate trust offices of the Trustee as follows:
(i) with respect to National City Bank, 1900 East Ninth Street, Corporate Trust
Division, Cleveland, Ohio 44114, and (ii) with respect to Chemical Bank, 450
West 33rd Street, New York, New York 10001-2697. The Indentures are subject to,
and are governed by, the Trust Indenture Act of 1939, as amended. The statements
made hereunder relating to the Indentures and the Debt Securities to be issued
thereunder are summaries of certain provisions thereof and do not purport to be
complete and are subject to,
3
<PAGE> 5
and are qualified in their entirety by reference to, all provisions of the
Indentures and such Debt Securities. All section references appearing in this
section "Description of Debt Securities" are to sections of the applicable
Indenture, and capitalized terms used but not defined herein shall have the
respective meanings set forth in the applicable Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company.
Each Indenture provides that the Debt Securities issued thereunder may be issued
without limit as to aggregate principal amount, in one or more series, in each
case as established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of the Company or as established in one or
more indentures supplemental to the applicable Indenture. All Debt Securities of
one series need not be issued at the same time and, unless otherwise provided, a
series may be reopened, without the consent of the Holders of the Debt
Securities of such series, for issuances of additional Debt Securities of such
series (Section 301 of the Indentures). Any Trustee under either Indenture may
resign or be removed with respect to one or more series of Debt Securities
issued under such Indenture, and a successor Trustee may be appointed to act
with respect to such series.
Reference is made to each Prospectus Supplement for the specific terms of
the series of Debt Securities being offered thereby, including:
(1) the title of such Debt 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, or (if applicable) the portion of the
principal amount of such Debt Securities which is convertible into Common
Shares or other equity securities of the Company, or the method by which
any such portion shall be determined;
(4) if such Debt Securities are convertible, any limitation on the
ownership or transferability of the Common Shares or other equity
securities of the Company into which such Debt Securities are convertible
in connection with the preservation of the Company's status as a REIT;
(5) the date or dates, or the method for determining the 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 the date or
dates, from which any such interest will accrue, the Interest Payment Dates
on which any such interest will be payable, the Regular Record Dates for
such Interest Payment Dates, or the method by which such Regular Record
Dates shall be determined, the Person 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)
or interest, if any, on such Debt Securities will be payable, such Debt
Securities may be surrendered for conversion or registration of transfer or
exchange, and notices or demands to or upon the Company in respect of such
Debt Securities and the applicable Indenture may be served;
(9) the period or periods within which, the price or prices at which,
and the terms and conditions upon which, such Debt Securities may be
redeemed, as a 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
4
<PAGE> 6
periods within which, the price or prices at which and the terms and
conditions upon which such Debt Securities will be redeemed, repaid or
purchased, as a 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;
(13) any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to the Events of Default or covenants set
forth in the applicable Indenture;
(14) whether such Debt Securities will be issued in certificated or
book-entry form;
(15) whether such Debt Securities will be in registered or bearer form
or both and, if and to the extent in registered form, the denominations
thereof if other than $1,000 and any integral multiple thereof and, if and
to the extent 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 XIV of the applicable Indenture;
(17) the terms, if any, upon which such Debt Securities may be
convertible into Common Shares or other equity securities of the Company
(and the class thereof) and the terms and conditions upon which such
conversion will be effected, including, without limitation, the initial
conversion price or rate and the conversion period;
(18) whether and under what circumstances the Company will pay
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
(19) any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture.
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"). Any material U.S. federal income tax,
accounting and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Except as hereinafter set forth under the caption "Certain
Covenants -- Limitation on Incurrence of Debt," and "-- Maintenance of
Unencumbered Real Estate Assets," which relates solely to the Senior Indenture
and the Senior Securities issued thereunder, neither Indenture contains any
provision that would limit the ability of the Company to incur indebtedness or
that would afford Holders of Debt Securities protection in a highly leveraged or
similar action involving the Company or in the event of a change of control of
the Company. However, certain restrictions on ownership and transfers of the
Company's Common Shares and the Company's other equity securities designed to
preserve its status as a REIT may act to prevent or hinder a change of control.
See "Description of Common Shares," "Description of Preferred Shares" and
"Description of Depositary Shares." Reference is made to the applicable
Prospectus Supplement for information with respect to any deletion from,
modification of or addition to the Events of Default or covenants of the Company
that are described below, including any addition of a covenant or other
provision providing event risk or similar protection.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302 of the Indentures).
5
<PAGE> 7
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at the corporate trust office of the applicable Trustee as
follows: (i) with respect to National City Bank, 120 Broadway, 33rd Floor, New
York, New York 10271, and (ii) with respect to Chemical Bank, 450 West 33rd
Street, New York, New York 10001-2697, provided that, at the option of the
Company, payment of interest may be made by check mailed to the address of the
Person entitled thereto as it appears in the Security Register or by wire
transfer of funds to such Person at an account maintained within the United
States (Sections 301, 305, 306, 307 and 1002 of the Indentures).
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
applicable Trustee, notice of which shall be given to the Holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be paid
at any time in any other lawful manner, all as more completely described in the
applicable Indenture (Section 307 of the Indentures).
Subject to certain limitations applicable to 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. In
addition, subject to certain limitations applicable to Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer 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 (Section 305 of the Indentures). If the
applicable Prospectus Supplement refers to any transfer agent (in addition to
the Trustee) initially designated by the Company with respect to any series of
Debt Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location at 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 of the Indentures).
Neither the Company nor any Trustee will be required (i) to 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) to 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) to issue, register the transfer of or exchange any Debt Security
which has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid (Section 305 of the
Indentures).
MERGER, CONSOLIDATION OR SALE
Each Indenture provides that the Company may consolidate with, or sell,
lease or convey all or substantially all of its assets to, or merge with or
into, any other corporation, provided that (i) either the Company must be the
continuing corporation, or the successor corporation (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 must expressly assume payment of the
principal of (and premium, if any), and interest on, all of the outstanding Debt
Securities and the due and punctual performance and observance of all of the
covenants and conditions contained in the applicable Indenture; (ii) immediately
after giving effect to such transaction and treating any indebtedness which
becomes an obligation of the Company or any Subsidiary as a result thereof as
having been incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default under the applicable Indenture, and no event
which, after notice or the lapse of time, or both, would become such an Event of
Default, shall have occurred and be continuing, and (iii) an officer's
certificate and
6
<PAGE> 8
legal opinion concerning such conditions shall be delivered to the applicable
Trustee (Sections 801 and 803 of the Indentures).
CERTAIN COVENANTS
The Senior Indenture contains the following covenants:
Limitation on Incurrence of Debt. The Company will not, and will not
permit any Subsidiary to, incur any Debt (as defined below) if, immediately
after giving effect to the incurrence of such additional Debt, the aggregate
principal amount of all outstanding Debt of the Company and its Subsidiaries on
a consolidated basis determined in accordance with generally accepted accounting
principles is greater than 65% of the sum of (i) the Company's Undepreciated
Real Estate Assets (as defined below) as of the end of the calendar quarter
covered in the Company's Annual Report on Form 10-K or Quarterly Report on Form
10-Q, as the case may be, most recently filed with the Commission (or, if such
filing is not permitted under the Exchange Act, with the applicable Trustee)
prior to the incurrence of such additional Debt and (ii) the purchase price of
all real estate assets acquired by the Company or any Subsidiary since the end
of such calendar quarter, including those obtained in connection with the
incurrence of such additional Debt (Section 1004 of the Senior Indenture).
In addition to the foregoing limitation on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt if
Consolidated Income Available for Debt Service (as defined below) for any 12
consecutive calendar months within the 15 calendar months immediately preceding
the date on which such additional Debt is to be incurred shall have been less
than 1.5 times the Maximum Annual Service Charge (as defined below) on the Debt
of the Company and all Subsidiaries to be outstanding immediately after the
incurring of such additional Debt (Section 1004 of the Senior Indenture).
Restrictions on Dividends and Other Distributions. The Company will not,
in respect of any shares of any class of its capital stock, (i) declare or pay
any dividends (other than dividends payable in capital stock of the Company)
thereon, (ii) apply any of its property or assets to the purchase, redemption or
other acquisition or retirement thereof, (iii) set apart any sum for the
purchase, redemption or other acquisition or retirement thereof or (iv) make any
other distribution thereon, by reduction of capital or otherwise if, immediately
after such declaration or other such action, the aggregate of all such
declarations and other actions since the date on which the Indenture was
originally executed shall exceed the sum of (a) Funds from Operations (as
defined below) from December 31, 1993 until the end of the latest calendar
quarter covered in the Company's Annual Report on Form 10-K or Quarterly Report
on Form 10-Q, as the case may be, most recently filed with the Commission (or,
if such filing is not permitted under the Exchange Act, with the applicable
Trustee) prior to such declaration or other action and (b) $20,000,000;
provided, however, that the foregoing limitation does not apply to any
declaration or other action referred to above which is necessary to maintain the
Company's status as a REIT under the Internal Revenue Code of 1986, as amended
(the "Code"), if the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries at such time is less than 65% of the Company's
Undepreciated Real Estate Assets as of the end of the latest calendar quarter
covered in the Company's Annual Report on Form 10-K or Quarterly Report on Form
10-Q, as the case may be, most recently filed with the Commission (or, if such
filing is not permitted under the Exchange Act, with the applicable Trustee)
prior to such declaration or other action (Section 1005 of the Senior
Indenture).
Notwithstanding the provisions described in the immediately preceding
paragraph, the Company will not be prohibited from making the payment of any
dividend within 30 days after the declaration thereof if at the date of
declaration such payment would have complied with those provisions (Section 1005
of the Senior Indenture).
Existence. Except as permitted under the provisions of the Senior
Indenture described in "Merger, Consolidation or Sale," the Company must do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, rights (charter and statutory) and franchises;
provided, however, that the Company will not be required to preserve any right
or franchise if it determines that the preservation thereof is no longer
desirable in the conduct of its business and that the loss thereof is not
disadvantageous in any material respect to the Holders of the Senior Securities
(Section 1006 of the Senior Indenture).
7
<PAGE> 9
Maintenance of Properties. The Company must cause all of its 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 must 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;
provided, however, that the Company and its Subsidiaries will not be prevented
from selling or otherwise disposing for value its properties in the ordinary
course of business (Section 1007 of the Senior Indenture).
Insurance. The Company will, and will cause each of its Subsidiaries to,
keep all of its respective insurable properties insured against loss or damage
at least equal to their then full insurable value with insurers of recognized
responsibility and having a rating of at least A:VIII in Best's Key Rating Guide
(Section 1008 of the Senior Indenture).
Payment of Taxes and Other Claims. The Company must 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 will 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 of the Senior Indenture).
Provision of Financial Information. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act, the Company must, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to such Section 13 or 15(d) (the "Financial
Statements") if the Company were so subject, on or prior to the respective dates
(the "Required Filing Dates") by which the Company would have been so required
so to file such documents. The Company must also in any event (x) within 15 days
after each Required Filing Date (i) transmit by mail to all Holders of Senior
Securities, as their names and addresses appear in the Security Register,
without cost to such Holders, copies of the annual reports and quarterly reports
which the Company would have been required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act if the Company were subject to such
Sections and (ii) file with the applicable Trustee copies of the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
if the Company were subject to such Sections 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 of
Senior Securities (Section 1010 of the Senior Indenture).
Maintenance of Unencumbered Real Estate Assets. The Company must maintain
an Unencumbered Real Estate Asset Value of not less than 135% of the aggregate
principal amount of all outstanding unsecured Debt of the Company and its
Subsidiaries (Section 1011 of the Senior Indenture).
Definitions. As used herein,
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined below) of the Company and its Subsidiaries
(a) plus amounts which have been deducted for (i) interest on Debt of the
Company and its Subsidiaries, (ii) provision for taxes of the Company and its
Subsidiaries based on income, (iii) amortization of debt discount and (iv)
depreciation and amortization and (b) adjusted, as appropriate, for (i) the
effect of any noncash charge resulting from a change in accounting principles in
determining Consolidated Net Income for such period and (ii) the effect of
equity in net income or loss of joint ventures in which the Company owns an
interest to the extent not providing a source of, or requiring a use of, cash,
respectively.
8
<PAGE> 10
"Consolidated Net Income" for any period means the amount of net income (or
loss) of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Debt" of the Company or any Subsidiary means any indebtedness of the
Company or any Subsidiary, whether or not contingent, in respect of (i) borrowed
money or evidenced by bonds, notes, debentures or similar instruments, (ii)
indebtedness secured by any mortgage, pledge, lien, charge, encumbrance or any
security interest existing on property owned by the Company or any Subsidiary,
(iii) letters of credit or amounts representing the balance deferred and unpaid
of the purchase price of any property except any such balance that constitutes
an accrued expense or trade payable or (iv) any lease of property by the Company
or any Subsidiary as lessee which is reflected on the Company's Consolidated
Balance Sheet as a capitalized lease in accordance with generally accepted
accounting principles, in the case of items of indebtedness under (i) through
(iii) above to the extent that any such items (other than letters of credit)
would appear as a liability on the Company's Consolidated Balance Sheet in
accordance with generally accepted accounting principles, and also includes, to
the extent not otherwise included, any obligation of the Company or any
Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise
(other than for purposes of collection in the ordinary course of business),
indebtedness of another person (other than the Company or any Subsidiary) (it
being understood that Debt shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Funds from Operations" for any period means the Consolidated Net Income of
the Company and its Subsidiaries for such period without giving effect to
depreciation and amortization, non-recurring gains and losses from extraordinary
items, gains or losses on sales of real estate, gains or losses on investments
in marketable securities or any provision or benefit for income taxes for such
period, plus funds from operations of unconsolidated joint ventures, all
determined on a consistent basis for such period.
"Maximum Annual Service Charge" as of any date means the maximum amount
which may become payable in a period of 12 consecutive calendar months from such
date for interest on, and required amortization of, Debt. The amount payable for
amortization will include the amount of any sinking fund or other analogous fund
for the retirement of Debt and the amount payable on account of principal of any
such Debt which matures serially other than at the final maturity date of such
Debt.
"Subsidiary" means a corporation a majority of the outstanding voting stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries of the Company. For purposes of this definition, "voting
stock" means stock having voting power for the election of directors, whether at
all times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Undepreciated Real Estate Assets" as of any date means the amount of real
estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization and determined on a consolidated basis in
accordance with generally accepted accounting principles.
"Unencumbered Real Estate Asset Value" as of any date means the sum of (i)
the Company's Undepreciated Real Estate Assets as of the end of the latest
calendar quarter covered in the Company's Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, as the case may be, most recently filed with the
Commission (or, if that filing is not required under the Exchange Act, with the
Trustee) prior to such date, which Undepreciated Real Estate Assets are not
encumbered by any mortgage, lien, charge, pledge, or security interest, and (ii)
the purchase price of any real estate assets that are not encumbered by any
mortgage, lien, charge, pledge, or security interest and were acquired by the
Company or any Subsidiary after the end of such calendar quarter.
The Subordinated Indenture does not contain the covenants described in this
section captioned "Certain Covenants," and does not contain any limitation on
the amount of Debt of any kind which the Company may incur or on the amount of
dividends or other distributions which the Company may pay to its shareholders.
9
<PAGE> 11
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (i) default for
30 days in the payment of any installment of interest on any Debt Security of
such series; (ii) default in the payment of the 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 of any other covenant of the Company
contained in the applicable Indenture (other than a covenant added to such
Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series), continued for 60 days after written notice
as provided in such Indenture; (v) default under any evidence of indebtedness of
the Company or any mortgage, indenture or other instrument under which such
indebtedness is issued or by which such indebtedness is secured which results in
the acceleration of indebtedness in an aggregate principal amount exceeding
$10,000,000, but only if such indebtedness is not discharged or such
acceleration is not rescinded or annulled as provided in the applicable
Indenture; (vi) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee, of the Company or of any
Significant Subsidiary or of the respective property of either and (vii) any
other Event of Default provided with respect to that series of Debt Securities
(Section 501 of the Indentures). The term "Significant Subsidiary" means each
significant subsidiary (as defined in Regulation S-X promulgated under the
Securities Act) of the Company.
If an Event of Default under either Indenture with respect to Debt
Securities of any series issued thereunder at the time Outstanding occurs and is
continuing, then in every such case the applicable Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Debt Securities of that
series may declare the principal amount (or, if the Debt Securities of that
series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount as may be specified in the terms thereof) of all
of the Debt Securities of that series to be due and payable immediately by
written notice thereof to the Company (and to such 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 such Indenture, as the case may be) has been made, the Holders
of not less than a majority in principal amount of Debt Securities of such
series (or of each series of Debt Securities then Outstanding under such
Indenture, as the case may be) may rescind and annul such declaration and its
consequences if (i) the Company shall have deposited with such 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
such Indenture, as the case may be), plus certain fees, expenses, disbursements
and advances of such Trustee and (ii) all Events of Default, other than the
nonpayment of accelerated principal (or specified portion thereof) with respect
to Debt Securities of such series (or of all Debt Securities then Outstanding
under such Indenture, as the case may be) have been cured or waived as provided
in such Indenture (Section 502 of the Indentures). The Indentures also provide
that the Holders of not less than a majority in principal amount of the Debt
Securities of any series (or of each series of 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 provision contained
in such Indenture that cannot be modified or amended without the consent of the
Holder of each Outstanding Debt Security affected thereby (Section 513 of the
Indentures).
Each Indenture provides that the Trustee thereunder is required to give
notice to the Holders of Debt Securities issued thereunder within 90 days of a
default under such Indenture; provided however, that such Trustee may withhold
notice to the Holders of any such 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 the Responsible Officers of such Trustee consider such withholding to
be in the interest of such Holders (Section 601 of the Indentures).
Each Indenture provides that no Holder of Debt Securities of any series
issued thereunder may institute any proceeding, judicial or otherwise, with
respect to such Indenture or for any remedy thereunder, except in the case of
the failure of the applicable Trustee, for 60 days, to act after it has received
a written request to
10
<PAGE> 12
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 reasonable indemnity (Section 507 of the
Indentures). 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 the Debt Securities held by that Holder
at the respective due dates thereof (Section 508 of the Indentures).
Subject to provisions in the applicable Indenture relating to its duties in
case of default, the Trustee thereunder is under no obligation to exercise any
of its rights or powers under such 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 such Trustee reasonable security or
indemnity (Section 602 of the Indentures). The Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of any series
(or of each series of Debt Securities then Outstanding under such 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 such Trustee, or of
exercising any trust or power conferred upon such Trustee. However, such Trustee
may refuse to follow any direction which is in conflict with any law or such
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 of the Indentures).
Within 120 days after the close of each fiscal year, the Company must
deliver to each Trustee under the Indentures a certificate, signed by one of
several specified officers, stating whether 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 1012 of the Senior Indenture and
Section 1004 of the Subordinated Indenture).
MODIFICATION OF THE INDENTURES
Modifications and amendments of either Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities issued thereunder 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, (i) change the Stated Maturity of the principal of, or any
installment of interest (or premium, if any) on, any such Debt Security, (ii)
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, (iii) change the Place of Payment, or the currency or
currencies, for payment of principal of, or premium, if any, or interest on any
such Debt Security, (iv) impair the right to institute suit for the enforcement
of any payment on or with respect to any such Debt Security, (v) reduce the
percentage of Outstanding Debt Securities of any series necessary to modify or
amend the applicable Indenture, to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder or to reduce the quorum
or voting requirements set forth in such Indenture; or (vi) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security
(Section 902 of the Indentures).
The Senior Indenture provides that the Holders of not less than a majority
in principal amount of Outstanding Debt Securities issued thereunder have the
right to waive compliance by the Company with certain covenants in the Senior
Indenture, including those described in the section of this Prospectus captioned
"Certain Covenants" (Section 1014 of the Senior Indenture).
Modifications and amendments of either Indenture may be made by the Company
and the applicable Trustee without the consent of any Holder of Debt Securities
issued thereunder for any of the following purposes: (i) to evidence the
succession of another Person to the Company as obligor under 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 issued thereunder or to surrender any right
or power conferred upon the Company in such Indenture; (iii) to add Events of
Default for the benefit of the Holders of all or any series of Debt Securities
11
<PAGE> 13
issued thereunder; (iv) to add or change any provisions of such Indenture to
facilitate the issuance of, or to liberalize certain terms of, Debt Securities
issued thereunder in bearer form, or to permit or facilitate the issuance of
such Debt Securities in uncertificated form, provided that such action shall not
adversely affect the interests of the Holders of such Debt Securities of any
series in any material respect; (v) to change or eliminate any provision of such
Indenture, provided that any such change or elimination shall become effective
only when there are no Debt Securities Outstanding of any series issued
thereunder created prior thereto which are entitled to the benefit of such
provision; (vi) to secure the Debt Securities issued thereunder; (vii) to
establish the form or terms of Debt Securities of any series issued thereunder,
including the provisions and procedures, if applicable, for the conversion of
such Debt Securities into Common Shares or Preferred Shares of the Company;
(viii) to provide for the acceptance of appointment by a successor Trustee or
facilitate the administration of the trusts under such Indenture by more than
one Trustee; (ix) to cure any ambiguity, defect or inconsistency in such
Indenture, provided that such action shall not adversely affect the interests of
Holders of Debt Securities of any series issued thereunder in any material
respect; or (x) to supplement any of the provisions of such Indenture to the
extent necessary to permit or facilitate defeasance and discharge of any series
of such Debt Securities issued thereunder, provided that such action shall not
adversely affect the interests of the Holders of the Debt Securities of any
series issued thereunder in any material respect (Section 901 of the
Indentures).
Each Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series issued
thereunder have given any request, demand, authorization, direction, notice,
consent or waiver thereunder or whether a quorum is present at a meeting of
Holders of such 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 a 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 Section 301 of such 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 (Section
101).
Each Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series issued thereunder (Section 1501 of the Indentures).
A meeting may 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
given as provided in the applicable Indenture (Section 1502 of the Indentures).
Except for any consent that must be given by the Holder of each Debt Security
affected by certain modifications and amendments of such Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at which
a quorum is present may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided however, that, except as referred to above, any resolution with respect
to any request, demand, authorization, direction, notice, consent, waiver or
other action that may be made, given or taken by the Holders of a specified
percentage which is less than a majority in principal amount of the Outstanding
Debt Securities of a series may be adopted at a meeting or adjourned meeting
duly reconvened at which a quorum is present by the affirmative vote of the
Holders of such specified percentage in principal amount of the Outstanding Debt
Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance with
the applicable 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
12
<PAGE> 14
percentage in principal amount of the Outstanding Debt Securities of such series
will constitute a quorum (Section 1504 of the Indentures).
Notwithstanding the provisions described above, if any action is to be
taken at a meeting of Holders of Debt Securities of any series with respect to
any request, demand, authorization, direction, notice, consent, waiver or other
action that the applicable Indenture expressly provides may be made, given or
taken by the Holders of a specified percentage in principal amount of all
Outstanding Debt Securities affected thereby, or of the Holders of such series
and one or more additional series: (i) there shall be no minimum quorum
requirement for such meeting and (ii) the principal amount of the Outstanding
Debt Securities of such series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other action shall be taken
into account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or taken
under such Indenture (Section 1504 of the Indentures).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to Holders of any series of
Debt Securities that have not already been delivered to the 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 such 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 (Section 401 of the Indentures).
Each Indenture provides that, if the provisions of Article Fourteen thereof
(relating to defeasance and covenant defeasance) are made applicable to the Debt
Securities of or within any series issued thereunder pursuant to Section 301 of
such Indenture, the Company may elect either (i) to defease and be discharged
from any and all obligations (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) with respect to such Debt Securities ("defeasance")
(Section 1402 of the Indentures) or (ii) to be released from its obligations
relating to (a) with respect to Senior Securities, the obligations under
Sections 1004 to 1011, inclusive, of the Senior Indenture (being the
restrictions described under the caption "Certain Covenants") and, if provided
pursuant to Section 301 of the Senior Indenture, its obligations with respect to
any other covenant contained in the Senior Indenture, and (b) with respect to
Subordinated Securities, if provided pursuant to Section 301 of the Subordinated
Indenture, its obligations with respect to any covenant contained in the
Subordinated Indenture, and any omission to comply with such obligations shall
not constitute a default or an Event of Default with respect to such Debt
Securities ("covenant defeasance") (Section 1403 of the Indentures), 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 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 may only 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 U.S. federal income tax purposes as
a result of such defeasance or covenant defeasance and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance or covenant defeasance had not
occurred, and such Opinion of Counsel, in the case of defeasance, must refer to
and be based upon a
13
<PAGE> 15
ruling of the Internal Revenue Service or a change in applicable United States
federal income tax law occurring after the date of such Indenture (Section 1404
of the Indentures).
"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 payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the Government Obligation or
the specific payment of interest on or principal of the Government Obligation
evidenced by such depository receipt (Section 101 of the Indentures).
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,
(i) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of the applicable Indenture or the terms of such Debt
Security to receive payment in a currency, currency unit or composite currency
other than that in which such deposit has been made in respect of such Debt
Security, or (ii) 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 shall be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of (and premium, if any) and interest on such Debt Security as they
become due out of the proceeds yielded by converting the amount so deposited in
respect of such Debt Security into the currency, currency unit or composite
currency in which such Debt Security becomes payable as a result of such
election or such cessation of usage based on the applicable market exchange rate
(Section 1405 of the Indentures). "Conversion Event" means the cessation of use
of (a) a currency, currency unit or composite currency both by the government of
the country which issued such currency and for the settlement of actions by a
central bank or other public institution of or within the international banking
community, (b) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (c) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise described 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 (Section 101 of the Indentures).
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 (i) with respect to Senior
Securities, the Event of Default described in clause (iv) under "Events of
Default, Notice and Waiver" with respect to Sections 1004 to 1011, inclusive, of
the Senior Indenture (which Sections would no longer be applicable to such Debt
Securities) or (ii) with respect to all Debt Securities, the Event of Default
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 Event of Default. In any such event, the Company would remain liable
to make payment of such amounts due at the time of acceleration.
14
<PAGE> 16
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.
SENIOR SECURITIES AND SENIOR INDEBTEDNESS
Each series of Senior Securities will constitute Senior Indebtedness (as
described below) and will rank equally with each other series of Senior
Securities and other Senior Indebtedness. All subordinated indebtedness
(including, but not limited to, all Subordinated Securities issued under the
Subordinated Indenture) will be subordinated to the Senior Securities and other
Senior Indebtedness.
Senior Indebtedness is defined in the Subordinated Indenture to mean (i)
the principal of and premium, if any, and unpaid interest on indebtedness for
money borrowed, (ii) purchase money and similar obligations, (iii) obligations
under capital leases, (iv) guarantees, assumptions or purchase commitments
relating to, or other transactions as a result of which the Company is
responsible for the payment of, such indebtedness of others, (v) renewals,
extensions and refunding of any such indebtedness, (vi) interest or obligations
in respect of any such indebtedness accruing after the commencement of any
insolvency or bankruptcy proceedings and (vii) obligations associated with
derivative products such as interest rate and currency exchange contracts,
foreign exchange contracts, commodity contracts, and similar arrangements,
unless, in each case, the instrument by which the Company incurred, assumed or
guaranteed the indebtedness or obligations described in clauses (i) through
(vii) expressly provides that such indebtedness or obligation is subordinate or
junior in right of payment to any other indebtedness or obligations of the
Company.
SUBORDINATION OF SUBORDINATED SECURITIES
Subordinated Indenture. The payment of the principal of (and premium, if
any) and interest on the Subordinated Securities will be subordinated as set
forth in the Subordinated Indenture to the Senior Indebtedness of the Company
whether outstanding on the date of the Subordinated Indenture or thereafter
incurred (Section 1701 of the Subordinated Indenture).
Ranking. No class of Subordinated Securities is subordinated to any other
class of subordinated debt securities. See "Subordination Provisions" below.
Subordination Provisions. In the event (i) of any distribution of assets of
the Company upon any dissolution, winding up, liquidation or reorganization of
the Company, whether in bankruptcy, insolvency, reorganization or receivership
proceeding or upon an assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of the Company or otherwise, except a
distribution in connection with a merger or consolidation or a conveyance or
transfer of all or substantially all of the properties of the Company which
complies with the requirements of Article Eight of the Subordinated Indenture,
or (ii) that a default shall have occurred and be continuing with respect to the
payment of principal of (or premium, if any) or interest on any Senior
Indebtedness, or (iii) that the principal of the Subordinated Securities of any
series issued under the Subordinated Indenture (or in the case of Original Issue
Discount Securities, the portion of the principal amount thereof referred to in
Section 502 of the Subordinated Indenture) shall have been declared due and
payable pursuant to Section 502 of the Subordinated Indenture, and such
declaration shall not have been rescinded and annulled as provided in said
Section 502, then:
(1) in a circumstance described in the foregoing clause (i) or (ii), the
holders of all Senior Indebtedness, and in the circumstance described in the
foregoing clause (iii), the holders of all Senior Indebtedness outstanding at
the time the principal of such Subordinated Securities issued under the
Subordinated Indenture (or in the case of Original Issue Discount Securities,
such portion of the principal amount) shall have been so declared due and
payable, shall first be entitled to receive payment of the full amount due
thereon in respect of principal, premium (if any) and interest, or provision
shall be made for such payment in money or money's worth, before the Holders of
any of the Subordinated Securities are entitled to receive any payment on
account of the principal of (or premium, if any) or interest on the indebtedness
evidenced by the Subordinated Securities;
15
<PAGE> 17
(2) any payment by, or distribution of assets of, the Company of any kind
or character, whether in cash, property or securities (other than certain
subordinated securities of the Company issued in a reorganization or
readjustment), to which the Holder of any of the Subordinated Securities would
be entitled except for the provisions of Article Seventeen of the Subordinated
Indenture shall be paid or delivered by the person making such payment or
distribution directly to the holders of Senior Indebtedness (as provided in
clause (1) above), or on their behalf, ratably according to the aggregate amount
remaining unpaid on account of such Senior Indebtedness, to the extent necessary
to make payment in full of all Senior Indebtedness (as provided in clause (1)
above) remaining unpaid after giving effect to any concurrent payment or
distribution (or provisions therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made to or in respect of the
Holders of the Subordinated Securities; and
(3) in the event that, notwithstanding the foregoing, any payment by, or
distribution of assets of, the Company of any kind or character is received by
the Holders of any of the Subordinated Securities issued under the Subordinated
Indenture before all Senior Indebtedness is paid in full such payment or
distribution shall be paid over to the holders of such Senior Indebtedness or on
their behalf, ratably as aforesaid, for application to the payment of all such
Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall
have been paid in full, after giving effect to any concurrent payment or
distribution (or provisions therefor) to the holders of such Senior
Indebtedness.
By reason of such subordination in favor of the holders of Senior
Indebtedness in the event of insolvency, certain general creditors of the
Company, including holders of Senior Indebtedness, may recover more, ratably,
than the Holders of the Subordinated Securities.
CONVERTIBLE DEBT SECURITIES
The following provisions will apply to Debt Securities that will be
convertible into Common Shares or other equity securities of the Company
("Convertible Debt Securities") unless otherwise described in the Prospectus
Supplement for such Convertible Debt Securities.
The Holder of any Convertible Debt Securities will have the right,
exercisable at any time during the time period specified in the applicable
Prospectus Supplement, unless previously redeemed by the Company, to convert
such Convertible Debt Securities into Common Shares or other equity securities
of the Company at the conversion price or rate for each $1,000 principal amount
of Convertible Debt Securities set forth in such Prospectus Supplement. The
Holder of any Convertible Debt Security may convert a portion thereof which is
$1,000 or any integral multiple of $1,000 (Section 301 of the Senior Indenture
and Section 1602 of the Subordinated Indenture). In the case of Convertible Debt
Securities called for redemption, conversion rights will expire at the close of
business on the date fixed for the redemption specified in the Prospectus
Supplement, except that, in the case of repayment at the option of the
applicable Holder, such right will terminate upon the Company's receipt of
written notice of the exercise of such option (Section 301 of the Senior
Indenture and Section 1602 of the Subordinated Indenture).
In certain events, the conversion price or rate will be subject to
adjustment as contemplated in the applicable Indenture. For Debt Securities
convertible into Common Shares, such events include the issuance of Common
Shares of the Company as a dividend; subdivisions and combinations of Common
Shares; the issuance to all holders of Common Shares of rights or warrants
entitling such holders to subscribe for a purchase of Common Shares at a price
per share less than the current market price per Common Share; and the
distribution to all holders of Common Shares of shares of capital stock of the
Company (other than Common Shares), evidences of indebtedness or assets of the
Company (excluding cash dividends or distributions paid from retained earnings
of the Company or subscription rights or warrants other than those referred to
above). In any of such cases, no adjustment of the conversion price or rate will
be required unless an adjustment would require a cumulative increase or decrease
of at least 1% in such price or rate (Section 301 of the Senior Indenture and
Section 1605 of the Subordinated Indenture). Fractional Common Shares will not
be issued upon conversion, but, in lieu thereof, the Company will pay cash
adjustments (Section 301 of the Senior Indenture and Section 1606 of the
Subordinated Indenture). Unless otherwise specified in the applicable Prospectus
Supplement, Convertible Debt Securities convertible into Common
16
<PAGE> 18
Shares surrendered for conversion between any record date for an interest
payment and the related interest payment date (except such Convertible Debt
Securities called for redemption on a redemption date during such period) must
be accompanied by payment of an amount equal to the interest thereon which the
Holder thereof is entitled to receive (Section 301 of the Senior Indenture and
Section 1604 of the Subordinated Indenture).
To protect the Company's status as a REIT, a person may not own or convert
any Convertible Debt Security if as a result of such ownership or upon such
conversion such person would then be deemed to Beneficially Own (as defined in
the Indenture) more than 5.0% of the outstanding capital stock of the Company
(Section 1602 of the Subordinated Indenture). Common Shares or other equity
securities of the Company that may be acquired upon the conversion of
Convertible Debt Securities directly or constructively held by an investor, but
not Common Shares or other equity securities of the Company issuable with
respect to the conversion of Convertible Debt Securities held by others, are
deemed to be outstanding (a) at the time of purchase of the Convertible Debt
Securities, and (b) prior to the conversion of the Convertible Debt Securities,
for purposes of determining the percentage ownership of Common Shares or other
equity securities of the Company held by such investor. See "Federal Income Tax
Considerations."
The adjustment provisions for Debt Securities convertible into equity
securities of the Company other than Common Shares will be determined at the
time of issuance of such Debt Securities and will be set forth in the applicable
Prospectus Supplement.
Except as set forth in the applicable Prospectus Supplement, any
Convertible Debt Securities called for redemption, unless surrendered for
conversion on or before the close of business on the redemption date, are
subject to being purchased from the Holder of such Convertible Debt Securities
by one or more investment bankers or other purchasers who may agree with the
Company to purchase such Convertible Debt Securities and convert them into
Common Shares or other equity securities of the Company, as the case may be
(Section 1108 of the Indentures).
Reference is made to the sections captioned "Description of Common Shares,"
"Description of Preferred Shares" and "Description of Depositary Shares" for a
general description of securities to be acquired upon the conversion of
Convertible Debt Securities, including a description of certain restrictions on
the ownership of the Common Shares and the Preferred Shares.
THE TRUSTEES
National City Bank serves as Trustee for the Company's Senior Securities
pursuant to the Senior Indenture and serves as Transfer Agent for the Company's
Common Shares. Chemical Bank serves as Trustee for the Company's Subordinated
Securities pursuant to the Subordinated Indenture.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (each, a "Global Security") that will be
deposited with, or on behalf of, a depository identified in the applicable
Prospectus Supplement. Global Securities may be issued in either registered or
bearer form and in either temporary or permanent form. Unless otherwise provided
in such Prospectus Supplement, Debt Securities that are represented by a Global
Security will be issued in denominations of $1,000 or any integral multiple
thereof and will be issued in registered form only, without coupons. Payments of
principal of, premium, if any, and interest on Debt Securities represented by a
Global Security will be made by the Company to the applicable Trustee under the
applicable Indenture, and then forwarded to the depository.
The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company, New York, New York ("DTC"), and
that such Global Securities will be registered in the name of Cede & Co., DTC's
nominee. The Company further anticipates that the following provisions will
apply to the depository arrangements with respect to any such Global Securities.
Any additional or differing terms of the depository arrangements will be
described in the Prospectus Supplement relating to a particular series of Debt
Securities issued in the form of Global Securities.
17
<PAGE> 19
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole Holder of
the Debt Securities represented by such Global Security for all purposes under
the applicable Indenture. Except as described below, owners of beneficial
interests in a Global Security will not be entitled to have Debt Securities
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Debt Securities in certificated
form and will not be considered the owners or Holders thereof under the
applicable Indenture. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in certificated form;
accordingly, such laws may limit the transferability of beneficial interests in
a Global Security.
Unless otherwise specified in the applicable Prospectus Supplement, each
Global Security representing Book-Entry Notes will be exchangeable for
certificated notes only if (i) DTC notifies the Company that it is unwilling or
unable to continue as depository or DTC ceases to be a clearing agency
registered under the Securities Exchange Act of 1934 (if so required by
applicable law or regulation) and, in either case, a successor depository is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such unwillingness, inability or ineligibility, (ii) the
Company in its sole discretion determines that the Global Securities shall be
exchangeable for certificated notes or (iii) there shall have occurred and be
continuing an Event of Default under an Indenture with respect to the Notes and
beneficial owners representing a majority in aggregate principal amount of the
Book-Entry Notes represented by Global Securities advise DTC to cease acting as
depository. Upon any such exchange, owners of a beneficial interest in the
Global Security or Securities representing Book-Entry Notes will be entitled to
physical delivery of individual Debt Securities in certificated form of like
tenor and rank, equal in principal amount to such beneficial interest, and to
have such Debt Securities in certificated form registered in the names of the
beneficial owners, which names shall be provided by DTC's relevant Participants
(as identified by DTC) to the applicable Trustee. Unless otherwise described in
the applicable Prospectus Supplement, Debt Securities so issued in certificated
form will be issued in denominations of $1,000 or any integral multiple thereof,
and will be issued in registered form only, without coupons.
The following is based on information furnished to the Company:
DTC will act as securities depository for the Debt Securities. The Debt
Securities will be issued as fully registered securities registered in the name
of Cede & Co. (DTC's partnership nominee). One fully registered Debt Security
certificate will be issued with respect to each $200 million of principal amount
of the Debt Securities of a series, and an additional certificate will be issued
with respect to any remaining principal amount of such series.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others,
such as securities brokers and dealers, and banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of Debt Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Debt Securities
on DTC's records. The ownership interest of each actual purchaser of each Debt
Security ("Beneficial Owner") is in turn recorded on the Direct and Indirect
Participants' records. A Beneficial Owner does not receive written confirmation
from DTC of its purchase, but is expected to receive a written confirmation
providing details of the transaction, as well as periodic statements
18
<PAGE> 20
of its holdings, from the Direct or Indirect Participant through which such
Beneficial Owner entered into the transaction. Transfers of ownership interests
in Debt Securities are accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners do not receive
certificates representing their ownership interests in Debt Securities, except
in the event that use of the book-entry system for the Debt Securities is
discontinued.
To facilitate subsequent transfers, the Debt Securities are registered in
the name of DTC's partnership nominee, Cede & Co. The deposit of the Debt
Securities with DTC and their registration in the name of Cede & Co. will effect
no change in beneficial ownership. DTC has no knowledge of the actual Beneficial
Owners of the Debt Securities; DTC records reflect only the identity of the
Direct Participants to whose accounts Debt Securities are credited, which may or
may not be the Beneficial Owners. The Participants remain responsible for
keeping account of their holdings on behalf of their customers.
Delivery of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners are governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Neither DTC nor Cede & Co. consents or votes with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus Proxy")
to the issuer as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Debt Securities are credited on the record date (identified
on a list attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Debt Securities
will be made in immediately available funds to DTC. DTC's practice is to credit
Direct Participants' accounts on the payment date in accordance with their
respective holdings as shown on DTC's records unless DTC has reason to believe
that it will not receive payment on the payment date. Payments by Participants
to Beneficial Owners are governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name" and are the responsibility of such
Participant and not of DTC, the applicable Trustee or the Company, subject to
any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal, premium, if any, and interest to DTC is the responsibility
of the Company or the applicable Trustee, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less than
all of the Book-Entry Notes within an issue are being redeemed, DTC's practice
is to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
A Beneficial Owner shall give notice of any option to elect to have its
Book-Entry Notes repaid by the Company, through its Participant, to the
applicable Trustee, and shall effect delivery of such Book-Entry Notes by
causing the Direct Participant to transfer the Participant's interest in the
Global Security or Securities representing such Book-Entry Notes, on DTC's
records, to such Trustee. The requirement for physical delivery of Book-Entry
Notes in connection with a demand for repayment will be deemed satisfied when
the ownership rights in the Global Security or Securities representing such
Book-Entry Notes are transferred by Direct Participants on DTC's records.
DTC may discontinue providing its services as securities depository with
respect to the Debt Securities at any time by giving reasonable notice to the
Company or the applicable Trustee. Under such circumstances, in the event that a
successor securities depository is not appointed, Debt Security certificates are
required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Debt Security certificates will be printed and delivered.
19
<PAGE> 21
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
Unless stated otherwise in the Prospectus Supplement, the underwriters or
agents with respect to a series of Debt Securities issued as Global Securities
will be Direct Participants in DTC.
None of the Company, the applicable Trustee or any applicable paying agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial interests in a Global Security, or
for maintaining, supervising or reviewing any records relating to such
beneficial interest.
DESCRIPTION OF PREFERRED SHARES
The Amended and Restated Articles of Incorporation of the Company (the
"Articles") authorize the issuance of up to (i) 1,500,000 Class A Cumulative
Preferred Shares, without par value (the "Class A Shares"), (ii) 1,500,000 Class
B Cumulative Preferred Shares, without par value (the "Class B Shares"), (iii)
1,500,000 Class C Cumulative Preferred Shares, without par value (the "Class C
Shares"), (iv) 1,500,000 Class D Cumulative Preferred Shares, without par value
(the "Class D Shares"), (v) 1,500,000 Class E Cumulative Preferred Shares,
without par value (the "Class E Shares"), and (vi) 1,500,000 Noncumulative
Preferred Shares, without par value (the "Noncumulative Shares") (the Class A
Shares, the Class B Shares, the Class C Shares, the Class D Shares, the Class E
Shares and the Noncumulative Shares, collectively the "Preferred Shares"). As of
the date of this Prospectus, there are 460,000 9.5% Class A Cumulative
Redeemable Preferred Shares ($250.00 liquidation preference per share), 177,500
9.44% Class B Cumulative Redeemable Preferred Shares ($250.00 liquidation
preference per share) and no Class C Shares, Class D Shares, Class E Shares or
Noncumulative Shares outstanding. The outstanding Preferred Shares are
represented by Depositary Shares. See "Description of Depositary Shares."
The following descriptions of the classes of Preferred Shares set forth
certain general terms and provisions of each class of Preferred Shares to which
any Prospectus Supplement may relate. The statements below describing each class
of Preferred Shares are in all respects subject to and qualified in their
entirety by reference to the applicable provisions of the Articles, which will
be further amended by the Board of Directors in connection with the fixing by
the Board of Directors of certain terms of the Preferred Shares as provided
below.
GENERAL
The Class A Shares, the Class B Shares, the Class C Shares, the Class D
Shares, the Class E Shares and the Noncumulative Shares rank on a parity with
each other and are identical to each other, except (1) that dividends on the
Class A Shares, the Class B Shares, the Class C Shares, the Class D Shares and
the Class E Shares will be cumulative, while dividends on the Noncumulative
Shares will not be cumulative, and (2) in respect of the following matters and
the matters enumerated below that, pursuant to the terms of the Articles and
subject to Ohio law, such matters may be fixed by the Board of Directors with
respect to each series of each class of Preferred Shares prior to the issuance
thereof: (i) the designation of the series which may be by distinguishing
number, letter or title, (ii) the authorized number of shares of the series,
which number the Board of Directors may (except when otherwise provided in the
creation of the series) increase or decrease from time to time before or after
the issuance thereof (but not below the number of shares thereof then
outstanding), (iii) the dividend rate or rates of the series, including the
means by which such rates may be established, (iv) with respect to the Class A
Shares, the Class B Shares, the Class C Shares, the Class D Shares and the Class
E Shares, the date or dates from which dividends shall accrue and be cumulative
and, with respect to all Preferred Shares, the date on which and the period or
periods for which dividends, if declared, shall be payable, including the means
by which such dates and periods may be established, (v) redemption rights and
prices, if any, (vi) the terms and amounts of the sinking fund, if any, (vii)
the amounts payable on shares of the series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company, (viii) whether the shares of the series shall be convertible into
Common Shares or shares of any other class and, if so, the conversion rate or
rates or price or prices, any
20
<PAGE> 22
adjustments thereof and all other terms and conditions upon which such
conversion may be made, and (ix) restrictions on the issuance of shares of the
same or any other class or series.
Reference is made to the Prospectus Supplement relating to the Preferred
Shares offered thereby for specific terms, including:
(1) The class, series and title of such Preferred Shares;
(2) The number of shares of such Preferred Shares offered, the
liquidation preference per share and the offering price of such Preferred
Shares;
(3) The dividend rate or rates, period or periods and payment date or
dates or method of calculation thereof applicable to such Preferred Shares;
(4) The date from which dividends on such Preferred Shares shall
accumulate, if applicable;
(5) The procedures for any auction or remarketing of such Preferred
Shares;
(6) The provision for any sinking fund for such Preferred Shares;
(7) The provision for redemption, if applicable, of such Preferred
Shares;
(8) Any listing of such Preferred Shares on any securities exchange;
(9) Any terms and conditions upon which such Preferred Shares will be
convertible into Common Shares of the Company, including the conversion
price (or manner of calculation thereof);
(10) Whether interests in such Preferred Shares will be represented by
Depositary Shares;
(11) Any other specific terms, preferences, rights, limitations or
restrictions of or on such Preferred Shares;
(12) A discussion of federal income tax considerations applicable to
such Preferred Shares;
(13) The relative ranking and preferences of such Preferred Shares as
to dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company;
(14) Any limitations on issuance of securities ranking senior to or on
a parity with such Preferred Shares as to dividend rights and rights upon
liquidation, dissolution or winding up of the affairs of the Company; and
(15) 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.
The Preferred Shares will, when issued, be fully paid and nonassessable and
will have no preemptive rights.
RANK
All Preferred Shares will, when issued, rank (i) on a parity with all other
Preferred Shares with respect to dividend rights (subject to dividends on
Noncumulative Shares being noncumulative) and rights upon liquidation,
dissolution or winding up of the Company, (ii) senior to all classes of Common
Shares of the Company and to all other equity securities ranking junior to such
Preferred Shares with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company; (iii) 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 Shares with respect
to dividend rights and rights upon liquidation, dissolution or winding up of the
Company; and (iv) junior to all equity securities issued by the Company the
terms of which specifically provide that such equity securities rank senior to
the Preferred Shares, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Company.
21
<PAGE> 23
DIVIDENDS
The holders of each series of each class of Preferred Shares are entitled
to receive, if, when and as declared, out of funds legally available therefor,
dividends in cash at the rate determined for such series and no more, payable on
the dates fixed for such series, in preference to the holders of Common Shares
and of any other class of shares ranking junior to the Preferred Shares. With
respect to each series of Class A Shares, Class B Shares, Class C Shares, Class
D Shares and Class E Shares, such dividends will be cumulative from the dates
fixed for the series. With respect to each series of Noncumulative Preferred
Shares, dividends will not be cumulative (i.e., if the Board of Directors fails
to declare a dividend payable on a dividend payment date on any Noncumulative
Shares, the holders of such series of Noncumulative Shares 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 any dividend for
such period, whether or not dividends on such series of Noncumulative Shares
would be declared to be payable on any future dividend payment date). 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 shall be fixed by the
Board of Directors of the Company.
If Preferred Shares of any series of any class are outstanding, no
dividends may be paid upon or declared or set apart for any series of Preferred
Shares for any dividend period unless at the same time (i) a like proportionate
dividend for the dividend periods terminating on the same or any earlier date
for all shares of all series of such class then issued and outstanding and
entitled to receive such dividend (but, if such series are series of
Noncumulative Shares, then only with respect to the current dividend period),
ratably in proportion to the respective annual dividend rates fixed therefor,
shall have been paid upon or declared or set apart and (ii) the dividends
payable for the dividend periods terminating on the same or any earlier date for
all other classes of Preferred Shares then issued and outstanding and entitled
to receive such dividends (but, with respect to Noncumulative Shares, only with
respect to the then current dividend period), ratably in proportion to the
respective dividend rates fixed therefor, shall have been paid upon or declared
or set apart.
So long as any series of Preferred Shares is outstanding, no dividend,
except a dividend payable in Common Shares or other shares ranking junior to
such series of Preferred Shares, shall be paid or declared or any distribution
made, except as aforesaid, in respect of the Common Shares or any other shares
ranking junior to such series of Preferred Shares, nor shall any Common Shares
or any other shares ranking junior to such series of Preferred Shares be
purchased, retired or otherwise acquired by the Company, except out of the
proceeds of the sale of Common Shares or other shares of the Company ranking
junior to such series of Preferred Shares received by the Company subsequent to
the date of first issuance of such series of Preferred Shares, unless (i) all
accrued and unpaid dividends on all classes of Preferred Shares then
outstanding, including the full dividends for all current dividend periods
(except, with respect to Noncumulative Shares, for the then current dividend
period only), shall have been declared and paid or a sum sufficient for payment
thereof set apart, and (ii) there shall be no arrearages with respect to the
redemption of any series of any class of Preferred Shares from any sinking fund
provided for such class in accordance with the Articles.
The foregoing restrictions on the payment of dividends or other
distributions on, or on the purchase, redemption, retirement or other
acquisition of, Common Shares or any other shares ranking on a parity with or
junior to any class of Preferred Shares will be inapplicable to (i) any payments
in lieu of issuance of fractional shares, whether upon any merger, conversion,
stock dividend or otherwise, (ii) the conversion of Preferred Shares into Common
Shares, or (iii) the exercise by the Company of its rights to repurchase shares
of its capital stock in order to preserve its status as a REIT under the Code.
When dividends are not paid in full (or a sum sufficient for such full payment
is not so set apart) upon the Preferred Shares of any series and the shares of
any other series of Preferred Shares ranking on a parity as to dividends with
such series, all dividends declared upon Preferred Shares of such series and any
other series of Preferred Shares ranking on a parity as to dividends with such
Preferred Shares shall be declared pro rata so that the amount of dividends
declared per share on the shares of such series of Preferred Shares shall in all
cases bear to each other the same ratio that accrued dividends per share on the
Preferred Shares of such series (which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods for Noncumulative Shares)
and such other series bear to each other. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment or payments on
Preferred Shares of such series which may be in arrears.
22
<PAGE> 24
Any dividend payment made on Preferred Shares will first be credited
against the earliest accrued but unpaid dividend due with respect to such shares
which remains payable.
REDEMPTION
If so described in the applicable Prospectus Supplement, a series of a
class of Preferred Shares will be subject to mandatory redemption or redemption
at the option of the Company, as a 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 Shares that is
subject to mandatory redemption will specify the number of such Preferred Shares
that shall be redeemed by the Company in each year commencing after a date to be
specified, at a redemption price per share to be specified, together with an
amount equal to all accrued and unpaid dividends thereon (which, in the case of
Noncumulative Shares, includes only unpaid dividends for the current dividend
period) to the date of redemption. The redemption price may be payable in cash
or other property, as specified in the applicable Prospectus Supplement.
Except in connection with the repurchase by the Company of shares of its
capital stock in order to maintain its qualification as a REIT for federal
income tax purposes, the Company may not purchase or redeem (for sinking fund
purposes or otherwise) less than all of a class of Preferred Shares then
outstanding except in accordance with a stock purchase offer made to all holders
of record of such class, unless all dividends on all Preferred Shares of that
class then outstanding for previous and current dividend periods (except, in the
case of Noncumulative Shares, dividends for the current dividend period only)
shall have been declared and paid or funds therefor set apart and all accrued
sinking fund obligations applicable thereto shall have been complied with.
If fewer than all of the outstanding shares of any class of Preferred
Shares are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares to be redeemed shall be selected by
lot in a manner determined by the Board of Directors.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of a Preferred Share to
be redeemed at the address shown on the stock transfer books of the Company. If
fewer than all the Preferred Shares of any series are to be redeemed, the notice
mailed to each such holder thereof shall also specify the number of Preferred
Shares to be redeemed from each holder. If notice of redemption of any Preferred
Shares 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 the
Preferred Shares so called for redemption, then from and after the redemption
date dividends will cease to accrue on such Preferred Shares, and such holders
will cease to be shareholders with respect to such shares and such holders shall
have no right or claim against the Company with respect to such shares, except
only the right to receive the redemption price without interest or to exercise
before the redemption date any unexercised privileges of conversion.
LIQUIDATION PREFERENCE
In the event of any voluntary liquidation, dissolution or winding up of the
affairs of the Company, the holders of any series of any class of Preferred
Shares shall be entitled to receive in full out of the assets of the Company,
including its capital, before any amount shall be paid or distributed among the
holders of the Common Shares or any other shares ranking junior to such series,
the amounts fixed by the Board of Directors with respect to such series and set
forth in the applicable Prospectus Supplement plus an amount equal to all
dividends accrued and unpaid thereon (except, with respect to Noncumulative
Shares, dividends for the current dividend period only) to the date of payment
of the amount due pursuant to such liquidation, dissolution or winding up the
affairs of the Company. After payment to the holders of the Preferred Shares of
the full preferential amounts to which they are entitled, the holders of
Preferred Shares, as such, shall have no right or claim to any of the remaining
assets of the Company.
If liquidating distributions shall have been made in full to all holders of
Preferred Shares, the remaining assets of the Company shall be distributed among
the holders of any other classes or series of capital stock
23
<PAGE> 25
ranking junior to the Preferred Shares upon liquidation, dissolution or winding
up, according to their respective rights and preferences and in each case
according to their respective numbers of shares. The merger or consolidation of
the Company into or with any other corporation, or the sale, lease or conveyance
of all or substantially all of the assets of the Company, shall not constitute a
dissolution, liquidation or winding up of the Company.
VOTING RIGHTS
Holders of Preferred Shares will not have any voting rights, except as set
forth below and as from time to time required by law.
If and when the Company is in default in the payment of (or, with respect
to Noncumulative Shares, has not paid or declared and set aside a sum sufficient
for the payment of) dividends on any series of any class of Preferred Shares at
the time outstanding, for a number of consecutive dividend payment periods which
in the aggregate contain at least 540 days, all holders of shares of such class,
voting separately as a class, together and combined with all other Preferred
Shares upon which like voting rights have been conferred and are exercisable,
will be entitled to elect a total of two members of the Board of Directors,
which voting right shall be vested (and any additional directors shall serve)
until all accrued and unpaid dividends (except, with respect to Noncumulative
Shares, only dividends for the then current dividend period) on such Preferred
Shares then outstanding shall have been paid or declared and a sum sufficient
for the payment thereof set aside for payment.
The affirmative vote of the holders of at least two-thirds of a class of
Preferred Shares at the time outstanding, voting separately as a class, given in
person or by proxy either in writing or at a meeting called for the purpose,
shall be necessary to effect either of the following:
(1) The authorization, creation or increase in the authorized number
of any shares, or any security convertible into shares, in either case
ranking prior to such class of Preferred Shares; or
(2) Any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Articles or the
Code of Regulations which affects adversely and materially the preferences
or voting or other right of the holders of such class of Preferred Shares
which are set forth in the Articles; provided, however, neither the
amendment of the Articles so as to authorize, create or change the
authorized or outstanding number of a class of Preferred Shares or of any
shares ranking on a parity with or junior to such class of Preferred Shares
nor the amendment of the provisions of the Code of Regulations so as to
change the number or classification of directors of the Company shall be
deemed to affect adversely and materially preferences or voting or other
rights of the holders of such class of Preferred Shares.
Without limiting the provisions described above, under Ohio law, holders of
each class of Preferred Shares will be entitled to vote as a class on any
amendment to the Articles, whether or not they are entitled to vote thereon by
the Articles, if the amendment would (i) increase or decrease the par value of
the shares of such class, (ii) change the issued shares of such class into a
lesser number of shares of such class or into the same or different number of
shares of another class, (iii) change the express terms or add express terms of
the shares of the class in any manner substantially prejudicial to the holders
of such class, (iv) change the express terms of issued shares of any class
senior to the particular class in any manner substantially prejudicial to the
holders of shares of the particular class, (v) authorize shares of another class
that are convertible into, or authorize the conversion of shares of another
class into, shares of the particular class, or authorize the directors to fix or
alter conversion rights of shares of another class that are convertible into
shares of the particular class, (vi) reduce or eliminate the stated capital of
the Company, (vii) substantially change the purposes of the Company, or (viii)
change the Company into a nonprofit corporation.
If, and only to the extent, that (i) a class of Preferred Shares is issued
in more than one series and (ii) Ohio law permits the holders of a series of a
class of capital stock to vote separately as a class, the affirmative vote of
the holders of at least two-thirds of each series of such class of Preferred
Shares at the time outstanding, voting separately as a class, given in person or
by proxy either in writing or at a meeting called for
24
<PAGE> 26
the purpose of voting on such matters, shall be required for any amendment,
alteration or repeal, whether by merger, consolidation or otherwise, of any of
the provisions of the Articles or the Code of Regulations which affects
adversely and materially the preferences or voting or other rights of the
holders of such series which are set forth in the Articles; provided, however,
neither the amendment of the Articles so as to authorize, create or change the
authorized or outstanding number of a class of Preferred Shares or of any shares
ranking on a parity with or junior to such class of Preferred Shares nor the
amendment of the provisions of the Code of Regulations so as to change the
number or classification of directors of the Company shall be deemed to affect
adversely and materially the preference or voting or other rights of the holders
of such series.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would be required shall be
effected, all outstanding shares of such series of Preferred Shares 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 shares of any series of any
class of Preferred Shares are convertible into Common Shares will be set forth
in the applicable Prospectus Supplement relating thereto. Such terms will
include the number of Common Shares into which the Preferred Shares 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 such Preferred Shares or the Company, the events requiring an
adjustment of the conversion price, and provisions affecting conversion upon the
occurrence of certain events.
RESTRICTIONS ON OWNERSHIP
As discussed below under "Description of Common Shares -- Restrictions on
Ownership," 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, and the capital stock
must be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months or during a proportionate part of a shorter taxable
year, and certain other requirements must be satisfied.
To assure that five or fewer individuals do not own more than 50% in value
of the Company's outstanding Preferred Shares, the Articles provide that,
subject to certain exceptions, no holder may own, or be deemed to own by virtue
of the attribution provisions of the Code, more than 9.8% (the "Preferred Shares
Ownership Limit") of any series of any class of the Company's outstanding
Preferred Shares. In addition, as discussed above under "Description of Common
Shares -- Restriction on Ownership," because rent from a Related Party Tenant
(any tenant 10% of which is owned, directly or constructively, by a REIT,
including an owner of 10% or more of a REIT) is not qualifying rent for purposes
of the gross income tests under the Code, the Articles provide that no
individual or entity may own, or be deemed to own by virtue of the attribution
provisions of the Code (which differ from the attribution provisions applied to
the Preferred Shares Ownership Limit), in excess of 9.8% of the outstanding
shares of any series of any class of Preferred Shares (the "Preferred Shares
Related Party Limit"). The Board of Directors may waive the Preferred Shares
Ownership Limit and the Preferred Shares Related Party Limit if the Board of
Directors obtains such representations and undertakings from the applicant with
respect to preserving the REIT status of the Company as are reasonably necessary
to ascertain that such ownership will not jeopardize the Company's status as a
REIT.
The foregoing restrictions on transferability and ownership of Preferred
Shares may not apply if the Board of Directors determines that it is no longer
in the best interests of the Company to attempt to qualify, or to continue to
qualify, as a REIT. The Preferred Shares Ownership Limit and the Preferred
Shares Related Party Limit will not be automatically removed even if the REIT
provisions of the Code are changed so as to no longer contain any ownership
concentration limitation or if the ownership concentration limitation is
increased. Any change in the Preferred Shares Ownership Limit would require an
amendment to the Articles, even if the Board of Directors determines that
maintenance of REIT status is no longer in the best interests of the Company.
Amendments to the Company's Articles require the affirmative vote of holders
owning not less
25
<PAGE> 27
than a majority of the outstanding Common Shares. If it is determined that an
amendment would materially and adversely affect the holders of any class of
Preferred Shares, such amendment would also require the affirmative vote of
holders of not less than two-thirds of such class of Preferred Shares.
If Preferred Shares in excess of the Preferred Shares Ownership Limit or
the Preferred Shares Related Party Limit, or shares which would cause the REIT
to be beneficially or constructively owned by fewer than 100 persons or would
result in the Company being "closely held" within the meaning of Section 856(h)
of the Code, are issued or transferred to any person, such issuance or transfer
will be null and void to the intended transferee, and the intended transferee
will acquire no rights to the shares. Preferred Shares transferred or proposed
to be transferred in excess of the Preferred Shares Ownership Limit or the
Preferred Shares Related Party Limit or which would otherwise jeopardize the
Company's REIT status ("Excess Preferred Shares") will be subject to repurchase
by the Company. The purchase price of any Excess Preferred Shares will be equal
to the lesser of (i) the price in such proposed transaction and (ii) the fair
market value of such shares reflected in the last reported sales price for the
shares on the trading day immediately preceding the date on which the Company or
its designee determines to exercise its repurchase right, if the shares are then
listed on a national securities exchange, or such price for the shares on the
principal exchange if the shares are then listed on more than one national
securities exchange, or, if the shares are not then listed on a national
securities exchange, the latest bid quotation for the shares if the shares are
then traded over-the-counter, or, if such quotation is not available, the fair
market value as determined by the Board of Directors in good faith, on the last
trading day immediately preceding the day on which notice of such proposed
purchase is sent by the Company. From and after the date fixed for purchase of
such Excess Preferred Shares by the Company, the holder thereof will cease to be
entitled to distribution, voting rights and other benefits with respect to such
shares except the right to payment of the purchase price for the shares. Any
dividend or distribution paid to a proposed transferee on Excess Preferred
Shares must be repaid to the Company upon demand. If the foregoing transfer
restrictions are determined to be void or invalid by virtue of any legal
decision, statute, rule or regulation, then the intended transferee of any
Excess Preferred Shares may be deemed, at the option of the Company, to have
acted as an agent on behalf of the Company in acquiring such Excess Preferred
Shares and to hold such Excess Preferred Shares on behalf of the Company.
Reference is made to the section captioned "Description of Common Shares"
for a general description of the Common Shares to be acquired upon the
conversion of Preferred Shares convertible into Common Shares ("Convertible
Preferred Shares"), including a description of certain restrictions on the
ownership of the Common Shares. Common Shares that may be acquired upon the
conversion of convertible Preferred Shares directly or constructively held by an
investor will be deemed by the Company to be outstanding (i) at the time of
purchase of the convertible Preferred Shares, and (ii) prior to the conversion
of the convertible Preferred Shares, for purposes of determining the percentage
ownership of Common Shares held by such investor.
All certificates representing Preferred Shares will bear a legend referring
to the restrictions described above.
The Articles provide that all persons who own, directly or by virtue of the
attribution provisions of the Code, more than 5% of the Preferred Shares shall
upon demand be required to disclose to the Company in writing such information
with respect to the direct, indirect and constructive ownership of shares as the
Board of Directors deems necessary to comply with the provisions of the Code as
applicable to a REIT or to comply with the requirements of any taxing authority
or governmental agency.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest or a share of a
particular series of a class of Preferred Shares, as specified in the applicable
Prospectus Supplement. Preferred Shares of each series of each class represented
by Depositary Shares will be deposited under a separate Deposit Agreement (each,
a "Deposit Agreement") among the Company, the depositary named therein (such
depositary or its successor, the "Preferred Shares Depositary")
26
<PAGE> 28
and the holders from time to time of the Depositary Receipts. Subject to the
terms of the Deposit Agreement, each owner of a Depositary Receipt will be
entitled, in proportion to the fractional interest of a share of the particular
series of a class of Preferred Shares represented by the Depositary Shares
evidenced by such Depositary Receipt, to all the rights and preferences of the
Preferred Shares represented by such Depositary Shares (including dividend,
voting, conversion, redemption and liquidation rights). As of the date of this
Prospectus, there are outstanding (i) 4,215,000 Depositary Shares each
representing 1/10 of a share of the 9.5% Class A Cumulative Redeemable Preferred
Shares and (ii) 1,775,000 Depositary Shares each representing 1/10 of a share of
the 9.44% Class B Cumulative Redeemable Preferred Shares. See "Description of
Preferred Shares." These Depositary Shares are listed on the New York Stock
Exchange under the symbols DDRPrA and DDRPrB, respectively.
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Shares by the Company to the Preferred Shares
Depositary, the Company will cause the Preferred Shares Depositary to issue, on
behalf of the Company, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from the Company upon
request.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Shares Depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Shares to the record
holders of the Depositary Receipts evidencing the related Depositary Shares in
proportion to the number of such Depositary Receipts owned by such holder,
subject to certain obligations of holders to file proofs, certificates and other
information and to pay certain charges and expenses to the Preferred Shares
Depositary.
In the event of a distribution other than in cash, the Preferred Shares
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the Preferred Shares Depositary, unless the Preferred Shares
Depositary determines that it is not feasible to make such distribution, in
which case the Preferred Shares Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Shares Depositary (unless the related Depositary Shares have
previously been called for redemption), the holders thereof will be entitled to
delivery at such office, to or upon such holder's order, of the number of whole
or fractional Preferred Shares and any money or other property represented by
the Depositary Shares evidenced by such Depositary Receipts. Holders of
Depositary Receipts will be entitled to receive whole or fractional shares of
the related Preferred Shares on the basis of the proportion of Preferred Shares
represented by each Depositary Share as specified in the applicable Prospectus
Supplement, but holders of such Preferred Shares will not thereafter be entitled
to receive Depositary Shares therefor. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of Preferred Shares to be withdrawn,
the Preferred Shares Depositary will deliver to such holder at the same time a
new Depositary Receipt evidencing such excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems Preferred Shares held by the Preferred Shares
Depositary, the Preferred Shares Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the Preferred
Shares so redeemed, provided the Company shall have paid in full to the
Preferred Shares Depositary the redemption price of the Preferred Shares to be
redeemed plus an amount equal to any accrued and unpaid dividends (except, with
respect to Noncumulative Shares, dividends for the current dividend period only)
thereon to the date fixed for redemption. The redemption price per Depositary
Share will be equal to the redemption price and any other amounts per share
payable with respect to the Preferred
27
<PAGE> 29
Shares. If less than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by the Preferred Shares
Depositary by lot.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Receipts evidencing the Depositary Shares so called
for redemption will cease, except the right to receive any moneys payable upon
such redemption and any money or other property to which the holders of such
Depositary Receipts were entitled upon such redemption upon surrender thereof to
the Preferred Shares Depositary.
VOTING OF THE UNDERLYING PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the Preferred
Shares are entitled to vote, the Preferred Shares Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent such
Preferred Shares. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Shares) will be entitled to instruct the Preferred Shares
Depositary as to the exercise of the voting rights pertaining to the amount of
Preferred Shares represented by such holder's Depositary Shares. The Preferred
Shares Depositary will vote the amount of Preferred Shares represented by such
Depositary Shares in accordance with such instructions, and the Company will
agree to take all reasonable action which may be deemed necessary by the
Preferred Shares Depositary in order to enable the Preferred Shares Depositary
to do so. The Preferred Shares Depositary will abstain from voting the amount of
Preferred Shares represented by such Depositary Shares to the extent it does not
receive specific instructions from the holders of Depositary Receipts evidencing
such Depositary Shares.
LIQUIDATION PREFERENCE
In the event of liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, each holder of a Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each Preferred
Share represented by the Depositary Share evidenced by such Depositary Receipt,
as set forth in the applicable Prospectus Supplement.
CONVERSION OF PREFERRED SHARES
The Depositary Shares, as such, are not convertible into Common Shares or
any other securities or property of the Company. Nevertheless, if so specified
in the applicable Prospectus Supplement relating to an offering of Depositary
Shares, the Depositary Receipts may be surrendered by holders thereof to the
Preferred Shares Depositary with written instructions to the Preferred Shares
Depositary to instruct the Company to cause conversion of the Preferred Shares
represented by the Depositary Shares evidenced by such Depositary Receipts into
whole Common Shares, other Preferred Shares of the Company or other shares of
capital stock, and the Company has agreed that upon receipt of such instructions
and any amounts payable in respect thereof, it will cause the conversion thereof
utilizing the same procedures as those provided for delivery of Preferred Shares
to effect such conversion. If the Depositary Shares evidenced by a Depositary
Receipt are to be converted in part only, one or more new Depositary Receipts
will be issued for any Depositary Shares not to be converted. No fractional
Common Shares will be issued upon conversion, and if such conversion will result
in a fractional share being issued, an amount will be paid in cash by the
Company equal to the value of the fractional interest based upon the closing
price of the Common Shares on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Shares and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the Preferred Shares
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts will not be effective unless such
amendment has been
28
<PAGE> 30
approved by the existing holders of at least a majority of the Depositary Shares
evidenced by the Depositary Receipts then outstanding.
The Deposit Agreement may be terminated by the Company upon not less than
30 days' prior written notice to the Preferred Shares Depositary if (i) such
termination is to preserve the Company's status as a REIT or (ii) a majority of
each class of Preferred Shares affected by such termination consents to such
termination, whereupon the Preferred Shares Depositary shall deliver or make
available to each holder of Depositary Receipts, upon surrender of the
Depositary Receipts held by such holder, such number of whole or fractional
Preferred Shares as are represented by the Depositary Shares evidenced by such
Depositary Receipts. In addition, the Deposit Agreement will automatically
terminate if (i) all outstanding Depositary Shares shall have been redeemed,
(ii) there shall have been a final distribution in respect of the related
Preferred Shares in connection with any liquidation, dissolution or winding up
of the Company and such distribution shall have been distributed to the holders
of Depositary Receipts evidencing the Depositary Shares representing such
Preferred Shares or (iii) each related Preferred Share shall have been converted
into capital stock of the Company not so represented by Depositary Shares.
CHARGES OF PREFERRED SHARES DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Shares Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of the
Preferred Shares Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Shares Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Shares Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Shares Depositary. A successor
Preferred Shares Depositary must be appointed within 60 days after delivery of
the notice of resignation or removal and must be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Shares Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Shares Depositary with respect to the related Preferred Shares.
Neither the Preferred Shares Depositary nor the Company will be liable if
it is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under the Deposit Agreement. The obligations
of the Company and the Preferred Shares Depositary under the Deposit Agreement
will be limited to performing their duties thereunder in good faith and without
negligence, gross negligence or willful misconduct, and the Company and the
Preferred Shares Depositary will not be obligated to prosecute or defend any
legal proceeding in respect of any Depositary Receipts, Depositary Shares or
Preferred Shares represented thereby unless satisfactory indemnity is furnished.
The Company and the Preferred Shares Depositary may rely on written advice of
counsel or accountants, or information provided by persons presenting Preferred
Shares represented thereby for deposit, holders of Depositary Receipts or other
persons believed to be competent to give such information, and on documents
believed to be genuine and signed by a proper party.
If the Preferred Shares Depositary shall receive conflicting claims,
requests or instructions from any holders of Depositary Receipts, on the one
hand, and the Company, on the other hand, the Preferred Shares Depositary shall
be entitled to act on such claims, requests or instructions received from the
Company.
29
<PAGE> 31
DESCRIPTION OF COMMON SHARES
GENERAL
The Articles authorize the issuance of up to 50,000,000 Common Shares,
without par value. As of May 14, 1996, there were 21,589,357 Common Shares
issued and outstanding. In addition, up to 1,500,525 Common Shares have been
reserved for issuance upon the exercise of options under the Company's employee
share option plan (the "Stock Option Plan"), 600,000 Common Shares have been
reserved for issuance under the Company's Equity-Based Award Plan and 320,000
Common Shares have been reserved for issuance upon the exercise of options
granted to the Company's directors and others. The Common Shares are listed on
the NYSE under the symbol "DDR." National City Bank, Cleveland, Ohio, is the
transfer agent and registrar of the Common Shares.
The following description of the Common Shares sets forth certain general
terms and provisions of the Common Shares to which any Prospectus Supplement may
relate, including a Prospectus Supplement providing that Common Shares will be
issuable upon conversion of Debt Securities or Preferred Shares of the Company
or upon the exercise of Common Share Warrants issued by the Company. The
statements below describing the Common Shares are in all respects subject to and
qualified in their entirety by reference to the applicable provisions of the
Articles and the Company's Code of Regulations (the "Code of Regulations").
Holders of Common Shares are entitled to receive dividends, when, as and if
declared by the Board of Directors of the Company, out of funds legally
available therefor. The payment and declaration of dividends on the Common
Shares and purchases thereof by the Company will be subject to certain
restrictions if the Company fails to pay dividends on any outstanding Preferred
Shares. See "Description of Preferred Shares." The holders of Common Shares,
upon any liquidation, dissolution or winding-up of the Company, are entitled to
receive ratably any assets remaining after payment in full of all liabilities of
the Company, including the preferential amounts owing with respect to any
Preferred Shares. The Common Shares possess ordinary voting rights, with each
share entitling the holder thereof to one vote. Holders of Common Shares have
cumulative voting rights in the election of directors. Holders of Common Shares
do not have preemptive rights, which means that they have no right to acquire
any additional Common Shares that may be subsequently issued by the Company.
All of the Common Shares now outstanding are, and any Common Shares offered
hereby when issued will be, fully paid and nonassessable.
RESTRICTIONS ON OWNERSHIP
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, and its capital stock must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year of 12 months or during a proportionate part of a shorter taxable year.
Additionally, certain other requirements must be satisfied.
To assure that five or fewer individuals do not own more than 50% in value
of the Company's outstanding Common Shares, the Articles provide that, subject
to certain exceptions, no holder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than 5% (the "Ownership Limit") of the
Company's outstanding Common Shares. Shareholders whose ownership exceeded the
Ownership Limit immediately after the IPO may continue to own Common Shares in
excess of the Ownership Limit and may acquire additional shares through the
Stock Option Plan, any dividend reinvestment plan adopted by the Company (a
"Dividend Reinvestment Plan") or from other existing shareholders who exceed the
Ownership Limit, but may not acquire additional shares from such sources such
that the five largest beneficial owners of Common Shares hold more than 49.6% of
the outstanding Common Shares, and in any event may not acquire additional
shares from any other source. In addition, because rent from a Related Party
Tenant (any tenant 10% of which is owned, directly or constructively, by a REIT,
including an owner of 10% or more of a REIT) is not qualifying rent for purposes
of the gross income tests under the Code, the Articles provide that no
individual or entity may own, or be deemed to own by virtue of the attribution
provisions of the Code (which
30
<PAGE> 32
differ from the attribution provisions applied to the Ownership Limit), in
excess of 9.8% of the outstanding Common Shares (the "Related Party Limit"). The
Board of Directors may waive the Ownership Limit and the Related Party Limit
(such Related Party Limit has been waived with respect to the shareholders who
exceeded the Related Party Limit immediately after the IPO) if an opinion of
counsel or a ruling from the Internal Revenue Service is provided to the Board
of Directors to the effect that such ownership will not then or in the future
jeopardize the Company's status as a REIT. As a condition of such waiver, the
Board of Directors will require appropriate representations and undertakings
from the applicant with respect to preserving the REIT status of the Company.
The foregoing restrictions on transferability and ownership of Common
Shares may not apply if the Board of Directors determines that it is no longer
in the best interests of the Company to continue to qualify as a REIT. The
Ownership Limit and the Related Party Limit will not be automatically removed
even if the REIT provisions of the Code are changed so as to no longer contain
any ownership concentration limitation or if the ownership concentration
limitation is increased. In addition to preserving the Company's status as a
REIT, the effects of the Ownership Limit and the Related Party Limit are to
prevent any person or small group of persons from acquiring unilateral control
of the Company. Any change in the Ownership Limit would require an amendment to
the Articles, even if the Board of Directors determines that maintenance of REIT
status is no longer in the best interests of the Company. Amendments to the
Articles require the affirmative vote of holders owning not less than a majority
of the outstanding Common Shares. If it is determined that an amendment would
materially and adversely affect the holders of any class of Preferred Shares,
such amendment also would require the affirmative vote of holders of not less
than two-thirds of such class of Preferred Shares.
If Common Shares in excess of the Ownership Limit or the Related Party
Limit, or Common Shares which would cause the REIT to be beneficially or
constructively owned by less than 100 persons or would result in the Company
being "closely held" within the meaning of Section 856(h) of the Code, are
issued or transferred to any person, such issuance or transfer will be null and
void to the intended transferee, and the intended transferee will acquire no
rights to the shares. Common Shares transferred or proposed to be transferred in
excess of the Ownership Limit or the Related Party Limit or which would
otherwise jeopardize the Company's REIT status ("Excess Shares") will be subject
to repurchase by the Company. The purchase price of any Excess Shares will be
equal to the lesser of (i) the price in such proposed transaction and (ii) the
fair market value of such shares reflected in the last reported sale price for
the Common Shares on the trading day immediately preceding the date on which the
Company or its designee determines to exercise its repurchase right, if then
listed on a national securities exchange, or such price for the shares on the
principal exchange, if they are then listed on more than one national securities
exchange, or, if the Common Shares are not then listed on a national securities
exchange, the latest bid quotation for the Common Shares if they are then traded
over-the-counter, or, if such quotation is not available, the fair market value
as determined by the Board of Directors in good faith, on the last trading day
immediately preceding the day on which notice of such proposed purchase is sent
by the Company. From and after the date fixed for purchase of Excess Shares by
the Company, the holder of such Excess Shares will cease to be entitled to
distribution, voting rights and other benefits with respect to such Excess
Shares except the right to payment of the purchase price for the Excess Shares.
Any dividend or distribution paid to a proposed transferee on Excess Shares will
be repaid to the Company upon demand. If the foregoing transfer restrictions are
determined to be void or invalid by virtue of any legal decision, statute, rule
or regulation, then the intended transferee of any Excess Shares may be deemed,
at the option of the Company, to have acted as an agent on behalf of the Company
in acquiring such Excess Shares and to hold such Excess Shares on behalf of the
Company.
All certificates representing Common Shares bear a legend referring to the
restrictions described above.
The Articles provide that all persons who own, directly or by virtue of the
attribution provisions of the Code, more than 5% of the outstanding Common
Shares must file an affidavit with the Company containing information specified
in the Articles within 30 days after January 1 of each year. In addition, each
such shareholder will upon demand be required to disclose to the Company in
writing such information with respect to the direct, indirect and constructive
ownership of shares as the Board of Directors deems necessary to
31
<PAGE> 33
comply with the provisions of the Code as applicable to a REIT or to comply with
the requirements of any taxing authority or governmental agency.
DESCRIPTION OF COMMON SHARE WARRANTS
The Company may issue Common Share Warrants for the purchase of Common
Shares. Common Share Warrants may be issued independently or together with any
other Offered Securities offered by any Prospectus Supplement and may be
attached to or separate from such Offered Securities. Each series of Common
Share 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 Share 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 Share Warrants. The following sets forth certain general terms and
provisions of the Common Share Warrants offered hereby. Further terms of the
Common Share Warrants and the applicable Warrant Agreements will be set forth in
the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the Common
Share Warrants in respect of which this Prospectus is being delivered,
including, where applicable, the following: (i) the title of such Common Share
Warrants; (ii) the aggregate number of such Common Share Warrants; (iii) the
price or prices at which such Common Share Warrants will be issued; (iv) the
number of Common Shares purchasable upon exercise of such Common Share Warrants;
(v) the designation and terms of the other Offered Securities with which such
Common Share Warrants are issued and the number of such Common Share Warrants
issued with each such Offered Security; (vi) the date, if any, on and after
which such Common Share Warrants and the related Common Shares will be
separately transferable; (vii) the price at which each Common Share purchasable
upon exercise of such Common Shares Warrants may be purchased; (viii) the date
on which the right to exercise such Common Share Warrants shall commence and the
date on which such right shall expire; (ix) the minimum or maximum amount of
such Common Share Warrants which may be exercised at any one time; (x)
information with respect to book-entry procedures, if any; (xi) a discussion of
certain federal income tax considerations; and (xii) any other terms of such
Common Share Warrants, including terms, procedures and limitations relating to
the exchange and exercise of such Common Share Warrants.
Reference is made to the section captioned "Description of Common Shares"
for a general description of the Common Shares to be acquired upon the exercise
of the Common Share Warrants, including a description of certain restrictions on
the ownership of Common Shares. Common Shares that may be acquired upon the
exercise of Common Share Warrants directly or constructively held by an investor
will be deemed by the Company to be outstanding (i) at the time of acquisition
of the Common Share Warrants, and (ii) prior to the exercise of the Common Share
Warrants, for purposes of determining the percentage ownership of Common Shares
held by such investor.
CERTAIN ANTI-TAKEOVER PROVISIONS OF OHIO LAW
Certain provisions of Ohio law may have the effect of discouraging or
rendering more difficult an unsolicited acquisition of a corporation or its
capital stock to the extent the corporation is subject to such provisions. The
Company has opted out of one such provision. The provisions remaining applicable
to the Company are described below.
Chapter 1704 of the Ohio Revised Code prohibits certain transactions,
including mergers, sales of assets, issuances or purchases of securities,
liquidation or dissolution, or reclassifications of the then outstanding shares
of an Ohio corporation with fifty or more shareholders involving, or for the
benefit of, certain holders of shares representing 10% or more of the voting
power of the corporation (any such shareholder, a "10% Shareholder"), unless (i)
such transactions are approved by the directors prior to the 10% Shareholder
becoming a 10% Shareholder, (ii) the acquisition of 10% of the voting power is
approved by the directors prior
32
<PAGE> 34
to the 10% Shareholder becoming a 10% Shareholder, or (iii) the transaction
involves a 10% Shareholder which has been a 10% Shareholder for at least three
years and is approved by holders of two-thirds of the voting power of the
Company and the holders of a majority of the voting power not owned by the 10%
Shareholder, or certain minimum price and form of consideration requirements are
met. Chapter 1704 of the Ohio Revised Code may have the effect of deterring
certain potential acquisitions of the Company which might be beneficial to
shareholders.
Section 1701.041 of the Ohio Revised Code regulates certain "control bids"
for corporations in Ohio with fifty or more shareholders which have significant
Ohio contacts and permits the Ohio Division of Securities to suspend a control
bid if certain information is not provided to offerees.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material Federal income tax
considerations to the Company and its security holders relating to the Offered
Securities and the treatment of the Company as a REIT. It is not intended to
represent a detailed description of the Federal income tax consequences
applicable to a particular shareholder of the Company in view of a shareholder's
particular circumstances, or to certain types of shareholders (including
insurance companies, tax-exempt organizations, financial institutions or broker-
dealers, foreign corporations and persons who are not citizens or residents of
the United States) subject to special treatment under the Federal income tax
laws. The discussion in this section is based on current provisions of the Code,
current and proposed Treasury Regulations, court decisions and other
administrative rulings and interpretations, all of which are subject to change
either prospectively or retroactively. There can be no assurance that any such
change, future Code provision or other legal authority will not alter
significantly the tax considerations described herein.
EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT THE APPLICABLE PROSPECTUS
SUPPLEMENT, AS WELL AS HIS OWN TAX ADVISOR, REGARDING THE SPECIFIC TAX
CONSEQUENCES, IN VIEW OF SUCH PROSPECTIVE PURCHASER'S INDIVIDUAL CIRCUMSTANCES,
OF THE PURCHASE, OWNERSHIP AND SALE OF THE OFFERED SECURITIES, INCLUDING THE
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE,
OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
GENERAL
The Company has elected to be taxed as a real estate investment trust under
Section 856 through 860 of the Code, commencing with its initial taxable year
ended December 31, 1993 which began January 1, 1993. The Company believes that
it is organized and is operating in such a manner as to qualify for taxation as
a REIT under the Code. The Company intends to continue to operate in such a
manner, but no assurance can be given that it will operate in a manner so as to
qualify or remain qualified as a REIT.
In the opinion of Baker & Hostetler, based on certain assumptions and
representations, the Company has qualified as a REIT for its taxable years ended
December 31, 1993 and December 31, 1994, and the Company is organized in
conformity with the requirements for qualification as a REIT and its method of
operation has and will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code provided the Company
continues to meet the asset composition, source of income, shareholder
diversification, distributions, recordkeeping, and other requirements of the
Code necessary for the Company to qualify as a REIT. It must be emphasized that
this opinion is based on various assumptions and is conditioned upon certain
representations made by the Company as to factual matters including, but not
limited to, those set forth below in this discussion of "Federal Income Tax
Considerations" and those concerning the Company's business and properties as
set forth in this Prospectus. Moreover, such qualification and taxation as a
REIT depends upon the Company's ability to meet, through actual annual operating
results, distribution levels and diversity of stock ownership, the various
qualification tests imposed under the Code discussed below the results of which
will not be reviewed by Baker & Hostetler. Accordingly, no assurance can be
given that
33
<PAGE> 35
the actual results of the Company's operations for any particular taxable year
will satisfy such requirements. See "-- Failure to Qualify."
TAXATION OF THE COMPANY
A REIT, such as the Company, generally will not be subject to Federal
corporate income tax on its taxable income that is currently distributed to its
shareholders. This treatment substantially eliminates the "double taxation" (at
the corporate and shareholder levels) that generally results from an investment
in a corporation. However, the Company will be subject to Federal income tax in
several ways, including the following: First, the Company will be taxed at
regular corporate rates on any undistributed REIT taxable income, including
undistributed net capital gains. Second, under certain circumstances, the
Company may be subject to the "alternative minimum tax." Third, if the Company
has: (i) net income from the sale or other disposition of "foreclosure property"
which is held primarily for sale to customers in the ordinary course of business
or (ii) other non-qualifying income from foreclosure property, it will be
subject to tax on such income at the highest corporate rate. Fourth, if the
Company has net income from "prohibited transactions" (which are, in general,
certain sales or other dispositions of property held primarily for sale to
customers in the ordinary course of business other than foreclosure property),
such income will be subject to a 100% corporate level tax. Fifth, if the Company
should fail to satisfy the 75% gross income test or the 95% gross income test
(each discussed below) but has nonetheless maintained its qualification as a
REIT by satisfying certain other requirements, it will be subject to a 100% tax
on an amount equal to the gross income attributable to the greater of the amount
by which the Company fails the 75% or 95% test, multiplied by a fraction
intended to reflect the Company's profitability. Sixth, if the Company should
fail to distribute during each calendar year at least the sum of: (i) 85% of its
REIT ordinary income for such year, (ii) 95% of its REIT capital gain net income
for such year and (iii) any undistributed taxable income from prior periods, it
will be subject to a 4% excise tax on the excess of such required distribution
over the amounts actually distributed. Seventh, if the Company acquires any
asset from a C corporation (i.e., generally a corporation subject to full
corporate-level tax) in a transaction in which the basis of the asset in the
Company's hands is determined by reference to the basis of the asset (or any
other property) in the hands of the C corporation, and the Company recognizes
gain on the disposition of such asset during the ten-year period beginning on
the date the asset was acquired by the Company, then the excess of (i) the fair
market value of such asset as of the beginning of such period over (ii) the
Company's adjusted basis in such asset as of the beginning of such period will
be subject to tax at the highest regular corporate tax rate.
REQUIREMENTS FOR QUALIFICATION
A REIT is defined in the Code as a corporation, trust or association: (i)
which is managed by one or more trustees or directors; (ii) the beneficial
ownership of which is evidenced by transferable shares or by transferable
certificates of beneficial interest; (iii) which would be taxable as a domestic
corporation, but for Sections 856 through 859 of the Code; (iv) which is neither
a financial institution nor an insurance company subject to certain provisions
of the Code; (v) the beneficial ownership of which is held by 100 or more
persons; (vi) not more than 50% in value of the outstanding stock of which is
owned during the last half of each taxable year, directly or indirectly, by or
for five or fewer individuals (as defined in the Code to include certain
entities); and (vii) which meets certain income and asset tests described below.
Conditions (i) through (iv) above must be met during the entire taxable year and
condition (v) 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.
However, conditions (v) and (vi) do not apply until after the first taxable year
for which an election is made to be taxed as a REIT.
The Company has satisfied conditions (v) and (vi) set forth above. In
addition, the Company's Amended and Restated Articles of Incorporation provide
for restrictions regarding the ownership and transfer of the Company's capital
stock, which restrictions are intended to assist the Company in continuing to
satisfy those requirements.
The Company owns and/or operates a number of properties through its wholly
owned subsidiaries, Developers Diversified Finance Corporation, Developers
Diversified of Alabama, Inc., DD Community
34
<PAGE> 36
Centers One, Inc., DD Community Centers Two, Inc., and DD Community Centers
Three, Inc. (the "DDRC Subsidiaries"). The DDRC Subsidiaries are "qualified REIT
subsidiaries" of the Company because 100% of the outstanding capital stock of
each of the DDRC Subsidiaries has been held by the Company at all times during
the period that such DDRC Subsidiary has been in existence. Code Section 856(i)
provides that a corporation which is a "qualified REIT subsidiary" shall not be
treated as a separate corporation, and all assets, liabilities and items of
income, deduction and credit of a "qualified REIT subsidiary" shall be treated
as assets, liabilities and such items (as the case may be) of the REIT. Thus, in
applying the requirements described herein, the DDRC Subsidiaries will be
ignored, and all assets, liabilities and items of income, deduction and credit
of the DDRC Subsidiaries will be treated as assets, liabilities and items of the
Company.
In the case of a REIT that is a partner in a partnership, the Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the income
of the partnership attributable to such share. In addition, the character of the
assets and gross income of the partnership will retain the same character in the
hands of the REIT for purposes of Section 856 of the Code, including satisfying
the gross income tests and the asset tests. Thus, the Company's proportionate
share of the assets, liabilities and items of income of the partnerships
(including limited liability companies treated as partnerships for federal
income tax purposes) in which the Company or its Subsidiaries is a partner will
be treated as assets, liabilities and items of income of the Company for
purposes of applying the requirements described herein.
INCOME TESTS
In order to maintain qualification as a REIT, the Company annually must
satisfy three gross income requirements. First, at least 75% of the Company'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 Company's gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real property investments, dividends, interest and gain
from 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 Company'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 are met. First, the amount of rent must not be based in whole
or in part on the income or profits of any person. However, an amount received
or accrued generally will not be excluded from the term "rents from real
property" solely by reason of being based on a fixed percentage or percentages
of receipts or sales. Second, the Code provides that rents received from a
tenant will not qualify as "rents from real property" in satisfying the gross
income tests if the REIT, or an owner of 10% or more of the REIT, directly or
constructively owns 10% or more of such tenant (a "Related Party Tenant").
Third, if rent attributable to personal property leased in connection with a
lease of real property is greater than 15% of the total rent received under the
lease, then the portion of rent attributable to such personal property will not
qualify as "rents from real property." Finally, for rents received to qualify as
"rents from real property," the REIT generally must not operate or manage the
property or furnish or render services to the tenants of such property, other
than through an independent contractor from whom the REIT derives no income;
provided, however, the Company may directly perform certain services that are
"usually or customarily rendered" in connection with the rental of space for
occupancy only and are not otherwise considered "rendered to the occupant" of
the property. The Company does not and will not charge rent for any property
that is based in whole or in part on the income or profits of any person (except
by reason of being based on a percentage of receipts or sales, as described
above), and the Company does not and will not rent any personal property (other
than personal property leased in connection with the lease of real property, the
amount of which is less than 15% of the total rent received under the lease).
The Company directly performs services under certain of its leases, but such
services are not rendered to the occupant of the property.
35
<PAGE> 37
Furthermore, these services are usual and customary management services provided
by landlords renting space for occupancy in the geographic areas in which the
Company owns property. To the extent that the performance of any services
provided by the Company would cause amounts received from its tenants to be
excluded from rents from real property, the Company will hire independent
contractors from whom the Company derives no revenue to perform such services.
The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of receipts
or sales.
If the Company fails to satisfy one or both of the 75% or 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. These relief
provisions generally will be available if the Company's failure to meet such
tests was attributable to reasonable cause and not to willful neglect, the
Company attaches a schedule of the sources of its income to its return, and any
incorrect information on the schedule was not attributable to fraud with intent
to evade tax. It is not possible, however, to determine whether, in all
circumstances, the Company would be entitled to the benefit of those relief
provisions. As discussed above in "-- General," even if those relief provisions
apply, a tax would be imposed with respect to excess net income.
ASSET TESTS
At the close of each quarter of its taxable year, the Company must also
satisfy three tests relating to the nature of its assets. First, at least 75% of
the value of the Company's total assets must be represented by interests in real
property, interests in mortgages on real property to the extent the mortgage
balance does not exceed the value of the associated real property, shares in
other REITs, cash, cash items, government securities and certain securities
attributable to temporary investment of new capital. Second, not more than 25%
of the Company's total assets may be represented by securities other than those
in the 75% asset class. Third, of the investments included in the 25% asset
class, the value of any one issuer's securities 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.
As set forth above, the ownership of more than 10% of the voting securities
of any one issuer by a REIT is prohibited by the asset tests. However, if the
Company owns stock in any subsidiaries that are "qualified REIT subsidiaries" as
defined in the Code, such as the DDRC Subsidiaries, such subsidiaries will not
be treated as separate corporations for Federal income tax purposes. Thus, the
Company's ownership of stock of a "qualified REIT subsidiary" will not cause the
Company to fail the asset tests.
ANNUAL DISTRIBUTION REQUIREMENTS
In order to qualify as a REIT, the Company is required to distribute
dividends (other than capital gain dividends) to its shareholders each year in
an amount at least equal to: (i) the sum of (a) 95% of the Company's "REIT
taxable income" (computed without regard to the dividends paid deduction and the
Company's net capital gain) and (b) 95% of the net income (after tax), if any,
from foreclosure property, minus (ii) the sum of certain items of non-cash
income. To the extent that the Company does not distribute all of its net
capital gain or distributes at least 95%, but less than 100%, of its "REIT
taxable income," as adjusted, it will be subject to tax thereon at regular
ordinary and capital gains corporate tax rates. Furthermore, if the Company
fails to distribute during each calendar year at least the sum of: (i) 85% of
its REIT ordinary income for such year, (ii) 95% of its REIT capital gain income
for such year and (iii) any undistributed taxable income from prior periods, the
Company will be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. The Company intends to make
timely distributions sufficient to satisfy these annual distribution
requirements.
It is possible that the Company, from time to time, may not have sufficient
cash or other liquid assets to meet the 95% distribution requirement because of
timing differences between (i) the actual receipt of income and the actual
payment of deductible expenses and (ii) the inclusion of such income and
deduction of such
36
<PAGE> 38
expenses in arriving at the taxable income of the Company. In the event that
such timing differences occur, in order to meet the 95% distribution requirement
the Company may find it necessary to arrange for short-term, or possibly
long-term, borrowings or to pay dividends in the form of taxable stock
dividends.
Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirement for a certain year by paying "deficiency
dividends" to shareholders in a later year, which may be included in the
Company's deduction for dividends paid for the earlier year. Thus, the Company
may be able to avoid being taxed on amounts distributed as deficiency dividends.
However, the Company will be required to pay interest based upon the amount of
any deduction taken for deficiency dividends.
FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable corporate alternative minimum tax) on its taxable
income at regular corporate rates. Distributions to shareholders in any year in
which the Company fails to qualify will not be deductible by the Company nor
will they be required to be made by the Company. In such event, to the extent of
current and accumulated earnings and profits, all distributions to shareholders
will be taxable as ordinary income, and, subject to certain limitations, a
corporate distributee may be eligible for the dividends received deduction.
Unless entitled to relief under specific statutory provisions, the Company will
also be disqualified from taxation as a REIT for the four taxable years
following the year during which qualification was lost. Whether the Company
would be entitled to such statutory relief cannot be foreseen.
TAXATION OF TAXABLE DOMESTIC SHAREHOLDERS
As long as the Company qualifies as a REIT, distributions made to its
taxable domestic shareholders out of current or accumulated earnings and profits
(and not designated as capital gain dividends) will result in ordinary income to
such shareholders. Corporate shareholders will not be entitled to the dividends
received deduction. 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 shares. However, corporate
shareholders may be required to treat up to 20% of certain capital gain
dividends as ordinary income. Distributions by the Company in excess of its
current and accumulated earnings and profits will not be taxable to a
shareholder to the extent that such distributions do not exceed the adjusted
basis of the shareholder's shares, but rather, will be a non-taxable reduction
in a shareholder's adjusted basis in such shares to the extent thereof and
thereafter will be taxed as capital gain.
Any dividend declared by the Company in October, November or December of
any year payable to a shareholder of record on a specified date in any such
month will be treated as both paid by the Company and received by the
shareholder on or before December 31 of such year, provided that the dividend is
actually paid by the Company by January 31 of the following calendar year.
Shareholders may not include any net operating losses or capital losses of
the Company in their individual income tax returns. In general, any loss upon
the sale or exchange of shares by a shareholder who has held such shares for six
months or less (after applying certain holding period rules) will be treated as
a long-term capital loss to the extent distributions from the Company are
required to be treated by such shareholder as long-term capital gain.
BACKUP WITHHOLDING
The Company will report to its domestic shareholders and to the IRS the
amount of dividends paid during each calendar year, and the amount of tax
withheld, if any. Under the backup withholding rules, a shareholder may be
subject to backup withholding at the rate of 31% with respect to dividends paid
unless such holder: (i) is a corporation or comes within certain other exempt
categories and, when required, demonstrates this fact, or (ii) provides a
taxpayer identification number, certifies to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. A shareholder that does not provide the Company with a
correct taxpayer identification number may also be
37
<PAGE> 39
subject to penalties imposed by the IRS. Any amount paid as backup withholding
will be creditable against the shareholder's income tax liability. In addition,
the Company may be required to withhold a portion of capital gain distributions
to any shareholders who fail to certify their non-foreign status to the Company.
See "-- Taxation of Foreign Shareholders."
TAXATION OF PENSION TRUSTS
For purposes of the "five or fewer" test described above, beneficiaries of
a domestic pension trust that owns shares in the Company generally will be
treated as owning such shares in proportion to their actuarial interests in the
trust. In addition, amounts distributed by the Company to a tax-exempt pension
trust generally do not constitute "unrelated business taxable income" ("UBTI")
to such trust unless the trust owns more than ten percent of the Company's
Common Shares, in which case a portion of such amounts distributed may be
treated as UBTI.
TAXATION OF FOREIGN SHAREHOLDERS
The rules governing United States federal income taxation of nonresident
alien individuals or foreign corporations, foreign partnerships and other
foreign shareholders (collectively, "Non-U.S. Shareholders") are complex and no
attempt is made herein to provide more than a summary of such rules. Prospective
Non-U.S. Shareholders should consult with their own tax advisors to determine
the impact of federal, state and local income tax laws with regard to an
investment in the Common Shares, including any reporting requirements.
It is currently anticipated that the Company will qualify as a
"domestically controlled REIT" (i.e., a REIT in which at all times during a
specified testing period less than 50% of the value of the capital stock of
which is owned directly or indirectly by Non-U.S. Shareholders) and therefore
gain from the sale of Common Shares by a Non-U.S. Shareholder will not be
subject to United States taxation unless such gain is treated as "effectively
connected" with the Non-U.S. Shareholder's United States trade or business.
Distributions that are not attributable to gain from the sale or exchange
by the Company of United States real property interests (and are not designated
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 generally will be subject to a United States
withholding tax equal to 30% of the gross amount of the distribution, subject to
reduction or elimination under an applicable tax treaty. However, if dividends
from the investment in the shares are treated as "effectively connected" with
the Non-U.S. Shareholder's conduct of a United States trade or business, such
dividends will be subject to regular U.S. income taxation (foreign corporations
may also be subject to the 30% branch profits tax). The Company expects to
withhold United States income tax at the rate of 30% on the gross amount of any
such dividends paid to a Non-U.S. Shareholder unless: (i) a lower treaty rate
applies and the Non-U.S. Shareholder files certain information evidencing its
entitlement to such lower treaty rate, or (ii) the Non-U.S. Shareholder files an
IRS Form 4224 with the Company claiming that the distribution is "effectively
connected" income. Distributions which exceed current and accumulated earnings
and profits of the Company will not be taxable to the extent that they do not
exceed the adjusted basis of a shareholder's shares, but rather will reduce (but
not below zero) the adjusted basis of such shares. To the extent that such
distributions exceed the adjusted basis of a Non-U.S. Shareholder's shares, they
generally will give rise to United States tax liability if the Non-U.S.
Shareholder would otherwise be subject to tax on gain from the sale or
disposition of his shares in the Company, as described above. If it cannot be
determined at the time a distribution is made whether or not such distribution
will be in excess of current and accumulated earnings and profits, the
distributions will be subject to withholding at the same rate as dividends.
However, amounts thus withheld are refundable if it is subsequently determined
that such distribution was, in fact, in excess of current and accumulated
earnings and profits of the Company.
Distributions by the Company to a Non-U.S. Shareholder that are
attributable to gain from sales or exchanges by the Company of a United States
real property interest are subject to income and withholding tax under the
provisions of the Foreign Investment in Real Property Tax Act of 1980
("FIRPTA"). Under FIRPTA, those distributions, if any, which are treated as gain
recognized from the sale of a United States real
38
<PAGE> 40
property interest, are taxed as income "effectively connected" with a United
States business. Non-U.S. Shareholders would thus be taxed at the normal capital
gain rates applicable to U.S. shareholders (subject to the applicable
alternative minimum tax and a special alternative minimum tax for nonresident
alien individuals). Also, distributions subject to FIRPTA may be subject to a
30% branch profits tax in the hands of a foreign corporate shareholder not
entitled to treaty exemption. The Company will withhold 35% of any distribution
to a Non-U.S. Shareholder that could be designated by the Company as a capital
gain dividend. This amount is creditable against the Non-U.S. Shareholder's
FIRPTA tax liability. A refund may be available if the amount withheld exceeds
the Non-U.S. Shareholder's federal tax liability.
OTHER TAX CONSEQUENCES
The Company and its shareholders may be subject to state or local taxation
in various jurisdictions, including those in which it or they transact business
or reside. The state and local tax treatment of the Company and its shareholders
may not conform to the federal income tax consequences discussed above.
Prospective shareholders should consult their own tax advisors regarding the
effect of state and local tax laws on an investment in the Company.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED SHARE DIVIDENDS
The Company's ratio of earnings to fixed charges for the three-month period
ended March 31, 1996, the fiscal years ended December 31, 1995, December 31,
1994 and December 31, 1993 (which includes results of operations for the pre-IPO
period January 1, 1993 through February 9, 1993), was 1.97, 1.66, 1.86 and 1.58,
respectively. The Company's ratio of earnings to combined fixed charges and
Preferred Share dividends for the three month period ended March 31, 1996 and
the fiscal year ended December 31, 1995 was 1.48 and 1.61, respectively.
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income (loss) before
income taxes and extraordinary items. Fixed charges consist of interest costs,
whether expensed or capitalized, the interest component of rental expense, and
amortization of debt discounts and issue costs, whether expensed or capitalized.
For the ratio of earnings to combined fixed charges combined fixed charges and
Preferred Share dividends the fixed charges are also adjusted by the Preferred
Share dividends.
Prior to completion of the IPO, DDG operated in a manner so as to minimize
net taxable income. As a result, although the Company's properties have
historically generated positive net cash flow, DDG had net losses for its fiscal
years ended December 31, 1991 and 1992. Consequently, the computation of the
ratio of earnings to fixed charges for such periods indicates that earnings were
inadequate to cover fixed charges by approximately $3.2 million and $6.1
million, respectively.
The consolidation of DDG into the Company prior to and concurrently with
the IPO permitted the Company to significantly deleverage many shopping center
properties, resulting in a significantly improved ratio of earnings to fixed
charges for periods subsequent to February 1993.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Offered Securities will be named in the applicable Prospectus
Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, related to the prevailing market prices at the
time of sale, or at negotiated prices. The Company also may, from time to time,
authorize underwriters acting as the Company's agents to offer and sell the
Offered Securities upon the terms and conditions set forth in an applicable
Prospectus Supplement. In connection with the sale of Offered Securities,
underwriters may be deemed to have received compensation from the Company
39
<PAGE> 41
in the form of underwriting discounts or commissions and may also receive
commissions from purchasers of Offered Securities for whom they may act as
agent. Underwriters may sell Offered Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions from the
underwriters 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 Offered 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 Offered 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 Offered Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements entered into with the
Company, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Offered 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 or more than, the respective amounts
stated in the applicable Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions, but will in all cases be
subject to the approval of the Company. Contracts will not be subject to any
conditions except (i) the purchase by an institution of the Offered 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 Offered Securities are being sold to underwriters, the
Company shall have sold to such underwriters the total principal amount of the
Offered 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.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of the Company for the year ended December 31,
1995, the audited historical financial statements included on pages F-2 to F-10
of the Company's Current Report on Form 8-K dated May 8, 1995, and the audited
historical financial statements included on pages F-2 to F-8 of the Company's
Current Report on Form 8-K dated November 3, 1995, have been so incorporated in
reliance on the reports of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the Offered Securities as well as certain legal matters
described under "Federal Income Tax Considerations" will be passed upon for the
Company by Baker & Hostetler, Cleveland, Ohio, and for any underwriters, dealers
or agents by Brown & Wood, New York, New York. A partner of Baker & Hostetler
who is participating as counsel in this offering serves as a director of the
Company.
40
<PAGE> 42
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder. Except
for the SEC registration fee, all amounts are estimates.
<TABLE>
<S> <C>
SEC registration fee..................................................... $ 108,410
NYSE listing fee......................................................... 20,000
Accounting fees and expenses............................................. 200,000
Legal fees and expenses (other than Blue Sky)............................ 200,000
Blue Sky fees and expenses (including counsel fees)...................... 25,000
Printing and engraving expenses.......................................... 200,000
Transfer agent's and registrar's fees and expenses....................... 25,000
Rating Agency Fees....................................................... 200,000
Miscellaneous Expenses................................................... 21,590
--------
Total.......................................................... $1,000,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Ohio Revised Code (the "Ohio Code") authorizes Ohio corporations to
indemnify officers and directors from liability if the officer or director acted
in good faith and in a manner reasonably believed by the officer or director to
be in or not opposed to the best interests of the corporation, and with respect
to any criminal actions, if the officer or director had no reason to believe his
action was unlawful. In the case of an action by or on behalf of a corporation,
indemnification may not be made (i) if the person seeking indemnification is
adjudged liable for negligence or misconduct, unless the court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnification, or (ii) if liability asserted against such person concerns
certain unlawful distributions. The indemnification provisions of the Ohio Code
require indemnification if a director or officer has been successful on the
merits or otherwise in defense of any action, suit or proceeding that he was a
party to by reason of the fact that he is or was a director or officer of the
corporation. The indemnification authorized under Ohio law is not exclusive and
is in addition to any other rights granted to officers and directors under the
articles of incorporation or code of regulations of the corporation or any
agreement between officers and directors and the corporation. A corporation may
purchase and maintain insurance or furnish similar protection on behalf of any
officer or director against any liability asserted against him and incurred by
him in his capacity, or arising out of the status, as an officer or director,
whether or not the corporation would have the power to indemnify him against
such liability under the Ohio Code.
The Registrant's Code of Regulations provides for the indemnification of
directors and officers of the Registrant to the maximum extent permitted by Ohio
law as authorized by the Board of Directors of the Registrant and for the
advancement of expenses incurred in connection with the defense of any action,
suit or proceeding that he was a party to by reason of the fact that he is or
was a director or officer of the Registrant upon the receipt of an undertaking
to repay such amount unless it is ultimately determined that the director or
officer is entitled to indemnification.
The Registrant maintains a directors' and officers' insurance policy which
insures the directors and officers of the Registrant from claims arising out of
an alleged wrongful act by such persons in their respective capacities as
directors and officers of the Registrant, subject to certain exceptions.
The Registrant has entered into indemnification agreements with its
directors and officers which provide for indemnification to the fullest extent
permitted under Ohio law.
II-1
<PAGE> 43
Reference is made to Section 6 of the separate Underwriting Agreements,
copies of which are filed herewith as Exhibits 1(a) and 1(b), for information
concerning indemnification arrangements among the Registrant and the
Underwriters.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C> <C>
1(a) -- Form of Underwriting Agreement for Debt Securities
1(b) -- Form of Underwriting Agreement for Equity Securities
1(c) -- Form of Distribution Agreement for Medium-Term Notes
4(a) -- Amended and Restated Articles of Incorporation
4(b) -- Senior Indenture(1)
4(b)(1) -- First Supplement to Senior Indenture(4)
4(c) -- Subordinated Indenture(2)
4(d) -- Form of Senior Debt Security(3)
4(e) -- Form of Subordinated Debt Security(3)
4(f) -- Form of Fixed Rate Senior Medium-Term Note
4(g) -- Form of Floating Rate Senior Medium-Term Note
4(h) -- Form of Fixed Rate Subordinated Medium-Term Note
4(i) -- Form of Floating Rate Subordinated Medium-Term Note
4(j) -- Specimen Certificate for Common Shares(3)
4(k) -- Form of Common Share Warrant Agreement(6)
4(l) -- Form of Certificate for Preferred Shares(6)
4(m) -- Form of Deposit Agreement and Depositary Receipt(6)
5 -- Opinion of Baker & Hostetler
8 -- Opinion of Baker & Hostetler regarding tax matters
12(a) -- Calculation of Ratio of Earnings to Fixed Charges
12(b) -- Calculation of Ratio of Earnings to Combined Fixed Charges and Preferred
Share Dividends
23(a) -- Consent of Price Waterhouse LLP
23(b) -- Consent of Baker & Hostetler (included in Exhibit 5)
25(a) -- Statement of Eligibility of Trustee on Form T-1 for National City Bank
25(b) -- Statement of Eligibility of Trustee on Form T-1 for Chemical Bank
27 -- Financial Data Schedule(5)
</TABLE>
- ---------------
(1) Incorporated by reference from the Company's Current Report on Form 8-K
dated July 19, 1994.
(2) Incorporated by reference from the Company's Current Report on Form 8-K
dated December 5, 1994.
(3) Incorporated by reference from the Company's Registration Statement on Form
S-3 (No. 33-78778) filed with the Commission on May 10, 1994.
(4) Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.
(5) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1996.
(6) To be filed by amendment or incorporated by reference prior to the offering
of the related securities.
II-2
<PAGE> 44
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 this
registration statement. Notwithstanding the foregoing, any increase or
decrease in the 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% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed 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 Securities offered herein, and the
offering of such Securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the Securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby further 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 Securities offered herein, and the offering of such Securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 of this
registration statement, or otherwise (other than insurance), the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such 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 such 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 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 THE CITY OF CLEVELAND, STATE OF OHIO, ON THE 31ST DAY OF MAY,
1996.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By: /s/ SCOTT A. WOLSTEIN
---------------------------------
Scott A. Wolstein, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Scott A. Wolstein, James A. Schoff and Albert T.
Adams or any one of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all pre- or post-effective
amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, 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 he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ BERT L. WOLSTEIN Chairman and Director May 31, 1996
- -----------------------------------
Bert L. Wolstein
/s/ SCOTT A. WOLSTEIN President, Chief Executive Officer May 31, 1996
- ----------------------------------- and Director
Scott A. Wolstein
/s/ JAMES A. SCHOFF Executive Vice President, May 31, 1996
- ----------------------------------- Chief Operating Officer
James A. Schoff and Director
/s/ WILLIAM H. SCHAFER Vice President and Chief Financial May 31, 1996
- ----------------------------------- Officer (Principal Financial Officer
William H. Schafer and Principal Accounting Officer)
Director May , 1996
- -----------------------------------
Walter H. Teninga
/s/ WILLIAM N. HULETT III Director May 31, 1996
- -----------------------------------
William N. Hulett III
Director May , 1996
- -----------------------------------
Ethan Penner
Director May , 1996
- -----------------------------------
Albert T. Adams
</TABLE>
II-4
<PAGE> 1
Exhibit 1(a)
B&W Draft 5/31/96
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(an Ohio corporation)
DEBT SECURITIES
UNDERWRITING AGREEMENT BASIC PROVISIONS
_______ , 1996
Dean Witter Reynolds Inc.
Two World Trade Center
New York, New York 10048
Dear Sirs:
1. INTRODUCTORY. Developers Diversified Realty Corporation, an Ohio corporation
(the "Company"), proposes to issue and sell its senior debt securities (the
"Senior Securities") or its subordinated debt securities (the "Subordinated
Securities"), or both, from time to time, in one or more offerings on terms to
be determined at the time of sale. The Senior Securities will be issued under an
indenture dated as of May 1, 1994 (the "Senior Indenture") between the Company
and National City Bank, as trustee (the "Senior Trustee"), and the Subordinated
Securities will be issued under an indenture dated as of May 1, 1994 (the
"Subordinated Indenture") between the Company and Chemical Bank, as trustee (the
"Subordinated Trustee"). The term "Trustee" as used herein shall refer to either
the Senior Trustee or the Subordinated Trustee, as appropriate, for Senior
Securities or Subordinated Securities. The Senior Indenture and the Subordinated
Indenture, each as amended or supplemented from time to time, are each sometimes
referred to as the "Indenture." Each series of Senior Securities or Subordinated
Securities may vary, as applicable, as to aggregate principal amount, maturity
date, interest rate or formula and timing of payments thereof, redemption and/or
repayment
1
<PAGE> 2
provisions, conversion provisions, sinking fund requirements, if any, and any
other variable terms which the Senior Indenture or the Subordinated Indenture,
as the case may be, contemplates may be set forth in the Senior Securities and
the Subordinated Securities as issued from time to time. The Senior Securities
or the Subordinated Securities may be offered either together or separately. As
used herein, "Securities" shall mean the Senior Securities or the Subordinated
Securities or any combination thereof. As used herein, "you" and "your," unless
the context otherwise requires, shall mean the parties to whom this Agreement is
addressed together with the other parties, if any, identified in the applicable
Terms Agreement (as hereinafter defined) as additional co-managers with respect
to Underwritten Securities (as hereinafter defined) purchased pursuant thereto.
Whenever the Company determines to make an offering of Securities
through you or through an underwriting syndicate managed by you, the Company
will enter into an agreement (the "Terms Agreement") providing for the sale of
such Securities (the "Underwritten Securities") to, and the purchase and
offering thereof by, you and such other underwriters, if any, selected by you as
have authorized you to enter into such Terms Agreement on their behalf (the
"Underwriters," which term shall include you whether acting alone in the sale of
the Underwritten Securities or as a member of an underwriting syndicate and any
Underwriter substituted pursuant to Section 11 hereof). The Terms Agreement
relating to the offering of Underwritten Securities shall specify the principal
amount of Underwritten Securities to be initially issued (the "Initial
Underwritten Securities"), the names of the Underwriters participating in such
offering (subject to substitution as provided in Section 11 hereof), the
principal amount of Initial Underwritten Securities which each such Underwriter
severally agrees to purchase, the names of such of you or such other
Underwriters acting as co-managers, if any, in connection with such offering,
the price at which the Initial Underwritten Securities are to be purchased by
the Underwriters from the Company, the initial public offering price, the time,
date and place of delivery and payment, any delayed delivery arrangements and
any other variable terms of the Initial Underwritten Securities (including, but
not limited to, current ratings, designations, denominations, interest rates or
formulas, interest payment dates, maturity dates, conversion provisions,
redemption and/or repayment provisions and sinking fund requirements. In
addition, each Terms Agreement shall specify whether the Company has agreed to
grant to the Underwriters an option to purchase additional Underwritten
Securities to cover over-allotments, if any, and the principal amount of
Underwritten Securities subject to such option (the "Option Securities"). As
used herein, the term "Underwritten Securities" shall include the Initial
Underwritten Securities and all or any portion of the
2
<PAGE> 3
Option Securities agreed to be purchased by the Underwriters as provided herein,
if any. The Terms Agreement, which shall be substantially in the form of Exhibit
A hereto, may take the form of an exchange of any standard form of written
telecommunication between you and the Company. Each offering of Underwritten
Securities through you or through an underwriting syndicate managed by you will
be governed by this Agreement, as supplemented by the applicable Terms
Agreement.
2. REPRESENTATIONS AND WARRANTIES. (a) The Company
represents and warrants to you, as of the date hereof, and to you
and each other Underwriter named in the applicable Terms Agreement,
as of the date thereof (such latter date being referred to herein
as a "Representation Date"), that:
(i) A registration statement on Form S-3 (No. 333- ) for
the registration of the Securities (including the Underwritten
Securities) and certain of the Company's equity securities and warrants
to purchase equity securities, under the Securities Act of 1933, as
amended (the "1933 Act"), and the offering thereof from time to time in
accordance with Rule 415 of the rules and regulations of the Securities
and Exchange Commission (the "Commission") under the 1933 Act (the
"1933 Act Regulations"), has heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the 1933
Act and the 1933 Act Regulations and has been filed with the Commission
under the 1933 Act. One or more amendments to such registration, as may
have been required and copies of which have heretofore been delivered
to you, have been so prepared and filed prior to the execution of the
applicable Terms Agreement. Such registration statement (as amended, if
applicable) has been declared effective by the Commission and each of
the Senior Indenture and the Subordinated Indenture has been qualified
under the Trust Indenture Act of 1939, as amended (the "1939 Act").
Such registration statement (as amended, if applicable) and the
registration statements of the Company on Form S-3 (Nos. 33-94182 and
33-90182), to the extent the applicable Terms Agreement relates to
Underwritten Securities registered thereunder in accordance with Rule
429 of the 1933 Act, on the one hand, and the prospectus constituting a
part thereof and each prospectus supplement relating to the offering of
Underwritten Securities provided to the Underwriters for use (whether
or not such prospectus supplement is required to be filed by the
Company pursuant to Rule 424(b) of the 1933 Act Regulations) (the
"Prospectus Supplement"), on the other hand, including all documents
incorporated therein by reference, as from time to time amended or
supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act")
3
<PAGE> 4
or otherwise, are referred to herein as the "Registration Statement"
and the "Prospectus," respectively; provided, however, that a
Prospectus Supplement shall be deemed to have supplemented the
Prospectus only with respect to the offering of Underwritten Securities
to which it relates. If the Company elects to reply on Rule 434 under
the 1933 Act Regulations, all references to the Prospectus shall be
deemed to include, without limitation, the form of prospectus and the
abbreviated term sheet, taken together, provided to the Underwriters by
the Company in reliance on Rule 434 under the 1933 Act (the "Rule 434
Prospectus"). If the Company files a registration statement to register
a portion of the Securities and relies on Rule 462(b) for such
registration statement to become effective upon filing with the
Commission (the "Rule 462 Registration Statement"), then any reference
to "Registration Statement" herein shall be deemed to be both the
registration statements referred to above (Nos. 333- , 33-94182 and
33-90182) and the Rule 462 Registration Statement, as each such
registration statement may be amended pursuant to the 1933 Act. All
references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (and all other references of
like import) shall be deemed to mean and include all such financial
statements and schedules and other information which is or is deemed to
be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include, without limitation, the
filing of any document under the 1934 Act which is or is deemed to be
incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
(ii) At the time the Registration Statement became
effective, the Registration Statement and the Prospectus conformed, and
as of the applicable Representation Date will conform, in all material
respects to the requirements of the 1933 Act, the 1933 Act Regulations
and the 1939 Act. At the time the Registration Statement became
effective, the Registration Statement did not, and as of the applicable
Representation Date, will not, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus, as of the date hereof does not, and as of the applicable
Representation Date and at Closing Time (as hereinafter defined) will
not, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they
4
<PAGE> 5
were made, not misleading; provided, however, that the foregoing
representations and warranties shall not apply to information contained
in or omitted from the Registration Statement or the Prospectus in
reliance upon, and in conformity with, written information furnished to
the Company by or on behalf of any Underwriter, directly or through
you, specifically for use in the preparation thereof or to that part of
the Registration Statement which shall constitute the Statement of
Eligibility under the 1939 Act (Form T-1) (the "Statement of
Eligibility") of the Senior Trustee and the Subordinated Trustee under
the Senior Indenture and the Subordinated Indenture, respectively.
(iii) The documents incorporated or deemed to be
incorporated by reference in the Prospectus pursuant to Item 12 of Form
S-3 under the 1933 Act, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects
with the requirements of the 1934 Act and the rules and regulations of
the Commission under the 1934 Act (the "1934 Act Regulations"), and,
when read together with the other information in the Prospectus, at the
time the Registration Statement became effective and as of the
applicable Representation Date or Closing Time or during the period
specified in Section 4(f), did not and will not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, of the Company and its
subsidiaries considered as one enterprise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by
the Company or its subsidiaries which are material with respect to the
Company and its subsidiaries considered as one enterprise other than
those in the ordinary course of business, and (C) except for regular
quarterly dividends on the Company's common shares, and regular
dividends declared, paid or made in accordance with the terms of any
class or series of the Company's preferred shares, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
5
<PAGE> 6
(v) The consolidated financial statements and supporting
schedules of the Company included in, or incorporated by reference
into, the Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated subsidiaries as
of the dates indicated and the results of their operations for the
periods specified and the consolidated financial statements of
Developers Diversified Group ("DDG") included in, or incorporated by
reference into, the Registration Statement and the Prospectus present
fairly the financial position of DDG as of the dates indicated and the
results of its operations for the periods specified; except as
otherwise stated in the Registration Statement and the Prospectus, said
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis; and the
supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus present fairly in all
material respects the information required to be stated therein.
(vi) Price Waterhouse LLP, who have expressed their opinion
on the audited financial statements and related schedules included in,
or incorporated by reference into, the Registration Statement, are
independent public accountants within the meaning of the 1933 Act and
the applicable 1933 Act Regulations.
(vii) The Company has been duly organized and is validly
existing and in good standing as a corporation under the laws of the
State of Ohio, with power and authority (corporate and other) to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus; the Company
is in possession of and operating in compliance with all material
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders required for the conduct of its
business, all of which are valid and in full force and effect; and the
Company is duly qualified to do business and in good standing as a
foreign corporation in all other jurisdictions where its ownership or
leasing of properties or the conduct of its business requires such
qualification, except where failure to qualify and be in good standing
would not have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(viii) Each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its
6
<PAGE> 7
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not
have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise.
(ix) The Indenture has been duly and validly authorized,
executed and delivered by the Company and constitutes the valid and
legally binding agreement of the Company, enforceable in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general equity
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(x) If applicable, the capitalization of the Company is as
set forth in the Prospectus under "Capitalization;" the issued and
outstanding capital stock of the Company has been duly authorized and
validly issued and is fully paid and non-assessable and is not subject
to preemptive or other similar rights; and all of the issued and
outstanding capital stock of the Company's subsidiaries has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned directly by the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(xi) The Underwritten Securities have been duly authorized
by the Company for issuance and sale pursuant to this Agreement and,
when issued, authenticated and delivered pursuant to the provisions of
the Indenture against payment of the consideration therefor specified
in the applicable Terms Agreement or any Delayed Delivery Contract (as
hereinafter defined), the Underwritten Securities will constitute valid
and legally binding obligations of the Company, enforceable in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws relating to or
affecting enforcement of creditors' rights generally or by general
equity principles (regardless or whether enforcement is considered in a
proceeding in equity or at law); the Underwritten Securities and the
Indenture conform in all material respects to all statements relating
thereto contained in the Prospectus; and the Underwritten Securities
will be entitled to the benefits provided by the Indenture.
7
<PAGE> 8
(xii) If applicable, the Common Shares issuable upon
conversion of any of the Securities have been duly and validly
authorized and reserved for issuance upon such conversion by all
necessary corporate action and such shares, when issued upon such
conversion, will be duly and validly issued and will be fully paid and
non-assessable, and the issuance of such shares upon such conversion
will not be subject to preemptive or other similar rights; the Common
Shares so issuable will conform in all material respects, as of the
applicable Representation Date, to all statements relating thereto
contained in the Prospectus.
(xiii) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened against or
affecting the Company or its subsidiaries, which is required to be
disclosed in the Prospectus (other than as disclosed therein), or which
might result in any material adverse change in the condition, financial
or otherwise, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, or might materially and
adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement, the
applicable Terms Agreement, or the Indenture, or the transactions
contemplated herein and therein; all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party
or of which any of their respective property is the subject which are
not described in the Prospectus, including routine litigation
incidental to the business, are, considered in the aggregate, not
material; and there are no material contracts or documents of the
Company or its subsidiaries which are required to be filed as exhibits
to the Registration Statement by the 1933 Act or by the 1933 Act
Regulations which have not been so filed.
(xiv) Neither the Company nor any of its subsidiaries, is
in violation of its respective articles of incorporation or other
organizational document, or its Code of Regulations or bylaws, as the
case may be (the "Code of Regulations"), or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party
or by which it or its properties may be bound, where such defaults in
the aggregate would have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise; and the execution and delivery of this Agreement, the
applicable
8
<PAGE> 9
Terms Agreement and the Indenture, and the consummation of the
transactions contemplated herein and therein have been duly authorized
by all necessary corporate action and compliance by the Company with
its obligations hereunder and thereunder will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or any of its subsidiaries is a party or by which it
may be bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such action result in
any violation of the provisions of the Articles of Incorporation or
Code of Regulations or, to the best of its knowledge, any law,
administrative regulation or administrative or court order or decree;
and no consent, approval, authorization or order of any court or
governmental authority or agency is required for the consummation by
the Company of the transactions contemplated by this Agreement or the
applicable Terms Agreement or the Indenture, except such as has been
obtained or as may be required under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), state securities or
Blue Sky laws or real estate syndication laws in connection with the
purchase and distribution of the Underwritten Securities by the
Underwriters.
(xv) The Company has full right, power and authority to
enter into this Agreement, the applicable Terms Agreement and the
Delayed Delivery Contracts, if any, and this Agreement has been, and as
of the applicable Representation Date, the applicable Terms Agreement
and the Delayed Delivery Contracts, if any, will have been duly
authorized, executed and delivered by the Company.
(xvi) With respect to its taxable years ended December 31,
1995, and its taxable years ending thereafter, the Company has operated
and will continue to operate so as to qualify as a Real Estate
Investment Trust ("REIT"), the Company qualified as a REIT for its
taxable years ended December 31, 1993 and December 31, 1994 and the
Company intends to make a timely election to be taxed as a REIT with
respect to its taxable year ended December 31, 1995.
(xvii) Neither the Company nor any of its subsidiaries is
required to be registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xviii) Neither the Company nor any of its subsidiaries
is required to own or possess any trademarks, service marks,
9
<PAGE> 10
trade names or copyrights in order to conduct the business now
operated by them.
(xix) If applicable, the Underwritten Securities have been
approved for listing on the New York Stock Exchange.
(xx) (A) The Company or its subsidiaries have good and
marketable title or leasehold interest, as the case may be, to the
portfolio properties (the "Portfolio Properties") described in the
Prospectus (or documents incorporated by reference therein) as being
owned by the Company or its subsidiaries, except with respect to
properties described in the Prospectus (or documents incorporated by
reference therein) as being held by the Company through joint ventures,
in each case free and clear of all liens, encumbrances, claims,
security interests and defects (collectively, the "Defects"), except
such as do not materially adversely affect the value of such property
or interests and do not materially interfere with the use made and
proposed to be made of such property or interests by the Company or
such subsidiaries, as the case may be; (B) the joint venture interest
in each property described in the Prospectus (or documents incorporated
by reference therein) as being held by the Company through a joint
venture, is owned, free and clear of all Defects except for such
Defects that will not have a material adverse effect on the business,
earnings or business prospects of the Company and its subsidiaries
considered as one enterprise; (C) all liens, charges, encumbrances,
claims, or restrictions on or affecting the properties and assets of
the Company or its subsidiaries which are required to be disclosed in
the Prospectus are disclosed therein; (D) none of the Company, its
subsidiaries or, to the best of the Company's knowledge, any lessee of
any of the Portfolio Properties is in default under any of the leases
governing the Portfolio Properties and the Company does not know of any
event which, but for the passage of time or the giving of notice, or
both, would constitute a default under any of such leases, except such
defaults that would not have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise; (E) no tenant under any of the leases pursuant to which
the Company or its subsidiaries leases any of the Portfolio Properties
has an option or right of first refusal to purchase the premises
demised under such lease, except for (i) Kmart Corporation, (ii) the
tenants at the Portfolio Property located in Solon, Ohio, (iii) as
otherwise described in the Prospectus (or document incorporated by
reference therein), and (iv) such options or rights of first refusal
that, if exercised, would not have a material adverse effect on the
condition, financial
10
<PAGE> 11
or otherwise, or on the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise; (F) each of the Portfolio Properties complies with all
applicable codes and zoning laws and regulations, except for such
failures to comply which would not individually or in the aggregate
have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise; and
(G) the Company does not have knowledge of any pending or threatened
condemnation, zoning change, or other proceeding or action that will in
any manner affect the size of, use of, improvements on, construction
on, or access to the Portfolio Properties, except such proceedings or
actions that would not have a material adverse effect on the condition,
financial or otherwise, or on the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise.
(xxi)The Company or its subsidiaries have title insurance
on each of the Portfolio Properties (except with respect to each
property described in the Prospectus (or documents incorporated by
reference therein) as held by the Company through a joint venture) in
an amount at least equal to the greater of (A) the cost of acquisition
of such Portfolio Property and (B) the cost of construction of the
improvements located on such Portfolio Property, except in each case,
where the failure to maintain such title insurance would not have a
material adverse effect on the condition, financial or otherwise, or on
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise; the joint venture owning
each property described in the Prospectus (or documents incorporated by
reference therein) as held by the Company through a joint venture has
title insurance on such property in an amount at least equal to the
greater of (A) the cost of acquisition of such Portfolio Property by
such joint venture and (B) the cost of construction of the improvements
located on such Portfolio Property, except in each case, where the
failure to maintain such title insurance would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(xxii)The mortgages and deeds of trust encumbering the
Portfolio Properties are not convertible and neither the Company nor
any of its subsidiaries hold a participating interest therein and said
mortgages and deeds of trust are not
11
<PAGE> 12
cross-defaulted or cross-collateralized to any property not
owned by the Company or its subsidiaries.
(xxiii)The Company has no knowledge of (a) the unlawful
presence of any hazardous substances, hazardous materials, toxic
substances or waste materials (collectively, "Hazardous Materials") on
any of the Portfolio Properties or of (b) any unlawful spills, release,
discharges or disposal of Hazardous Materials that have occurred or are
presently occurring from the Portfolio Properties as a result of any
construction on or operation and use of the Portfolio Properties, which
presence or occurrence would materially adversely affect the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise. In connection with the construction on or operation and use
of the Portfolio Properties, the Company represents that, as of the
date of this Agreement, the Company has no knowledge of any material
failure to comply with all applicable local, state and federal
environmental laws, regulations, ordinances and administrative and
judicial orders relating to the generation, recycling, reuse, sale,
storage, handling, transport and disposal of any Hazardous Materials
that would have a material adverse effect on the condition, financial
or otherwise, or on the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise.
(b) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company, as the case may be, to each
Underwriter participating in such offering as to the matters covered thereby on
the date of such certificate and, unless subsequently amended or supplemented,
at the applicable Representation Date subsequent thereto.
3. PURCHASE BY, AND SALE AND DELIVERY TO, UNDERWRITERS. (a) The several
commitments of the Underwriters to purchase the Underwritten Securities pursuant
to the applicable Terms Agreement shall be deemed to have been made on the basis
of the representations and warranties herein contained and shall be subject to
the terms and conditions herein set forth.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company may grant, if so provided in the applicable Terms Agreement relating to
the Initial Underwritten Securities, an option to the Underwriters named in such
Terms Agreement, severally and not jointly, to purchase up to the
12
<PAGE> 13
aggregate principal amount of Option Securities set forth therein at the same
price per Option Security as is applicable to the Initial Underwritten
Securities less an amount equal to any interest paid or payable on the Initial
Underwritten Securities and not payable on the Option Securities. Such option,
if granted, will expire 30 days (or such lesser number of days as may be
specified in the applicable Terms Agreement) after the Representation Date
relating to the Initial Underwritten Securities, and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Underwritten Securities upon notice by you to the Company setting forth
the aggregate principal amount of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time, date and place of delivery
(a "Date of Delivery") shall be determined by you, but shall not be later than
seven full business days and not be earlier than two full business days after
the exercise of said option, nor in any event prior to Closing Time, unless
otherwise agreed upon by you and the Company. If the option is exercised as to
all or any portion of the Option Securities, each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total aggregate
principal amount of Option Securities then being purchased which the aggregate
principal amount of Initial Underwritten Securities each such Underwriter has
severally agreed to purchase as set forth in the applicable Terms Agreement
bears to the total aggregate principal amount of Initial Underwritten Securities
(except as otherwise provided in the applicable Terms Agreement).
(c) Payment of the purchase price for, and delivery of, the
Underwritten Securities to be purchased by the Underwriters shall be made at the
office of Brown & Wood, 58th Floor, One World Trade Center, New York, New York
10048-0557, or at such other place as shall be agreed upon by you and the
Company, at 10:00 A.M., New York City time, on the third business day (unless
postponed in accordance with the provisions of Section 11 hereof) following the
date of the applicable Terms Agreement, or if such Terms Agreement is executed
subsequent to 4:30 P.M. on the date of its execution, on the fourth business
day, or at such other time as shall be agreed upon by you and the Company (each
such time and date of payment and delivery being referred to herein as the
"Closing Time"). In addition, in the event that any or all of the Option
Securities are purchased by the Underwriters, payment of the purchase price for,
and delivery of certificates representing, such Option Securities, shall be made
at the above-mentioned offices of Brown & Wood, or at such other place as shall
be agreed upon by you and the Company on each Date of Delivery as specified in
the notice from you to the Company. Unless otherwise specified in the applicable
Terms Agreement, payment shall be made to the Company by
13
<PAGE> 14
certified or official bank check or checks in Federal or similar same-day funds
payable to the order of the Company against delivery to you for the respective
accounts of the Underwriters for the Underwritten Securities to be purchased by
them. The Underwritten Securities shall be in such authorized denominations and
registered in such names as you may request in writing at least one business day
prior to the Closing Time or Date of Delivery, as the case may be. The
Underwritten Securities, which may be in temporary form, will be made available
for examination and packaging by you on or before the first business day prior
to the Closing Time or the Date of Delivery, as the case may be.
If authorized by the applicable Terms Agreement, the Underwriters named
therein may solicit offers to purchase Underwritten Securities from the Company
pursuant to delayed delivery contracts ("Delayed Delivery Contracts")
substantially in the form of Exhibit B hereto with such changes therein as the
Company may approve. As compensation for arranging Delayed Delivery Contracts,
the Company will pay to you at Closing Time, for the respective accounts of the
Underwriters, a fee specified in the applicable Terms Agreement for each of the
Underwritten Securities for which Delayed Delivery Contracts are made at the
Closing Time. Any Delayed Delivery Contracts are to be with institutional
investors of the types described in the Prospectus. At the Closing Time, the
Company will enter into Delayed Delivery Contracts (for not less than the
minimum principal amount of Underwritten Securities per Delayed Delivery
Contract specified in the applicable Terms Agreement) with all purchasers
proposed by the Underwriters and previously approved by the Company as provided
below, but not for an aggregate principal amount of Underwritten Securities in
excess of that specified in the applicable Terms Agreement. The Underwriters
will not have any responsibility for the validity or performance of Delayed
Delivery Contracts.
You shall submit to the Company, at least two business days prior to
the Closing Time, the names of any institutional investors with which it is
proposed that the Company will enter into Delayed Delivery Contracts and the
principal amount of Underwritten Securities to be purchased by each of them, and
the Company will advise you, at least one business day prior to the Closing
Time, of the names of the institutions with which the making of Delayed Delivery
Contracts is approved by the Company and the principal amount of Underwritten
Securities to be covered by each such Delayed Delivery Contract.
The principal amount of Underwritten Securities agreed to be purchased
by the several Underwriters pursuant to the applicable Terms Agreement shall be
reduced by the principal amount of Underwritten Securities covered by Delayed
Delivery Contracts, as to each Underwriter as set forth in a written notice
delivered by you to the Company; provided, however, that the total principal
14
<PAGE> 15
amount of Underwritten Securities to be purchased by all Underwriters shall be
the total amount of Underwritten Securities covered by the applicable Terms
Agreement, less the principal amount of Underwritten Securities covered by
Delayed Delivery Contracts.
4. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company
covenants with the several Underwriters participating in the
offering of Underwritten Securities that:
(a) Immediately following the execution of the applicable Terms
Agreement, the Company will prepare a Prospectus Supplement setting forth the
principal amount of Underwritten Securities covered thereby and their terms not
otherwise specified in the Prospectus or the Indenture, as the case may be,
pursuant to which the Underwritten Securities are being issued, the names of the
Underwriters participating in the offering and the principal amount of
Underwritten Securities which each severally has agreed to purchase, the names
of the Underwriters acting as co-managers in connection with the offering, the
price at which the Underwritten Securities are to be purchased by the
Underwriters from the Company, the initial public offering price, if any, the
selling concession and reallowance, if any, any delayed delivery arrangements,
and such other information as you and the Company deem appropriate in connection
with the offering of the Underwritten Securities; and the Company will promptly
transmit copies of the Prospectus Supplement to the Commission for filing
pursuant to Rule 424(b) of the 1933 Act Regulations.
(b) The Company will advise you promptly of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that purpose, and will
use its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible the lifting thereof, if issued. The Company will
advise you promptly of the transmittal to the Commission for filing of any
Prospectus Supplement or other supplement or amendment to the Prospectus or any
document to be filed pursuant to the 1934 Act. The Company will advise you
promptly of any request by the Commission for any amendment of or supplement to
the Registration Statement or the Prospectus or for additional information.
(c) If the Company elects to rely on Rule 434 under the 1933 Act
Regulations, the Company will prepare an abbreviated term sheet that complies
with the requirements of Rule 434 under the 1933 Act Regulations and the Company
will provide the Underwriters with copies of the form of Rule 434 Prospectus, in
such number as the Underwriters may reasonably request, and file or transmit for
filing with the Commission the form of Prospectus complying with Rule 434(c)(2)
of the 1933 Act in accordance with Rule 424(b) of
15
<PAGE> 16
the 1933 Act by the close of business in New York on the business day
immediately succeeding the date of the Terms Agreement.
(d) At any time when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act in connection with sales of the Underwritten
Securities, the Company will give you notice of its intention to file any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus, whether pursuant to the 1933 Act, 1934 Act or otherwise, and will
furnish you with copies of any such amendment or supplement a reasonable amount
of time prior to such proposed filing, and will not file any such amendment or
supplement or other documents in a form to which you or counsel for the
Underwriters shall reasonably object in writing or which is not in material
compliance with the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934
Act Regulations as applicable.
(e) The Company will deliver to each Underwriter a signed copy of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith and documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act) and will also
deliver to such Underwriter a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (including documents incorporated
by reference but without exhibits).
(f) The Company will furnish to each Underwriter, from time to time
during the period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act in connection with sales of the Underwritten Securities,
such number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request for the purposes contemplated by the 1933
Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations.
(g) If at any time after the effective date of the Registration
Statement when a prospectus relating to the Underwritten Securities is required
to be delivered under the 1933 Act or the 1934 Act any event relating to or
affecting the Company occurs as a result of which the Prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact, or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Registration
Statement or the Prospectus to comply with the 1933 Act or the 1934 Act, the
Company will promptly notify you thereof and will amend or supplement the
Registration Statement or the Prospectus to correct such statement or omission
whether by filing documents pursuant to the 1933 Act, the 1934 Act or otherwise.
16
<PAGE> 17
(h) The Company will cooperate with the Underwriters to enable the
Underwritten Securities and the Common Shares issuable upon conversion of the
Securities, if any, to be qualified for sale under the securities laws and real
estate syndication laws of such jurisdictions as you may designate and at the
request of the Underwriters will make such applications and furnish such
information as may be required of it as the issuer of the Underwritten
Securities and the Common Shares issuable upon conversion of the Securities, if
any, for that purpose; provided, however, that the Company shall not be required
to qualify to do business or to file a general consent to service of process in
any such jurisdiction. The Company will, from time to time, prepare and file
such statements and reports as are or may be required of it as the issuer of the
Underwritten Securities and the Common Shares issuable upon conversion of the
Securities, if any, to continue such qualifications in effect for so long a
period as the Underwriters may reasonably request for the distribution of the
Underwritten Securities; and in each jurisdiction in which the Underwritten
Securities and the Common Shares issuable upon conversion of the Securities, if
any, have been so qualified, the Company will file such statements and reports
as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required for the distribution of
the Underwritten Securities and the Common Shares issuable upon conversion of
the Securities, if any; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction where it is
not so qualified.
(i) With respect to each sale of Underwritten Securities, the Company
will make generally available to its security holders as soon as practicable,
but in any event no later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 of the 1933 Act Regulations) which will be in reasonable detail (but which
need not be audited) and which will comply with Section 11(a) of the 1933 Act
covering a period of at least twelve months beginning not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Regis tration Statement.
(j) The Company will furnish to its shareholders annual reports
containing financial statements certified by independent public accountants and
with quarterly summary financial information in reasonable detail which may be
unaudited. During the period of five years from the date hereof, the Company
will deliver to you and, upon request, to each of the other Underwriters, (i)
copies of each annual report of the Company and each other report furnished by
the Company to its shareholders; and will deliver to you, (ii) as soon as they
are available, copies of any other reports (financial or other) which the
Company shall publish or otherwise make available to any of its security holders
as such, and (iii) as
17
<PAGE> 18
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national securities exchange.
In the event the Company has active subsidiaries, such financial statements will
be on a consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its shareholders
generally. Separate financial statements shall be furnished for all subsidiaries
whose accounts are not consolidated but which at the time are significant
subsidiaries as defined in the 1933 Act Regulations.
(k) The Company will use the net proceeds received by it from the sale
of Underwritten Securities in the manner specified in the Prospectus under "Use
of Proceeds."
(l) The Company will use its best efforts to continue to meet the
requirements to qualify as a "real estate investment trust" under the Code for
the taxable year in which sales of the Underwritten Securities are to occur.
(m) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act in connection with sales of the
Underwritten Securities, will file promptly all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the
time periods prescribed by the 1934 Act and the 1934 Act Regulations.
(n) The Company will not, between the date of the applicable Terms
Agreement and the termination of any trading restrictions or the Closing Time,
whichever is later, with respect to the Underwritten Securities covered thereby,
without your prior written consent, offer or sell, grant any option for the sale
of, or enter into any agreement to sell, any debt securities of the Company with
a maturity of more than one year (other than the Underwritten Securities which
are to be sold pursuant to such Terms Agreement), or if such Terms Agreement
relates to Senior Securities or Subordinated Securities that are convertible
into Common Shares, any Common Shares or any security convertible into Common
Shares (except for Common Shares issued pursuant to reservations, agreements,
employee benefit plans, dividend reinvestment plans, or employee stock option
plans), except as may otherwise be provided in the applicable Terms Agreement.
(o) If applicable, the Company will reserve and keep available at all
times, free of preemptive rights or other similar rights, a sufficient number of
Common Shares for the purpose of enabling the Company to satisfy any obligations
to issue such shares upon conversion of the Securities.
(p) If applicable, the Company will use its best efforts to
list the Common Shares issuable upon conversion of the Securities
18
<PAGE> 19
on the New York Stock Exchange or such other national exchange on which the
Company's Common Shares are then listed.
(q) The Company has complied and will comply with all of the provisions
of Florida H.B. 1771, Section 1, P. 17,130 of the Florida Securities and
Investors Act, and all regulations thereunder relating to issuers doing business
with Cuba.
5. PAYMENT OF EXPENSES. The Company will pay, directly or by
reimbursement, all expenses incident to the performance of its obligations under
this Agreement or the applicable Terms Agreement, including (i) the printing and
filing of the Registration Statement as originally filed and of each amendment
thereto, (ii) the cost of printing, filing and distributing to the Underwriters
copies of this Agreement and the applicable Terms Agreement, (iii) the
preparation, issuance and delivery of the Underwritten Securities to the
Underwriters, (iv) the fees and disbursements of the Company's counsel and
accountants, of the Trustee and its counsel and of any applicable calculation
agent or exchange rate agent, (v) the qualification of the Underwritten
Securities, and the Common Shares issuable upon conversion of the Securities, if
any, under securities laws and real estate syndication laws in accordance with
the provisions of Section 4(h), including filing fees and the fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto including the abbreviated term
sheet delivered by the Company pursuant to Rule 434 of the 1933 Act Regulations,
and of the Prospectus and any amendments or supplements thereto, (vii) the cost
of reproducing and distributing to the Underwriters copies of the Indenture,
(viii) the cost of reproducing and delivering to the Underwriters copies of the
Blue Sky Survey, (ix) any fees charged by nationally recognized statistical
rating organizations for the rating of the Securities, (x) the fees and
expenses, if any, incurred with respect to the listing of the Underwritten
Securities or the Common Shares issuable upon conversion of the Securities, if
any, on any national securities exchange, (xi) the fees and expenses, if any,
incurred with respect to any filing with the National Association of Securities
Dealers, Inc., (xii) the cost of providing any CUSIP or other identification
numbers for the Underwritten Securities or the Common Shares issuable upon
conversion of the Securities, if applicable, and (xiii) the fees and expenses of
any depositary in connection with the Underwritten Securities.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees
to indemnify and hold harmless each Underwriter, and each person,
if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act, against any losses, claims, damages,
liabilities or expenses (including the reasonable cost of
19
<PAGE> 20
investigating and defending against any claims therefor and reasonable counsel
fees incurred in connection therewith), joint or several, as incurred, which may
be based upon the 1933 Act, or any other statute or at common law, arising out
of any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement thereto
including the abbreviated term sheet delivered by the Company pursuant to Rule
434 of the 1933 Act Regulations) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, unless
any such statement or omission was made in reliance upon, and in conformity
with, written information furnished to the Company by any Underwriter, directly
or through you or any other Underwriter, specifically for use in the preparation
thereof; provided, however, that the Company shall not be liable with respect to
any claims made against any Underwriter or any such controlling person under
this subsection unless such Underwriter or controlling person shall have
notified the Company in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been served upon such Underwriter or controlling person, but failure to
notify the Company of any such claim shall not relieve either of them from any
liability which they may have to such Underwriter or controlling person
otherwise than on account of the indemnity agreement contained in this
paragraph. The Company will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and, if the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it. In the event the
Company elects to assume the defense of any such suit and retain such counsel,
the Underwriter or Underwriters or controlling person or persons, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Company shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include such Underwriter or Underwriters or controlling person or persons and
the Company and such Underwriter or Underwriters or controlling person or
persons have been advised by counsel that one or more legal defenses may be
available to it or to them which may not be available to the Company, in which
case the Company shall not be entitled to assume the defense of such suit
notwithstanding their obligation to bear the fees and expenses of such counsel.
The Company shall not be liable to indemnify any person for any settlement of
any such claim effected without the Company's written
20
<PAGE> 21
consent. This indemnity agreement will be in addition to any
liability which the Company might otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of the Company's officers who signed
the Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any losses, claims,
damages, liabilities or expenses (including the reasonable cost of investigating
and defending against any claims therefor and reasonable counsel fees incurred
in connection therewith), joint or several, as incurred, which may be based upon
the 1933 Act, or any other statute or at common law, arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto) or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but only insofar as
any such statement or omission was made in reliance upon, and in conformity
with, written information furnished to the Company by such Underwriter, directly
or through you or any other Underwriter, specifically for use in the preparation
thereof; provided, however, that an Underwriter shall not be liable with respect
to any claims made against the Company or any person against whom the action is
brought unless the Company or such person shall have notified such Underwriter
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon the Company or such person, but failure to notify such Underwriter of such
claim shall not relieve it from any liability which it may have to the Company
or such person otherwise than on account of its indemnity agreement contained in
this paragraph. Such Underwriter shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but, if such Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it. In the
event that any Underwriter elects to assume the defense of any such suit and
retain such counsel, the Company, said officer and directors and other
Underwriter or Underwriters or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, respectively, unless (i) such Underwriter shall have
specifically authorized the retaining of such counsel or (ii) the parties to
such suit include any indemnified party and such Underwriter, and any such
indemnified party has been advised by counsel that one or more legal defenses
may be available to it which may not be
21
<PAGE> 22
available to such Underwriter, in which case such Underwriter shall not be
entitled to assume the defense of such suit notwithstanding its obligation to
bear the fees and expenses of such counsel. The Underwriter against whom
indemnity may be sought shall not be liable to indemnify any person for any
settlement of any such claim effected without such Underwriter's consent. This
indemnity agreement will be in addition to any liability which such Underwriter
might otherwise have.
(c) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as incurred, in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the Underwritten
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party, as
incurred, in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
applicable Prospectus Supplement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
22
<PAGE> 23
party in connection with investigating or defending any such claim.
Notwithstanding the provisions of this subsection (c), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Underwritten Securities purchased by it pursuant to the
applicable Terms Agreement and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute are several in
proportion to their respective underwriting obligations and not joint.
7. SURVIVAL OF INDEMNITIES, REPRESENTATION, WARRANTIES, ETC. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, and the several Underwriters, as set forth in
this Agreement or the applicable Terms Agreement or made by them respectively,
pursuant to this Agreement or the applicable Terms Agreement, shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of their officers or directors or any
controlling person, and shall survive delivery of and payment for the
Underwritten Securities.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations
of the several Underwriters to purchase Underwritten Securities pursuant to the
applicable Terms Agreement are subject to the accuracy, at and (except as
otherwise stated herein) as of the date hereof, the Representation Date, Closing
Time and at each Date of Delivery, of the representations and warranties made
herein by the Company, to the accuracy of the statements of the Company's
officers or directors in any certificate furnished pursuant to the provisions
hereof, to compliance at and as of such Closing Time and at each Date of
Delivery by the Company, with its covenants and agreements herein contained and
other provisions hereof to be satisfied at or prior to such Closing Time, or
Date of Delivery, as the case may be, and to the following additional
conditions:
(a) At Closing Time, (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been initiated or, to the
knowledge of the Company or you, threatened by the Commission, (ii) the
rating assigned by any nationally recognized statistical rating
organization to any long-term debt securities of the Company as of the
date of the applicable Terms Agreement shall not have been lowered
since such date nor shall any such rating organization have publicly
announced that it has placed any long-term debt securities of
23
<PAGE> 24
the Company on what is commonly termed a "watch list" for possible
downgrading, and (iii) there shall not have come to your attention any
facts that would cause you to believe that the Prospectus, together
with the applicable Prospectus Supplement, at the time it was required
to be delivered to purchasers of the Underwritten Securities, contained
any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances existing at such time, not misleading.
(b) At the time of execution of the applicable Terms
Agreement, you shall have received from Price Waterhouse LLP a letter,
dated the date of such execution, in form and substance satisfactory to
you, to the effect that:
(i) they are independent accountants with respect to the
Company and its subsidiaries and DDG within the meaning of the
1933 Act and the 1933 Act Regulations; (ii) it is their
opinion that the consolidated financial statements and
supporting schedules of the Company and DDG included or
incorporated by reference in the Registration Statement and
the Prospectus and covered by their opinions therein comply in
form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1934 Act, and the related
published rules and regulations; (iii) it is their opinion
that the financial statements of the properties acquired or
proposed to be acquired by the Company included in the
Company's Forms 8-K dated May 8, 1995 and November 3, 1995,
each of which is incorporated by reference in the Company's
Registration Statement and covered by their opinions therein
comply as to form with the applicable accounting requirements
of the 1933 Act and the 1934 Act with respect to real estate
operations acquired or to be acquired; (iv) they have
performed limited procedures, not constituting an audit,
including a reading of the latest available unaudited interim
consolidated financial statements of the Company and its
subsidiaries, a reading of the minute books of the Company and
its subsidiaries, inquiries of certain officials of the
Company and its subsidiaries who have responsibility for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, and on the
basis of such limited review and procedures nothing came to
their attention that caused them to believe that (A) the
unaudited interim consolidated financial statements and
financial statement schedules, if any, of the Company included
or incorporated by reference in the Registration Statement and
the Prospectus do not comply as to form in all material
respects with the applicable accounting
24
<PAGE> 25
requirements of the 1934 Act and the related published rules
and regulations thereunder or that any material modification
should be made to the unaudited condensed interim financial
statements included in or incorporated by reference in the
Registration Statement and the Prospectus for them to be in
conformity with generally accepted accounting principles, (B)
the unaudited pro forma condensed financial statements
included in the Company's aforementioned Forms 8-K, the
Company's Form 8 dated December 1, 1995 and the Company's Form
8-K dated May 31, 1996 do not comply as to form in all
material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X under the 1933 Act or that the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements, (C)
the information included or incorporated by reference in the
Registration Statement and the applicable Prospectus under the
caption "Selected Consolidated Financial Data" did not conform
in all material respects with the disclosure requirements of
item 301 of Regulation S-K, or (D) at a specified date not
more than three days prior to the date of the applicable Terms
Agreement, there has been any change in the capital stock of
the Company or in the consolidated long term debt of the
Company or any decrease in the net assets of the Company, as
compared with the amounts shown in the most recent
consolidated balance sheet included or incorporated by
reference in the Registration Statement and the Prospectus or,
during the period from the date of the most recent
consolidated statement of operations of the Company included
or incorporated by reference in the Registration Statement and
the Prospectus to a specified date not more than three days
prior to the date of the applicable Terms Agreement, there
were any decreases, as compared with the corresponding period
in the preceding year, in consolidated revenues, or decrease
in consolidated net income or consolidated net income per
share of the Company, except in all instances for changes,
increases or decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur; and (v) in
addition to the audit referred to in their opinions and the
limited procedures referred to in clause (iv) above, they have
carried out certain specified procedures, not constituting an
audit, with respect to certain amounts, percentages and
financial information which are included or incorporated by
reference in the Registration Statement and the Prospectus and
which are specified by you, and have found such amounts,
percentages and financial information to be in agreement with
the relevant accounting, financial and
25
<PAGE> 26
other records of the Company and its subsidiaries
identified in such letter.
(c) At Closing Time, you shall have received from Price Waterhouse LLP
a letter, dated Closing Time, to the effect that such accountants
reaffirm, as of Closing Time, and as though made on such Closing Time,
the statements made in the letter furnished by such accountants
pursuant to paragraph (b) of this Section 8, except that the specified
date will be a date not more than three days prior to the Closing Date.
(d) At Closing Time, you shall have received from Baker &
Hostetler, counsel for the Company, an opinion, dated as of Closing
Time, to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of
the State of Ohio.
(ii) The Company has full corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Prospectus.
(iii) The Company is duly qualified to transact business and
is in good standing in each jurisdiction in which it owns real
property except where the failure to qualify and be in good
standing would not have a material adverse effect on the
condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(iv) If the Company has one or more significant
subsidiaries, as defined in Rule 405 of the 1933 Act (each a
"Significant Subsidiary"), each Significant Subsidiary has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to
conduct its business, and is duly qualified to transact
business and is in good standing in each jurisdiction in which
it owns real property, except where the failure to so qualify
and be in good standing would not have a material adverse
effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise.
(v) The number of issued and outstanding shares of
capital stock of the Company is as set forth in the
26
<PAGE> 27
Prospectus under "Capitalization" and the outstanding shares
of capital stock have been duly authorized, validly issued,
fully paid and non-assessable. All of the issued and
outstanding capital stock of the Company's subsidiaries have
been duly authorized and validly issued, is fully paid and
non-assessable and, to the best of such counsel's knowledge,
is owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(vi) The Underwritten Securities have been duly and
validly authorized by all necessary corporate action and, when
executed, authenticated and delivered pursuant to the
provisions of the Indenture and against payment of the
consideration therefor specified in the applicable Terms
Agreement or the Delayed Delivery Contracts, if any, the
Underwritten Securities will constitute valid and legally
binding obligations of the Company entitled to the benefits
provided by the Indenture and enforceable in accordance with
their terms except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws relating to or
affecting enforcement of creditors' rights generally or by
general equity principles (regardless of whether enforcement
is considered in a proceeding in equity or at law).
(vii) If applicable, the Common Shares, Preferred Shares or
Depositary Shares issuable upon conversion of any of the
Senior Securities or the Subordinated Securities have been
duly and validly authorized and reserved for issuance upon
such conversion or exercise by all necessary corporate action
and such shares, when issued upon such conversion or exercise
and the payment of any required consideration in connection
therewith, will be duly and validly issued and will be fully
paid and non-assessable, and the issuance of such shares upon
such conversion or exercise will not be subject to preemptive
or other similar rights arising by operation of law or, to the
best of such counsel's knowledge, otherwise.
(viii) Each of this Agreement, the applicable Terms
Agreement and the Delayed Delivery Contracts, if any, has been
duly authorized, executed and delivered by the Company.
(ix) The Indenture has been duly and validly authorized,
executed and delivered by the Company and (assuming due
authorization, execution and delivery by the Trustee)
constitutes the valid and legally binding agreement of the
Company, enforceable in accordance with
27
<PAGE> 28
its terms except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws relating to or
affecting enforcement of creditors' rights generally or by
general equity principles (regardless of whether enforcement
is considered in a proceeding in equity or at law).
(x) The Indenture has been duly qualified under the
1939 Act.
(xi) The Registration Statement is effective under the 1933
Act and, to the best of their knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission.
(xii) The Registration Statement and the Prospectus,
excluding the documents incorporated by reference therein, as
of their respective effective or issue dates, comply as to
form in all material respects with the requirements for
registration statements on Form S-3 under the 1933 Act and the
1933 Act Regulations. If applicable, the Rule 434 Prospectus
conforms to the requirements of Rule 434 of the 1933 Act
Regulations in all material respects. It being understood,
however, that no opinion need be rendered with respect to the
financial statements, schedules and other financial and
statistical data included or incorporated by reference in the
Registration Statement or the Prospectus or with respect to
the Statement of Eligibility of the Trustee.
(xiii) Each document filed pursuant to the 1934 Act (other
than the financial statements, schedules and other financial
and statistical data included therein, as to which no opinion
need be rendered) and incorporated or deemed to be
incorporated by reference in the Prospectus complied when so
filed as to form in all material respects with the 1934 Act
and the 1934 Act Regulations.
(xiv) The Underwritten Securities, the Common Shares
issuable upon conversion of the Senior Securities or
Subordinated Securities, if applicable, and the Indenture
conform in all material respects to the statements relating
thereto contained in the Prospectus.
(xv) Nothing has come to such counsel's attention that would
lead it to believe that the Registration Statement or any
amendment thereto (excluding the financial statements and
financial schedules included or incorporated by reference
therein, as to which such
28
<PAGE> 29
counsel need express no belief), at the time it became
effective or at the time an Annual Report on Form 10-K was
filed by the Company with the Commission (whichever is later),
or at the Representation Date, contained an untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or
any amendment or supplement thereto (excluding the financial
statements and financial schedules included or incorporated by
reference therein, as to which such counsel need express no
belief), at the Representation Date or at Closing Time,
included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(xvi) To the best of their knowledge, there are no legal or
governmental proceedings pending or threatened which are
required to be disclosed in the Prospectus, other than those
disclosed therein, and, to the best of their knowledge, all
pending legal or governmental proceedings to which the Company
or its subsidiaries is a party or of which any of the property
of the Company or its subsidiaries is the subject which are
not described in the Registration Statement, including
ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material to the business of
the Company and its subsidiaries considered as one enterprise.
(xvii) To the best of their knowledge, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein or filed as
exhibits thereto, the descriptions thereof or references
thereto are correct in all material respects, and, to the best
of their knowledge, no default exists in the due performance
or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument so described,
referred to or filed which would have a material adverse
effect on the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise.
(xviii) No authorization, approval or consent of any
court or governmental authority or agency is required
29
<PAGE> 30
that has not been obtained in connection with the consummation
by the Company of the transactions contemplated by this
Agreement, the applicable Terms Agreement and the Indenture
except such as may be required under the 1933 Act, the 1934
Act, and state securities laws or Blue Sky laws or real estate
syndication laws; to the best of their knowledge, the
execution and delivery of this Agreement and the Terms
Agreement, and the consummation of the transactions
contemplated herein and therein and compliance by the Company
with its obligations hereunder and thereunder will not (A)
constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or its subsidiaries
pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Company or any of its subsidiaries is a party or by which they
may be bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except where
such breach, default, creation or imposition would not have a
material adverse effect on the condition, financial or
otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as
one enterprise, (B) nor will such action result in violation
of the provisions of the articles of incorporation or Code of
Regulations of the Company or its subsidiaries or any
applicable law, administrative regulation or administrative or
court order or decree.
(xix) Neither the Company nor any of its subsidiaries
is required to be registered under the 1940 Act.
(xx) The information in the Prospectus, if applicable, under
the captions "Description of Debt Securities," "Certain
Anti-Takeover Provisions of Ohio Law" and "Federal Income Tax
Considerations," and, if applicable, any similar matters set
forth in the Prospectus Supplement under a caption or captions
to be set forth in such opinion, to the extent that it
constitutes matters of law or legal conclusions, has been
reviewed by them and is correct in all material respects.
(xxi) The Company has qualified as a REIT for the taxable
years ended December 31, 1993 and December 31, 1994, and the
Company is organized and operates in a manner that will enable
it to qualify to be taxed as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code") for the taxable year
ended December 31, 1995 and thereafter provided the Company
continues to meet the asset composition, source of income,
shareholder
30
<PAGE> 31
diversification, distributions, record keeping, and other
requirements of the Code which are necessary for the Company
to qualify as a REIT.
(e) The Representatives shall have received from Brown & Wood, counsel for the
Underwriters, their opinion or opinions dated Closing Time with respect to the
matters set forth in (i), (vi) to (xii), inclusive, (xiv) and (xv) of subsection
(d) of this Section, and the Company shall have furnished to such counsel such
documents as they may request for the purpose of enabling them to pass upon such
matters.
In giving their opinion, Brown & Wood may rely as to matters
involving the laws of the State of Ohio upon the opinion of Baker &
Hostetler. Baker & Hostetler and Brown & Wood may rely (i) as to the
qualification of the Company or its subsidiaries to do business in any
state or jurisdiction, upon certificates of appropriate government
officials, and (ii) as to matters of fact, upon certificates and
written statements of officers and employees of and accountants for the
Company or its subsidiaries.
(f) At the Closing Time (i) the Registration Statement and the
Prospectus shall contain all statements which are required to be stated
therein in accordance with the 1933 Act, and the Rules and Regulations
and in all material respects shall conform to the requirements of the
1933 Act, and the 1933 Act Regulations and neither the Registration
Statement nor the Prospectus shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
no action, suit or proceeding at law or in equity shall be pending or,
to the knowledge of the Company, threatened against the Company or its
subsidiaries which would be required to be set forth in the
Registration Statement and the Prospectus other than as set forth
therein, (ii) there shall not have been, since the date of the
applicable Terms Agreement or since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
any material adverse change in the condition, financial or otherwise,
of the Company and its subsidiaries considered as one enterprise or in
its earnings, business affairs or business prospects, whether or not
arising in the ordinary course of business, from that set forth in the
Registration Statement and the Prospectus, (iii) no proceeding shall be
pending or, to the knowledge of the Company, threatened against the
Company or its subsidiaries before or by any Federal, state or other
commission, board or administrative agency wherein an unfavorable
decision, ruling or finding would materially and adversely affect the
business,
31
<PAGE> 32
property, financial condition or income of the Company and its
subsidiaries considered as one enterprise other than as set forth in
the Registration Statement and the Prospectus, (iv) neither the Company
nor any of its subsidiaries shall be in default in the performance or
observance of any contract to which it is a party, except such defaults
that would not have a material adverse effect on the condition,
financial or otherwise, of the Company and its subsidiaries considered
as one enterprise or on the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, (v) no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act and no
proceeding therefor shall have been instituted or threatened by the
Commission and (vi) you shall have received at Closing Time a
certificate of the President and the Chief Financial Officer of the
Company, dated as of Closing Time, evidencing compliance with the
provisions of this subsection (f). As used in this subsection (f), the
term "Prospectus" means the Prospectus in the form first used to
confirm sales of the Underwritten Securities.
(g) You shall have received certificates, dated Closing Time,
of the President and the Chief Financial Officer of the Company to the
effect that the representations and warranties of the Company contained
in Section 2(a) are true and correct with the same force and effect as
though expressly made at and as of Closing Time.
(h) The Company shall have furnished to you such additional
certificates as you may have reasonably requested as to the accuracy,
at and as of Closing Time, of the representations and warranties made
herein by them, as to compliance, at and as of Closing Time, by them
with their covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to Closing Time, and as
to other conditions to the obligations of the Underwriters hereunder.
(i) In the event the Underwriters exercise their option
provided in a Terms Agreement as set forth in Section 3 hereof to
purchase all or any portion of the Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall
be true and correct as of each Date of Delivery, and you shall have
received:
(i) A letter from Price Waterhouse LLP in form and
substance satisfactory to you and dated such Date of Delivery,
substantially the same in scope and substance as the letter
furnished to the Representatives pursuant to Section 8(b),
except that the specified date in the
32
<PAGE> 33
letter furnished pursuant to this Section 8(i) shall be a date
not more than three days prior to such Date of Delivery.
(ii) The opinion of Baker & Hostetler, counsel for the
Company, in form and substance satisfactory to Brown & Wood,
dated such Date of Delivery, relating to the Option Securities
and otherwise to the same effect as the opinion required by
Section 8(d).
(iii) The opinion of Brown & Wood, counsel for the
Underwriters, dated such Date of Delivery, relating to the
Options Securities and otherwise to the same effect as the
opinion required by Section 8(e).
(iv) A certificate, dated such Date of Delivery, of the
President and the Chief Financial Officer of the Company
confirming that the certificate or certificates delivered at
Closing Time pursuant to Section 8(f) and Section 8(g) remains
or remain true as of such Date of Delivery.
(v) Such additional certificates, dated such Date of
Delivery, as you may have reasonably requested pursuant to
Section 8(h).
If any of the conditions hereinabove provided for in this Section shall
not have been satisfied when and as required to be satisfied, the applicable
Terms Agreement may be terminated by you by notifying the Company of such
termination in writing or by telegram at or prior to Closing Time, but you shall
be entitled to waive any of such conditions.
9. TERMINATION. (a) This Agreement (excluding the
applicable Terms Agreement) may be terminated for any reason at any
time by the Company or by you upon the giving of 30 days' written
notice of such termination to the other party hereto.
(b) You may also terminate the applicable Terms Agreement, by notice to
the Company, at any time at or prior to the Closing Time if (i) trading in any
securities of the Company shall have been suspended by the Commission or a
national securities exchange or if trading generally on the New York or American
Stock Exchanges shall have been suspended or minimum or maximum prices shall
have been established on either such exchange, or a banking moratorium shall
have been declared by New York or United States authorities; (ii) there shall
have been any material adverse change in the financial markets in the United
States or any outbreak or escalation of hostilities between the United States
and any foreign power, or of any other insurrection or armed conflict involving
the United States which, in your judgment, makes it impracticable or
33
<PAGE> 34
inadvisable to offer or sell the Underwritten Securities; (iii) there shall have
been, since the date of the applicable Terms Agreement or since the respective
dates as to which information is given in the Registration Statement and the
Prospectus, any material adverse change in the condition (financial or
otherwise), or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise; (iv) there shall be
any litigation against the Company or the Properties, pending or threatened,
which, in the judgment of the Representatives, makes it impracticable or
inadvisable to offer or deliver the Underwritten Securities on the terms
contemplated by the Prospectus, or (v) if the rating assigned by any nationally
recognized statistical rating organization to any long-term debt securities of
the Company as of the date of the applicable Terms Agreement shall have been
lowered since such date or if any such rating organization shall have publicly
announced that it has placed any long-term debt securities of the Company on
what is commonly termed a "watch list" for possible downgrading. As used in this
Section 9(b), the term "Prospectus" means the Prospectus in the form first used
to confirm sales of the Underwritten Securities.
(c) In the event of any such termination, the covenants set forth in
Section 4 with respect to any offering of Underwritten Securities shall remain
in effect so long as any Underwriter owns any such Underwritten Securities
purchased from the Company pursuant to the applicable Terms Agreement.
10. REIMBURSEMENT OF UNDERWRITERS. Notwithstanding any other provisions
hereof, if this Agreement or the applicable Terms Agreement shall be terminated
by you under Section 8, Section 9 or Section 12, the Company will bear and pay
the expenses specified in Section 5 hereof and, in addition to their obligations
pursuant to Section 6, hereof, except when you terminate this Agreement pursuant
to clause (a), (b)(i) or (b)(ii) of Section 9, the Company will reimburse the
reasonable out-of-pocket expenses of the several Underwriters (including
reasonable fees and disbursements of counsel for the Underwriters) incurred in
connection with this Agreement or the applicable Terms Agreement and the
proposed purchase of the Underwritten Securities, and promptly upon demand the
Company, will pay such amounts to you for and on behalf of such Underwriter. In
addition, the provisions of Section 6 shall survive any such termination.
11. DEFAULT BY UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase Underwritten Securities under
the applicable Terms Agreement at the Closing Time and the aggregate principal
amount of Underwritten Securities which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
principal amount of Underwritten Securities which the Underwriters are
34
<PAGE> 35
obligated to purchase at the Closing Time, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the full amount of the Underwritten Securities which such defaulting
Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or
Underwriters shall so default and the aggregate principal amount of Underwritten
Securities with respect to which such default or defaults occur is more than 10%
of the total principal amount of Underwritten Securities and arrangements
satisfactory to you and the Company for the purchase of such Underwritten
Securities by other persons are not made within 48 hours after such default, the
applicable Terms Agreement shall terminate.
If the remaining Underwriters or substituted underwriters are required
hereby or agree to take up all or part of the Underwritten Securities of a
defaulting Underwriter or Underwriters as provided in this Section 11, (i) the
Company shall have the right to postpone the Closing Time for a period of not
more than five full business days, in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
principal amounts of Underwritten Securities to be purchased by the remaining
Underwriters or substituted underwriters shall be taken as the basis of their
underwriting obligation for all purposes of the applicable Terms Agreement.
Nothing herein contained shall relieve any defaulting Underwriter of its
liability to the Company or the Underwriters for damages occasioned by its
default hereunder. Any termination of the applicable Terms Agreements pursuant
to this Section 11 shall be without liability on the part of any non-defaulting
Underwriter or the Company, except for expenses to be paid or reimbursed
pursuant to Section 5 and except for the provisions of Section 6.
12. DEFAULT BY THE COMPANY. If the Company shall fail at the Closing
Time to sell and deliver the principal amount of Underwritten Securities which
it is obligated to sell pursuant to the applicable Terms Agreement, then such
agreement shall terminate without any liability on the part of any
non-defaulting party, other than obligations under Section 10 hereof. No action
taken pursuant to this Section 12 shall relieve the Company from liability, if
any, in respect of such default.
13. NOTICES. All communications hereunder shall be in writing
and, if sent to the Underwriters shall be mailed, delivered or telecopied and
confirmed to you, c/o Dean Witter Reynolds Inc., at Two World Trade Center, 65th
Floor, New York, New York 10048, Attention: W. Blake Baird, Managing Director,
except that notices given to an Underwriter pursuant to Section 6 hereof shall
be sent
35
<PAGE> 36
to such Underwriter at the address furnished by you or if sent to the Company
shall be mailed, delivered or telegraphed and confirmed at 34555 Chagrin
Boulevard, Moreland Hills, Ohio 44022, Attention: Scott A. Wolstein, President
and Chief Executive Officer.
14. SUCCESSORS. This Agreement and the applicable Terms Agreement shall
inure to the benefit of and be binding upon you and the Company and any
Underwriter who becomes a party to such Terms Agreement, the Company and their
respective successors and legal representatives. Nothing expressed or mentioned
in this Agreement or the applicable Terms Agreement is intended or shall be
construed to give any person other than the persons mentioned in the preceding
sentence any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provisions herein contained, this Agreement or such Terms
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person; except that the representations, warranties, covenants,
agreements and indemnities of the Company, contained in this Agreement shall
also be for the benefit of the person or persons, if any, who control any
Underwriter within the meaning of Section 15 of the 1933 Act, and the
indemnities given by the several Underwriters shall also be for the benefit of
each director of the Company, each of the Company's officers who has signed the
Registration Statement and the person or persons, if any, who control the
Company within the meaning of Section 15 of the 1933 Act.
15. APPLICABLE LAW. This Agreement and the applicable Terms
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
state. Specified times of day refer to New York City time.
16. COUNTERPARTS. This Agreement and the applicable Terms Agreement
may be executed in one or more counterparts, and if executed in more than one
counterpart the executed counterparts shall constitute a single instrument.
36
<PAGE> 37
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By:
------------------------------
Name:
Title:
Accepted and delivered,
as of the date first above written:
DEAN WITTER REYNOLDS INC.
By:
--------------------------------
Name:
Title:
37
<PAGE> 38
Exhibit A
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(an Ohio corporation)
[Title of Securities]
TERMS AGREEMENT
Dated: , 1996
To: Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Attention: Mr. Scott A. Wolstein
President and Chief Executive Officer
Dear Sirs:
We (the "Representative") understand that Developers Diversified Realty
Corporation, an Ohio corporation (the "Company"), proposes to issue and sell $
aggregate principal amount of its [Title of Securities] (the "Underwritten
Securities"). Subject to the terms and conditions set forth or incorporated by
reference herein, the underwriters named below (the "Underwriters") offer to
purchase, severally and not jointly, the respective amounts of Initial
Underwritten Securities (as defined in the Underwriting Agreement referenced
below) set forth below opposite their respective names, and a proportionate
share of Option Securities (as defined in the Underwriting Agreement referred to
below) to the extent any are purchased, at the purchase price set forth below.
A-1
<PAGE> 39
Principal Amount
UNDERWRITER OF DEBT SECURITIES
- ----------- ------------------
Total ----------
==========
The Underwritten Securities shall have the following terms:
[SECURITIES]
Title of Securities:
Currency:
Principal amount to be issued:
Current Ratings:
Interest rate or formula:
Interest payment dates:
Stated maturity date:
Redemption and/or repayment provisions:
Sinking fund requirements:
Number of Option Securities, if any, that may be purchased by the Underwriters:
Delayed Delivery Contracts: [authorized] [not authorized]
[Date of Delivery:
Minimum Contract:
Maximum aggregate principal amount:
Fee: %]
Initial public offering price: %, plus accrued interest, if any, or
amortized original issue discount, if any, from , 19 .
Purchase price: %, plus accrued interest, if any, or amortized original
issue discount, if any, from , 19
(payable in [same] [next] day funds).
Conversion provisions:
Form:
Other terms:
Closing time, date and location:
All the provisions contained in the document attached as Annex A hereto
entitled "Developers Diversified Realty Corporation-Debt Securities-Underwriting
Agreement Basic Provisions" are hereby incorporated by reference in their
entirety herein and shall be deemed to be a part of this Terms Agreement to the
same extent as if such provisions had been set forth in full herein. Terms
defined in such document are used herein as therein defined.
A-2
<PAGE> 40
Please accept this offer no later than o'clock P.M. (New York City
time) on by signing a copy of this Terms Agreement in the space set forth below
and returning the signed copy to us.
Very truly yours,
DEAN WITTER REYNOLDS INC.
By:_________________________
Acting on behalf of itself and
the other named Underwriters.
Accepted:
DEVELOPERS DIVERSIFIED REALTY CORPORATION
By:_________________________
Name:
Title:
A-3
<PAGE> 41
Exhibit B
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(an Ohio corporation)
[Title of Securities]
DELAYED DELIVERY CONTRACT
-------------------------
, 19
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Attention: Mr. Scott A. Wolstein
President and Chief Executive Officer
Dear Sirs:
The undersigned hereby agrees to purchase from Developers Diversified
Realty Corporation (the "Company"), and the Company agrees to sell to the
undersigned on __________, 19__ (the "Delivery Date"),
of the Company's [insert title of security] (the "Securities"), offered by the
Company's Prospectus dated __________, 19__, as supplemented by its Prospectus
Supplement dated ___________, 19__, receipt of which is hereby acknowledged at a
purchase price of _____% of the principal amount thereof, plus accrued interest
from __________, 19__,] to the Delivery Date, and on the further terms and
conditions set forth in this contract.
Payment for the Securities which the undersigned has agreed to purchase
on the Delivery Date shall be made to the Company or its order by certified or
official bank check in New York Clearing House funds at the office of
, on the Delivery Date, upon delivery to
the undersigned of the Securities to be purchased by the undersigned in
definitive form and in such denominations and registered in such names as the
undersigned may designate by written or telegraphic communication addressed to
the Company not less than five full business days prior to the Delivery Date.
B-1
<PAGE> 42
The obligation of the undersigned to take delivery of and make payment
for Securities on the Delivery Date shall be subject only to the conditions that
(1) the purchase of Securities to be made by the undersigned shall not on the
Delivery Date be prohibited under the laws of the jurisdiction to which the
undersigned is subject and (2) the Company, on or before __________, 19__, shall
have sold to the Underwriters of the Securities (the "Underwriters") such
principal amount of the Securities as is to be sold to them pursuant to the
Terms Agreement dated __________, 19__ between the Company and the Underwriters.
The obligation of the undersigned to take delivery of and make payment for
Securities shall not be affected by the failure of any purchaser to take
delivery of and make payments for Securities pursuant to other contracts similar
to this contract. The undersigned represents and warrants to you that its
investment in the Securities is not, as of the date hereof, prohibited under the
laws of any jurisdiction to which the undersigned is subject and which govern
such investment.
Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
By the execution hereof, the undersigned represents and warrants to the
Company that all necessary action for the due execution and delivery of this
contract and the payment for and purchase of the Securities has been taken by it
and no further authorization or approval of any governmental or other regulatory
authority is required for such execution, delivery, payment or purchase, and
that, upon acceptance hereof by the Company and mailing or delivery of a copy as
provided below, this contract will constitute a valid and binding agreement of
the undersigned in accordance with its terms.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that the Company will not accept Delayed Delivery
Contracts for an aggregate principal amount of Securities in excess of $________
and that the acceptance of any Delayed Delivery Contract is in the Company's
sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance on a copy hereof
and mail or deliver a signed copy hereof to the undersigned at its address set
forth below. This will become a binding
B-2
<PAGE> 43
contract between the Company and the undersigned when such copy is
so mailed or delivered.
This Agreement shall be governed by the laws of the State of New York.
Yours very truly,
-----------------------------
(Name of Purchaser)
By___________________________
(Title)
-----------------------------
-----------------------------
(Address)
Accepted as of the date first above written.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
By___________________________
(Title)
PURCHASER-PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone number of the representative of the Purchaser
with whom details of delivery on the Delivery Date may be discussed are as
follows: (Please print.)
Telephone No.
NAME (INCLUDING AREA CODE)
---- ---------------------
B-3
<PAGE> 1
Exhibit 1(B)
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(an Ohio corporation)
PREFERRED SHARES, DEPOSITARY SHARES,
COMMON SHARES AND WARRANTS TO PURCHASE COMMON SHARES
UNDERWRITING AGREEMENT BASIC PROVISIONS
____________ __, 1996
Dean Witter Reynolds Inc.
Two World Trade Center
New York, New York 10048
Dear Sirs:
1. INTRODUCTORY. Developers Diversified Realty Corporation, an Ohio
corporation (the "Company"), proposes to issue and sell, common shares, without
par value (the "Common Shares") or warrants to purchase a number of Common
Shares (the "Warrants"), or both, or preferred shares, without par value (the
"Preferred Shares") from time to time, in one or more offerings on terms to be
determined at the time of sale. The Preferred Shares may be offered in the form
of depositary shares (the "Depositary Shares") represented by depositary
receipts (the "Depositary Receipts"). The Warrants will be issued pursuant to a
Warrant Agreement (the "Warrant Agreement") between the Company and a warrant
agent (the "Warrant Agent"). Except as provided under Ohio law and in the
Company's Articles of Incorporation, as amended (the "Articles of
Incorporation") each series of Preferred Shares may vary as to the specific
number of shares, title, stated value, liquidation preference, issuance price,
ranking, dividend rate or rates (or method of calculation), dividend payment
dates, any redemption or sinking fund requirements, any conversion provisions
and any other variable terms as set forth in the Articles of Incorporation
relating to such Preferred Shares. As used herein, "Securities" shall mean the
Common Shares and the Warrants, the Preferred Shares, the Depositary Shares and
the Depositary Receipts; and "Warrant Securities" shall mean the Common Shares
issuable upon
<PAGE> 2
exercise of Warrants. As used herein, "you" and "your," unless the context
otherwise requires, shall mean the parties to whom this Agreement is addressed
together with the other parties, if any, identified in the applicable Terms
Agreement (as hereinafter defined) as additional co-managers with respect to
Underwritten Securities (as hereinafter defined) purchased pursuant thereto.
Whenever the Company determines to make an offering of Securities
through you or through an underwriting syndicate managed by you, the Company
will enter into an agreement (the "Terms Agreement") providing for the sale of
such Securities (the "Underwritten Securities") to, and the purchase and
offering thereof by, you and such other underwriters, if any, selected by you as
have authorized you to enter into such Terms Agreement on their behalf (the
"Underwriters," which term shall include you whether acting alone in the sale of
the Underwritten Securities or as a member of an underwriting syndicate and any
Underwriter substituted pursuant to Section 11 hereof). The Terms Agreement
relating to the offering of Underwritten Securities shall specify the number of
Underwritten Securities of each class or series to be initially issued,
including the number of Warrants, if any (the "Initial Underwritten
Securities"), whether the Initial Underwritten Securities shall be in the form
of Depositary Shares and the fractional amount of Preferred Shares represented
by each Depositary Share, the names of the Underwriters participating in such
offering (subject to substitution as provided in Section 11 hereof), the number
of Initial Underwritten Securities which each such Underwriter severally agrees
to purchase, the names of such of you or such other Underwriters acting as
co-managers, if any, in connection with such offering, the price at which the
Initial Underwritten Securities are to be purchased by the Underwriters from the
Company, the initial public offering price, the time, date and place of delivery
and payment, any delayed delivery arrangements and any other variable terms of
the Initial Underwritten Securities (including, but not limited to, current
ratings in the case of Preferred Shares and Depositary Shares only). In
addition, each Terms Agreement shall specify whether the Company has agreed to
grant to the Underwriters an option to purchase additional Underwritten
Securities to cover over-allotments, if any, and the number of Underwritten
Securities subject to such option (the "Option Securities"). As used herein, the
term "Underwritten Securities" shall include the Initial Underwritten Securities
and all or any portion of the Option Securities agreed to be purchased by the
Underwriters as provided herein, if any. The Terms Agreement, which shall be
substantially in the form of Exhibit A hereto, may take the form of an exchange
of any standard form of written telecommunication between you and the Company.
Each offering of Underwritten Securities through you or through an underwriting
syndicate managed by you will be governed by this Agreement, as supplemented by
the applicable Terms Agreement.
2
<PAGE> 3
2. REPRESENTATIONS AND WARRANTIES. (a) The Company represents and
warrants to you, as of the date hereof, and to you and each other Underwriter
named in the applicable Terms Agreement, as of the date thereof (such latter
date being referred to herein as a "Representation Date"), that:
(i) A registration statement on Form S-3 (No. 333- ) for
the registration of the Securities (including the Underwritten
Securities) and Warrant Securities and certain of the Company's debt
securities, under the Securities Act of 1933, as amended (the "1933
Act"), and the offering thereof from time to time in accordance with
Rule 415 of the rules and regulations of the Securities and Exchange
Commission (the "Commission") under the 1933 Act (the "1933 Act
Regulations"), has heretofore been delivered to you, has been prepared
by the Company in conformity with the requirements of the 1933 Act and
the 1933 Act Regulations and has been filed with the Commission under
the 1933 Act. One or more amendments to such registration, as may have
been required and copies of which have heretofore been delivered to
you, have been so prepared and filed prior to the execution of the
applicable Terms Agreement. Such registration statement (as amended, if
applicable) has been declared effective by the Commission. Such
registration statement (as amended, if applicable) and the registration
statements of the Company on Form S-3 (Nos. 33-94182 and 33-90182), to
the extent the applicable Terms Agreement relates to Underwritten
Securities registered thereunder in accordance with Rule 429 of the
1933 Act, on the one hand, and the prospectus constituting a part
thereof and each prospectus supplement relating to the offering of
Underwritten Securities provided to the Underwriters for use (whether
or not such prospectus supplement is required to be filed by the
Company pursuant to Rule 424(b) of the 1933 Act Regulations) (the
"Prospectus Supplement"), on the other hand, including all documents
incorporated therein by reference, as from time to time amended or
supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act") or otherwise, are referred to herein
as the "Registration Statement" and the "Prospectus," respectively;
provided, however, that a Prospectus Supplement shall be deemed to have
supplemented the Prospectus only with respect to the offering of
Underwritten Securities to which it relates. If the Company elects to
rely on Rule 434 under the 1933 Act Regulations, all references to the
Prospectus shall be deemed to include, without limitation, the form of
prospectus and the abbreviated term sheet, taken together, provided to
the Underwriters by the Company in reliance on Rule 434 under the 1933
Act (the "Rule 434 Prospectus"). If the Company files a registration
statement to register a portion of the Securities
3
<PAGE> 4
and relies on Rule 462(b) for such registration statement to become
effective upon filing with the Commission (the "Rule 462 Registration
Statement"), then any reference to "Registration Statement" herein
shall be deemed to be both the registration statements referred to
above (Nos. 333- , 33-94182 and 33-90182) and the Rule 462 Registration
Statement, as each such registration statement may be amended pursuant
to the 1933 Act. All references in this Agreement to financial
statements and schedules and other information which is "contained,"
"included" or "stated" in the Registration Statement or the Prospectus
(and all other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in
the Registration Statement or the Prospectus, as the case may be; and
all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and
include, without limitation, the filing of any document under the 1934
Act which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be.
(ii) At the time the Registration Statement became
effective, the Registration Statement and the Prospectus conformed, and
as of the applicable Representation Date will conform, in all material
respects to the requirements of the 1933 Act and the 1933 Act
Regulations. At the time the Registration Statement became effective,
the Registration Statement did not, and as of the applicable
Representation Date, will not, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus, as of the date hereof does not, and as of the applicable
Representation Date and at Closing Time (as hereinafter defined) will
not, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing representations and warranties
shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of any Underwriter, directly or through you, specifically for
use in preparation thereof.
(iii) The documents incorporated or deemed to be
incorporated by reference in the Prospectus pursuant to Item 12 of Form
S-3 under the 1933 Act, at the time they were or hereafter are filed
with the Commission, complied and will
4
<PAGE> 5
comply in all material respects with the requirements of the 1934 Act
and the rules and regulations of the Commission under the 1934 Act (the
"1934 Act Regulations"), and, when read together with the other
information in the Prospectus, at the time the Registration Statement
became effective and as of the applicable Representation Date or
Closing Time or during the period specified in Section 4(f), did not
and will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, of the Company and its
subsidiaries considered as one enterprise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by
the Company or its subsidiaries which are material with respect to the
Company and its subsidiaries considered as one enterprise other than
those in the ordinary course of business, and (C) except for regular
quarterly dividends on the Company's common shares, and regular
dividends declared, paid or made in accordance with the terms of any
class or series of the Company's preferred shares, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(v) The consolidated financial statements and supporting
schedules of the Company included in, or incorporated by reference
into, the Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated subsidiaries as
of the dates indicated and the results of their operations for the
periods specified and the consolidated financial statements of
Developers Diversified Group ("DDG") included in, or incorporated by
reference into, the Registration Statement and the Prospectus present
fairly the financial position of DDG as of the dates indicated and the
results of its operations for the periods specified; except as
otherwise stated in the Registration Statement and the Prospectus, said
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis; and the
supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus
5
<PAGE> 6
present fairly in all material respects the information required to be
stated therein.
(vi) Price Waterhouse LLP, who have expressed their opinion
on the audited financial statements and related schedules included in,
or incorporated by reference into, the Registration Statement, are
independent public accountants within the meaning of the 1933 Act and
the applicable 1933 Act Regulations.
(vii) The Company has been duly organized and is validly
existing and in good standing as a corporation under the laws of the
State of Ohio, with power and authority (corporate and other) to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus; the Company
is in possession of and operating in compliance with all material
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders required for the conduct of its
business, all of which are valid and in full force and effect; and the
Company is duly qualified to do business and in good standing as a
foreign corporation in all other jurisdictions where its ownership or
leasing of properties or the conduct of its business requires such
qualification, except where failure to qualify and be in good standing
would not have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(viii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise.
(ix) If applicable, the capitalization of the Company is as
set forth in the Prospectus under "Capitalization;" the issued and
outstanding capital stock of the Company has been duly authorized and
validly issued and is fully paid and non-assessable and is not subject
to preemptive or other similar rights; and all of the issued and
outstanding
6
<PAGE> 7
capital stock of the Company's subsidiaries has been duly authorized
and validly issued, is fully paid and non-assessable and is owned
directly by the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(x) The Underwritten Securities being sold pursuant to the
applicable Terms Agreement and, if applicable, the deposit of the
Preferred Shares in accordance with the provisions of a Deposit
Agreement (each, a "Deposit Agreement"), among the Company, the
financial institution named in the Deposit Agreement (the "Preferred
Shares Depositary") and the holders of the Depositary Receipts issued
thereunder, have, as of each Representation Date, been duly authorized
by the Company and such Underwritten Securities have been duly
authorized by the Company for issuance and sale pursuant to this
Agreement and, when issued and delivered pursuant to this Agreement
against payment of the consideration therefor specified in the
applicable Terms Agreement or any Delayed Delivery Contract (as
hereinafter defined), will be validly issued, fully paid and
non-assessable; the Preferred Shares, if applicable, conform to the
provisions of the Articles of Incorporation; and the Underwritten
Securities being sold pursuant to the applicable Terms Agreement
conform in all material respects to all statements relating thereto
contained in the Prospectus; and the issuance of the Underwritten
Securities is not subject to preemptive or other similar rights.
(xi) If applicable, the Warrants have been duly authorized
and, when issued and delivered pursuant to this Agreement and
countersigned by the Warrant Agent as provided in the Warrant
Agreement, will have been duly executed, countersigned, issued and
delivered and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Warrant Agreement
under which they are to be issued; the issuance of the Warrant
Securities upon exercise of the Warrants will not be subject to
preemptive or other similar rights; and the Warrants conform in all
material respects to all statements relating thereto contained in the
Prospectus.
(xii) If applicable, the Common Shares issuable upon
conversion of any of the Preferred Shares or the Depositary Shares or
the Warrant Securities, will have been duly and validly authorized and
reserved for issuance upon such conversion or exercise by all necessary
corporate action and such shares, when issued upon such conversion or
exercise will be duly and validly issued and will be fully paid and
non-assessable, and the issuance of such shares upon such
7
<PAGE> 8
conversion or exercise will not be subject to preemptive or other
similar rights; the Common Shares so issuable upon conversion of any of
the Preferred Shares or the Depositary Shares or the Warrant Securities
will conform in all material respects, as of the applicable
Representation Date, to all statements relating thereto contained in
the Prospectus.
(xiii) The applicable Warrant Agreement, if any, and the
applicable Deposit Agreement, if any, will have been duly authorized,
executed and delivered by the Company prior to the issuance of any
applicable Underwritten Securities, and constitutes a valid and legally
binding agreement of the Company enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws relating to or affecting creditors'
rights generally and by general equity principles (regardless of
whether enforcement is considered in a proceeding in equity or at law);
and the Warrant Agreement, if any, conforms in all material respects to
all statements relating thereto contained in the Prospectus.
(xiv) If applicable, upon execution and delivery thereof
pursuant to the terms of the Deposit Agreement, the persons in whose
names the Depositary Receipts are registered will be entitled to the
rights specified therein and in the Deposit Agreement, except as
enforcement of such rights may be limited by bankruptcy, insolvency or
other similar laws relating to or affecting creditors' rights generally
and by general equity principles (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xv) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened against or
affecting the Company or its subsidiaries, which is required to be
disclosed in the Prospectus (other than as disclosed therein), or which
might result in any material adverse change in the condition, financial
or otherwise, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, or might materially and
adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement, the
applicable Terms Agreement, the applicable Warrant Agreement, if any,
or the transactions contemplated herein and therein; all pending legal
or governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective property is
the subject which are not described in the Prospectus, including
routine litigation incidental to the business, are, considered in the
aggregate,
8
<PAGE> 9
not material; and there are no material contracts or documents of the
Company or its subsidiaries which are required to be filed as exhibits
to the Registration Statement by the 1933 Act or by the 1933 Act
Regulations which have not been so filed.
(xvi) Neither the Company nor any of its subsidiaries is in
violation of its respective articles of incorporation or other
organizational document, or its Code of Regulations or bylaws, as the
case may be (the "Code of Regulations"), or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party
or by which it or its properties may be bound, where such defaults in
the aggregate would have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise; and the execution and delivery of this Agreement, the
applicable Terms Agreement, and the applicable Warrant Agreement, if
any, or the applicable Deposit Agreement, if any, and the consummation
of the transactions contemplated herein and therein have been duly
authorized by all necessary corporate action and compliance by the
Company with its obligations hereunder and thereunder will not conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of its subsidiaries is a party
or by which it may be bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, nor will such
action result in any violation of the provisions of the Articles of
Incorporation or Code of Regulations or, to the best of its knowledge,
any law, administrative regulation or administrative or court order or
decree; and no consent, approval, authorization or order of any court
or governmental authority or agency is required for the consummation by
the Company of the transactions contemplated by this Agreement, the
applicable Terms Agreement or the applicable Warrant Agreement, if any,
or the applicable Deposit Agreement, if any, except such as has been
obtained or as may be required under the 1933 Act, the 1934 Act, state
securities or Blue Sky laws or real estate syndication laws in
connection with the purchase and distribution of the Underwritten
Securities by the Underwriters.
(xvii) The Company has full right, power and authority to
enter into this Agreement, the applicable Terms Agreement
9
<PAGE> 10
and the Delayed Delivery Contracts, if any, and this Agreement has
been, and as of the applicable Representation Date, the applicable
Terms Agreement and the Delayed Delivery Contracts, if any, will have
been duly authorized, executed and delivered by the Company.
(xviii) With respect to its taxable years ended December 31,
1995, and its taxable years ending thereafter, the Company has operated
and will continue to operate so as to qualify as a Real Estate
Investment Trust ("REIT"), the Company qualified as a REIT for its
taxable years ended December 31, 1993 and December 31, 1994 and the
Company intends to make a timely election to be taxed as a REIT with
respect to its taxable year ended December 31, 1995.
(xix) Neither the Company nor any of its subsidiaries is
required to be registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xx) Neither the Company nor any of its subsidiaries is
required to own or possess any trademarks, service marks, trade names
or copyrights in order to conduct the business now operated by them.
(xxi) If applicable, the Underwritten Securities have been
approved for listing on the New York Stock Exchange.
(xxii) (A) The Company or its subsidiaries have good and
marketable title or leasehold interest, as the case may be, to the
portfolio properties (the "Portfolio Properties") described in the
Prospectus (or documents incorporated by reference therein) as being
owned by the Company or its subsidiaries, except with respect to the
properties described in the Prospectus (or documents incorporated by
reference therein) as being held by the Company through joint ventures,
in each case free and clear of all liens, encumbrances, claims,
security interests and defects (collectively, the "Defects"), except
such as have been granted pursuant to the line of credit agreement,
dated July 18, 1995, entered into between the Company and National City
Bank, and such as do not materially adversely affect the value of such
property or interests and do not materially interfere with the use made
and proposed to be made of such property or interests by the Company or
such subsidiaries, as the case may be; (B) the joint venture interest
in each property described in the Prospectus (or documents incorporated
by reference therein), as being held by the Company through a joint
venture, is owned free and clear of all Defects except for such Defects
that will not have a material adverse effect on the business, earnings
or business prospects of the Company and its
10
<PAGE> 11
subsidiaries considered as one enterprise; (C) all liens, charges,
encumbrances, claims, or restrictions on or affecting the properties
and assets of the Company or its subsidiaries which are required to be
disclosed in the Prospectus are disclosed therein; (D) none of the
Company, its subsidiaries or, to the best of the Company's knowledge,
any lessee of any of the Portfolio Properties is in default under any
of the leases governing the Portfolio Properties and the Company does
not know of any event which, but for the passage of time or the giving
of notice, or both, would constitute a default under any of such
leases, except such defaults that would not have a material adverse
effect on the condition, financial or otherwise, or on the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; (E) no tenant under any of
the leases pursuant to which the Company or its subsidiaries leases any
of the Portfolio Properties has an option or right of first refusal to
purchase the premises demised under such lease except for (i) Kmart
Corporation, (ii) the tenants at the Portfolio Property located in
Solon, Ohio, (iii) as otherwise described in the Prospectus (or
document incorporated by reference therein), and (iv) such options or
rights of first refusal that, if exercised, would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; (F) each of the Portfolio
Properties complies with all applicable codes and zoning laws and
regulations, except for such failures to comply which would not
individually or in the aggregate have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise; and (G) the Company does not have knowledge of any
pending or threatened condemnation, zoning change, or other proceeding
or action that will in any manner affect the size of, use of,
improvements on, construction on, or access to the Portfolio
Properties, except such proceedings or actions that would not have a
material adverse effect on the condition, financial or otherwise, or on
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise.
(xxiii) The Company or its subsidiaries have title insurance
on each of the Portfolio Properties (except with respect to each
property described in the Prospectus (or documents incorporated by
reference therein) as held by the Company through a joint venture) in
an amount at least equal to the greater of (A) the cost of acquisition
of such Portfolio Property and (B) the cost of construction of the
improvements located on such Portfolio Property, except in
11
<PAGE> 12
each case, where the failure to maintain such title insurance would not
have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise; the
joint venture owning each property described in the Prospectus (or
documents incorporated by reference therein) as held by the Company
through a joint venture) has title insurance on such property in an
amount at least equal to the greater of (A) the cost of acquisition of
such Portfolio Property by such joint venture and (B) the cost of
construction of the improvements located on such Portfolio Property,
except in each case, where the failure to maintain such title insurance
would not have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(xxiv) The mortgages and deeds of trust encumbering the
Portfolio Properties are not convertible and neither the Company nor
any of its subsidiaries hold a participating interest therein and said
mortgages and deeds of trust are not cross-defaulted or
cross-collateralized in respect of any property not owned by the
Company or its subsidiaries or in which the Company owns a joint
venture interest.
(xxv) The Company has no knowledge of (a) the unlawful
presence of any hazardous substances, hazardous materials, toxic
substances or waste materials (collectively, "Hazardous Materials") on
any of the Portfolio Properties or of (b) any unlawful spills,
releases, discharges or disposals of Hazardous Materials that have
occurred or are presently occurring from the Portfolio Properties as a
result of any construction on or operation and use of the Portfolio
Properties, which presence or occurrence would materially adversely
affect the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise. In connection with the construction on or
operation and use of the Portfolio Properties, the Company represents
that, as of the date of this Agreement, the Company has no knowledge of
any material failure to comply with all applicable local, state and
federal environmental laws, regulations, ordinances and administrative
and judicial orders relating to the generation, recycling, reuse, sale,
storage, handling, transport and disposal of any Hazardous Materials
that would have a material adverse effect on the condition, financial
or otherwise, or on the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise.
12
<PAGE> 13
(b) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company, as the case may be, to each
Underwriter participating in such offering as to the matters covered thereby on
the date of such certificate and, unless subsequently amended or supplemented,
at the applicable Representation Date subsequent thereto.
3. PURCHASE BY, AND SALE AND DELIVERY TO, UNDERWRITERS. (a) The several
commitments of the Underwriters to purchase the Underwritten Securities pursuant
to the applicable Terms Agreement shall be deemed to have been made on the basis
of the representations and warranties herein contained and shall be subject to
the terms and conditions herein set forth.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company may grant, if so provided in the applicable Terms Agreement relating to
the Initial Underwritten Securities, an option to the Underwriters named in such
Terms Agreement, severally and not jointly, to purchase up to the number of
Option Securities set forth therein at the same price per Option Security as is
applicable to the Initial Underwritten Securities less an amount equal to any
dividend paid or payable on the Initial Underwritten Securities and not payable
on the Option Securities. Such option, if granted, will expire 30 days (or such
lesser number of days as may be specified in the applicable Terms Agreement)
after the Representation Date relating to the Initial Underwritten Securities,
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial Underwritten Securities upon notice by you to
the Company setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time, date and place
of delivery (a "Date of Delivery") shall be determined by you, but shall not be
later than seven full business days and not be earlier than two full business
days after the exercise of said option, nor in any event prior to Closing Time,
unless otherwise agreed upon by you and the Company. If the option is exercised
as to all or any portion of the Option Securities, each of the Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of Option Securities then being purchased which the number of Initial
Underwritten Securities each such Underwriter has severally agreed to purchase
as set forth in the applicable Terms Agreement bears to the total number of
Initial Underwritten Securities (except as otherwise provided in the applicable
Terms Agreement).
13
<PAGE> 14
(c) Payment of the purchase price for, and delivery of, the
Underwritten Securities to be purchased by the Underwriters shall be made at the
office of Brown & Wood, 58th Floor, One World Trade Center, New York, New York
10048-0557, or at such other place as shall be agreed upon by you and the
Company, at 10:00 A.M., New York City time, on the third business day (unless
postponed in accordance with the provisions of Section 11 hereof) following the
date of the applicable Terms Agreement, or if such Terms Agreement is executed
subsequent to 4:30 P.M. on the date of its execution, on the fourth business
day, or at such other time as shall be agreed upon by you and the Company (each
such time and date of payment and delivery being referred to herein as the
"Closing Time"). In addition, in the event that any or all of the Option
Securities are purchased by the Underwriters, payment of the purchase price for,
and delivery of certificates representing, such Option Securities, shall be made
at the above-mentioned offices of Brown & Wood, or at such other place as shall
be agreed upon by you and the Company on each Date of Delivery as specified in
the notice from you to the Company. Unless otherwise specified in the applicable
Terms Agreement, payment shall be made to the Company by certified or official
bank check or checks in Federal or similar same-day funds payable to the order
of the Company against delivery to you for the respective accounts of the
Underwriters for the Underwritten Securities to be purchased by them. The
Underwritten Securities or, if applicable, the Depositary Receipts evidencing
the Depositary Shares, shall be in such authorized denominations and registered
in such names as you may request in writing at least one business day prior to
the Closing Time or Date of Delivery, as the case may be. The Underwritten
Securities, which may be in temporary form, will be made available for
examination and packaging by you on or before the first business day prior to
the Closing Time or the Date of Delivery, as the case may be.
If authorized by the applicable Terms Agreement, the Underwriters named
therein may solicit offers to purchase Underwritten Securities from the Company
pursuant to delayed delivery contracts ("Delayed Delivery Contracts")
substantially in the form of Exhibit B hereto with such changes therein as the
Company may approve. As compensation for arranging Delayed Delivery Contracts,
the Company will pay to you at Closing Time, for the respective accounts of the
Underwriters, a fee specified in the applicable Terms Agreement for each of the
Underwritten Securities for which Delayed Delivery Contracts are made at the
Closing Time as is specified in the applicable Terms Agreement. Any Delayed
Delivery Contracts are to be with institutional investors of the types described
in the Prospectus. At the Closing Time, the Company will enter into Delayed
Delivery Contracts (for not less than the minimum number of Underwritten
Securities per Delayed Delivery Contract specified in the applicable Terms
Agreement) with all purchasers proposed by the Underwriters and
14
<PAGE> 15
previously approved by the Company as provided below, but not for an aggregate
number of Underwritten Securities in excess of that specified in the applicable
Terms Agreement. The Underwriters will not have any responsibility for the
validity or performance of Delayed Delivery Contracts.
You shall submit to the Company, at least two business days prior to
the Closing Time, the names of any institutional investors with which it is
proposed that the Company will enter into Delayed Delivery Contracts and the
number of Underwritten Securities to be purchased by each of them, and the
Company will advise you, at least one business day prior to the Closing Time, of
the names of the institutions with which the making of Delayed Delivery
Contracts is approved by the Company and the number of Underwritten Securities
to be covered by each such Delayed Delivery Contract.
The number of Underwritten Securities agreed to be purchased by the
several Underwriters pursuant to the applicable Terms Agreement shall be reduced
by the number of Underwritten Securities covered by Delayed Delivery Contracts,
as to each Underwriter as set forth in a written notice delivered by you to the
Company; provided, however, that the total number of Underwritten Securities to
be purchased by all Underwriters shall be the total number of Underwritten
Securities covered by the applicable Terms Agreement, less the number of
Underwritten Securities covered by Delayed Delivery Contracts.
4. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company
covenants with the several Underwriters participating in the
offering of Underwritten Securities that:
(a) Immediately following the execution of the applicable Terms
Agreement, the Company will prepare a Prospectus Supplement setting forth the
number of Underwritten Securities covered thereby and their terms not otherwise
specified in the Prospectus or the applicable Warrant Agreement, if any, as the
case may be, pursuant to which the Underwritten Securities are being issued, the
names of the Underwriters participating in the offering and the number of
Underwritten Securities which each severally has agreed to purchase, the names
of the Underwriters acting as co-managers in connection with the offering, the
price at which the Underwritten Securities are to be purchased by the
Underwriters from the Company, the initial public offering price, if any, the
selling concession and reallowance, if any, any delayed delivery arrangements,
and such other information as you and the Company deem appropriate in connection
with the offering of the Underwritten Securities; and the Company will promptly
transmit copies of the Prospectus Supplement to the Commission for filing
pursuant to Rule 424(b) of the 1933 Act Regulations.
15
<PAGE> 16
(b) The Company will advise you promptly of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that purpose, and will
use its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible the lifting thereof, if issued. The Company will
advise you promptly of the transmittal to the Commission for filing of any
Prospectus Supplement or other supplement or amendment to the Prospectus or any
document to be filed pursuant to the 1934 Act. The Company will advise you
promptly of any request by the Commission for any amendment of or supplement to
the Registration Statement or the Prospectus or for additional information.
(c) If the Company elects to rely on Rule 434 under the 1933 Act
Regulations, the Company will prepare an abbreviated term sheet that complies
with the requirements of Rule 434 under the 1933 Act Regulations and the Company
will provide the Underwriters with copies of the form of Rule 434 Prospectus, in
such number as the Underwriters may reasonably request, and file or transmit for
filing with the Commission the form of Prospectus complying with Rule 434(c)(2)
of the 1933 Act in accordance with Rule 424(b) of the 1933 Act by the close of
business in New York on the business day immediately succeeding the date of the
Terms Agreement.
(d) At any time when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act in connection with sales of the Underwritten
Securities, the Company will give you notice of its intention to file any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus, whether pursuant to the 1933 Act, 1934 Act or otherwise, and will
furnish you with copies of any such amendment or supplement a reasonable amount
of time prior to such proposed filing, and will not file any such amendment or
supplement or other documents in a form to which you or counsel for the
Underwriters shall reasonably object in writing or which is not in material
compliance with the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934
Act Regulations as applicable.
(e) The Company will deliver to each Underwriter a signed copy of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith and documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act) and will also
deliver to such Underwriter a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (including documents incorporated
by reference but without exhibits).
(f) The Company will furnish to each Underwriter, from time to time
during the period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act in connection with
16
<PAGE> 17
sales of the Underwritten Securities, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or
the 1934 Act Regulations.
(g) If at any time after the effective date of the Registration
Statement when a prospectus relating to the Underwritten Securities is required
to be delivered under the 1933 Act or the 1934 Act any event relating to or
affecting the Company occurs as a result of which the Prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact, or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Registration
Statement or the Prospectus to comply with the 1933 Act or the 1934 Act, the
Company will promptly notify you thereof and will amend or supplement the
Registration Statement or the Prospectus to correct such statement or omission
whether by filing documents pursuant to the 1933 Act, the 1934 Act or otherwise.
(h) The Company will cooperate with the Underwriters to enable the
Underwritten Securities, the Warrant Securities, if any, and the Common Shares
issuable upon conversion of the Preferred Shares or the Depositary Shares, if
any, to be qualified for sale under the securities laws and real estate
syndication laws of such jurisdictions as you may designate and at the request
of the Underwriters will make such applications and furnish such information as
may be required of it as the issuer of the Underwritten Securities, the Warrant
Securities, if any, and the Common Shares issuable upon conversion of the
Preferred Shares or the Depositary Shares, if any, for that purpose; provided,
however, that the Company shall not be required to qualify to do business or to
file a general consent to service of process in any such jurisdiction. The
Company will, from time to time, prepare and file such statements and reports as
are or may be required of it as the issuer of the Underwritten Securities, the
Warrant Securities, if any, and the Common Shares issuable upon conversion of
the Preferred Shares or the Depositary Shares, if any, to continue such
qualifications in effect for so long a period as the Underwriters may reasonably
request for the distribution of the Underwritten Securities; and in each
jurisdiction in which the Underwritten Securities, the Warrant Securities, if
any, and the Common Shares issuable upon conversion of the Preferred Shares or
the Depositary Shares, if any, have been so qualified, the Company will file
such statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for so long as may be required for the
distribution of the Underwritten Securities, the Warrant Securities, if any, and
the Common Shares issuable upon conversion of the Preferred Shares or the
Depositary
17
<PAGE> 18
Shares, if any; provided, however, that the Company shall not be obligated to
qualify as a foreign corporation in any jurisdiction where it is not so
qualified.
(i) With respect to each sale of Underwritten Securities, the Company
will make generally available to its security holders as soon as practicable,
but in any event no later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 of the 1933 Act Regulations) which will be in reasonable detail (but which
need not be audited) and which will comply with Section 11(a) of the 1933 Act
covering a period of at least twelve months beginning not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
(j) The Company will furnish to its shareholders annual reports
containing financial statements certified by independent public accountants and
with quarterly summary financial information in reasonable detail which may be
unaudited. During the period of five years from the date hereof, the Company
will deliver to you and, upon request, to each of the other Underwriters, (i)
copies of each annual report of the Company and each other report furnished by
the Company to its shareholders; and will deliver to you, (ii) as soon as they
are available, copies of any other reports (financial or other) which the
Company shall publish or otherwise make available to any of its security holders
as such, and (iii) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange. In the event the Company has active subsidiaries, such
financial statements will be on a consolidated basis to the extent the accounts
of the Company and its subsidiaries are consolidated in reports furnished to its
shareholders generally. Separate financial statements shall be furnished for all
subsidiaries whose accounts are not consolidated but which at the time are
significant subsidiaries as defined in the 1933 Act Regulations.
(k) The Company will use the net proceeds received by it from
the sale of Underwritten Securities in the manner specified in the
Prospectus under "Use of Proceeds."
(l) The Company will use its best efforts to continue to meet the
requirements to qualify as a "real estate investment trust" under the Code for
the taxable year in which sales of the Underwritten Securities are to occur.
(m) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act in connection with sales of the
Underwritten Securities, will file
18
<PAGE> 19
promptly all documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the 1934 Act within the time periods prescribed by the
1934 Act and the 1934 Act Regulations.
(n) If the Preferred Shares or Depositary Shares are convertible into
Common Shares or if Warrants are issued, the Company will reserve and keep
available at all times, free of preemptive rights or other similar rights, a
sufficient number of Common Shares or Preferred Shares, as the case may be, for
the purpose of enabling the Company to satisfy any obligations to issue such
shares upon conversion of the Preferred Shares or the Depositary Shares, as the
case may be, or upon exercise of the Warrants.
(o) If the Preferred Shares or Depositary Shares are convertible into
Common Shares or if Warrants are exercised, the Company will use its best
efforts to list the Common Shares issuable upon conversion of the Preferred
Shares or Depositary Shares or upon exercise of the Warrants on the New York
Stock Exchange or such other national exchange on which the Company's Common
Shares are then listed.
(p) The Company has complied and will comply with all of the provisions
of Florida H.B. 1771, Section 1, P. 17,130 of the Florida Securities and
Investors Act, and all regulations thereunder relating to issuers doing business
with Cuba.
5. PAYMENT OF EXPENSES. The Company will pay, directly or by
reimbursement, all expenses incident to the performance of its obligations under
this Agreement or the applicable Terms Agreement, including (i) the printing and
filing of the Registration Statement as originally filed and of each amendment
thereto, (ii) the cost of printing, filing and distributing to the Underwriters
copies of this Agreement and the applicable Terms Agreement, (iii) the
preparation, issuance and delivery of the Underwritten Securities to the
Underwriters and the Warrant Securities, if any, (iv) the fees and disbursements
of the Company's counsel and accountants, (v) the qualification of the
Underwritten Securities and the Warrant Securities, if any, and the Common
Shares issuable upon conversion of the Preferred Shares or the Depositary
Shares, if any, under securities laws and real estate syndication laws in
accordance with the provisions of Section 4(h), including filing fees and the
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey, (vi) the printing
and delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, and of the Prospectus and any
amendments or supplements thereto including the abbreviated term sheet delivered
by the Company pursuant to Rule 434 of the 1933 Act Regulations, (vii) the cost
of reproducing and distributing to the
19
<PAGE> 20
Underwriters copies of the applicable Warrant Agreement, if any, (viii) the cost
of reproducing and delivering to the Underwriters copies of the Blue Sky Survey,
(ix) the fees and expenses, if any, incurred with respect to the listing of the
Underwritten Securities or the Warrant Securities, if any, or the Common Shares
issuable upon conversion of the Preferred Shares or the Depositary Shares, if
any, on any national securities exchange, and (x) the fees and expenses, if any,
incurred with respect to any filing with the National Association of Securities
Dealers, Inc., (xi) the cost of providing any CUSIP or other identification
numbers for the Underwritten Securities or the Common Shares issuable upon
exercise of the Warrant Securities, or the Common Shares issuable upon
conversion of the Preferred Shares or the Depositary Shares, if applicable.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter, and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act,
against any losses, claims, damages, liabilities or expenses (including the
reasonable cost of investigating and defending against any claims therefor and
reasonable counsel fees incurred in connection therewith), joint or several, as
incurred, which may be based upon the 1933 Act, or any other statute or at
common law, arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto including the abbreviated term sheet
delivered by the Company pursuant to Rule 434 of the 1933 Act Regulations) or
the omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, unless any such statement or omission was made
in reliance upon, and in conformity with, written information furnished to the
Company by any Underwriter, directly or through you or any other Underwriter,
specifically for use in the preparation thereof; provided, however, that the
Company shall not be liable with respect to any claims made against any
Underwriter or any such controlling person under this subsection unless such
Underwriter or controlling person shall have notified the Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Underwriter or controlling person, but failure to notify the Company of any such
claim shall not relieve either of them from any liability which they may have to
such Underwriter or controlling person otherwise than on account of the
indemnity agreement contained in this
20
<PAGE> 21
paragraph. The Company will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and, if the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it. In the event the
Company elects to assume the defense of any such suit and retain such counsel,
the Underwriter or Underwriters or controlling person or persons, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Company shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include such Underwriter or Underwriters or controlling person or persons and
the Company and such Underwriter or Underwriters or controlling person or
persons have been advised by counsel that one or more legal defenses may be
available to it or to them which may not be available to the Company, in which
case the Company shall not be entitled to assume the defense of such suit
notwithstanding their obligation to bear the fees and expenses of such counsel.
The Company shall not be liable to indemnify any person for any settlement of
any such claim effected without the Company's written consent. This indemnity
agreement will be in addition to any liability which the Company might otherwise
have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of the Company's officers who signed
the Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any losses, claims,
damages, liabilities or expenses (including the reasonable cost of investigating
and defending against any claims therefor and reasonable counsel fees incurred
in connection therewith), joint or several, as incurred, which may be based upon
the 1933 Act, or any other statute or at common law, arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto) or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but only insofar as
any such statement or omission was made in reliance upon, and in conformity
with, written information furnished to the Company by such Underwriter, directly
or through you or any other Underwriter, specifically for use in the preparation
thereof; provided, however, that an Underwriter shall not be liable with respect
to any claims made against the Company or any person against whom the action is
brought unless the Company or such person shall have notified such
21
<PAGE> 22
Underwriter in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Company or such person, but failure to notify such Underwriter
of such claim shall not relieve it from any liability which it may have to the
Company or such person otherwise than on account of its indemnity agreement
contained in this paragraph. Such Underwriter shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but, if such Underwriter elects
to assume the defense, such defense shall be conducted by counsel chosen by it.
In the event that any Underwriter elects to assume the defense of any such suit
and retain such counsel, the Company, said officer and directors and other
Underwriter or Underwriters or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, respectively, unless (i) such Underwriter shall have
specifically authorized the retaining of such counsel or (ii) the parties to
such suit include any indemnified party and such Underwriter, and any such
indemnified party has been advised by counsel that one or more legal defenses
may be available to it which may not be available to such Underwriter, in which
case such Underwriter shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such counsel.
The Underwriter against whom indemnity may be sought shall not be liable to
indemnify any person for any settlement of any such claim effected without such
Underwriter's consent. This indemnity agreement will be in addition to any
liability which such Underwriter might otherwise have.
(c) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as incurred, in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the Underwritten
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party, as
incurred, in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses (or actions in
respect thereof), as well as any other relevant equitable
22
<PAGE> 23
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the applicable Prospectus Supplement, or, if not set forth thereon, with respect
to an offering without stated underwriting discounts and commissions, as implied
by the difference between the closing price of the Underwritten Securities on
the date of the offering and the purchase price per share of the Underwritten
Securities in the offering. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such claim.
Notwithstanding the provisions of this subsection (c), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Underwritten Securities purchased by it pursuant to the
applicable Terms Agreement and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute are several in
proportion to their respective underwriting obligations and not joint.
7. SURVIVAL OF INDEMNITIES, REPRESENTATION, WARRANTIES, ETC. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, and the several Underwriters, as set forth in
this Agreement or the applicable Terms Agreement or made by them respectively,
pursuant to this Agreement or the applicable Terms Agreement, shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of their officers
23
<PAGE> 24
or directors or any controlling person, and shall survive delivery of and
payment for the Underwritten Securities.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations
of the several Underwriters to purchase Underwritten Securities pursuant to the
applicable Terms Agreement are subject to the accuracy, at and (except as
otherwise stated herein) as of the date hereof, the Representation Date, Closing
Time and at each Date of Delivery, of the representations and warranties made
herein by the Company, to the accuracy of the statements of the Company's
officers or directors in any certificate furnished pursuant to the provisions
hereof, to compliance at and as of such Closing Time and at each Date of
Delivery by the Company, with its covenants and agreements herein contained and
other provisions hereof to be satisfied at or prior to such Closing Time, or
Date of Delivery, as the case may be, and to the following additional
conditions:
(a) At Closing Time, (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been initiated or, to the
knowledge of the Company or you, threatened by the Commission, (ii) if
Preferred Shares or Depositary Shares are being offered, the rating
assigned by any nationally recognized statistical rating organization
to any preferred stock of the Company as of the date of the applicable
Terms Agreement shall not have been lowered since such date nor shall
any such rating organization have publicly announced that it has placed
any preferred stock of the Company on what is commonly termed a "watch
list" for possible downgrading, and (iii) there shall not have come to
your attention any facts that would cause you to believe that the
Prospectus, together with the applicable Prospectus Supplement, at the
time it was required to be delivered to purchasers of the Underwritten
Securities, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at such
time, not misleading.
(b) At the time of execution of the applicable Terms
Agreement, you shall have received from Price Waterhouse LLP a letter,
dated the date of such execution, in form and substance satisfactory to
you, to the effect that:
(i) they are independent accountants with respect
to the Company and its subsidiaries and DDG within the meaning
of the 1933 Act and the 1933 Act Regulations; (ii) it is their
opinion that the consolidated financial statements and
supporting schedules of the Company and DDG included or
incorporated
24
<PAGE> 25
by reference in the Registration Statement and the Prospectus
and covered by their opinions therein comply in form in all
material respects with the applicable accounting requirements
of the 1933 Act and the 1934 Act, and the related published
rules and regulations; (iii) it is their opinion that the
financial statements of the properties acquired or proposed to
be acquired by the Company included in the Company's Forms 8-K
dated May 8, 1995 and November 3, 1995, each of which is
incorporated by reference in the Company's Registration
Statement and covered by their opinions therein comply as to
form with the applicable accounting requirements of the 1933
Act and the 1934 Act with respect to real estate operations
acquired or to be acquired; (iv) they have performed limited
procedures, not constituting an audit, including a reading of
the latest available unaudited interim consolidated financial
statements of the Company and its subsidiaries, a reading of
the minute books of the Company and its subsidiaries,
inquiries of certain officials of the Company and its
subsidiaries who have responsibility for financial and
accounting matters and such other inquiries and procedures as
may be specified in such letter, and on the basis of such
limited review and procedures nothing came to their attention
that caused them to believe that (A) the unaudited interim
consolidated financial statements and financial statement
schedules, if any, of the Company included or incorporated by
reference in the Registration Statement and the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act and the
related published rules and regulations thereunder or that any
material modification should be made to the unaudited
condensed interim financial statements included in or
incorporated by reference in the Registration Statement and
the Prospectus for them to be in conformity with generally
accepted accounting principles, (B) the unaudited pro forma
condensed financial statements included in the Company's
aforementioned Forms 8-K, the Company's Form 8 dated December
1, 1995 and the Company's Form 8-K dated May 31, 1996 do not
comply as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X under
the 1933 Act or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation
of such statements, (C) the information included or
incorporated by reference in the Registration Statement and
the applicable Prospectus under the caption "Selected
Consolidated Financial Data" did not conform in all material
respects with the disclosure requirements of
25
<PAGE> 26
item 301 of Regulation S-K, or (D) at a specified date not
more than three days prior to the date of the applicable Terms
Agreement, there has been any change in the capital stock of
the Company or in the consolidated long term debt of the
Company or any decrease in the net assets of the Company, as
compared with the amounts shown in the most recent
consolidated balance sheet included or incorporated by
reference in the Registration Statement and the Prospectus or,
during the period from the date of the most recent
consolidated statement of operations of the Company included
or incorporated by reference in the Registration Statement and
the Prospectus to a specified date not more than three days
prior to the date of the applicable Terms Agreement, there
were any decreases, as compared with the corresponding period
in the preceding year, in consolidated revenues, or decrease
in consolidated net income or consolidated net income per
share of the Company, except in all instances for changes,
increases or decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur; and (v) in
addition to the audit referred to in their opinions and the
limited procedures referred to in clause (iv) above, they have
carried out certain specified procedures, not constituting an
audit, with respect to certain amounts, percentages and
financial information which are included or incorporated by
reference in the Registration Statement and the Prospectus and
which are specified by you, and have found such amounts,
percentages and financial information to be in agreement with
the relevant accounting, financial and other records of the
Company and its subsidiaries identified in such letter.
(c) At Closing Time, you shall have received from Price
Waterhouse LLP a letter, dated Closing Time, to the effect that such
accountants reaffirm, as of Closing Time, and as though made on such
Closing Time, the statements made in the letter furnished by such
accountants pursuant to paragraph (b) of this Section 8, except that
the specified date will be a date not more than three days prior to the
Closing Date.
(d) At Closing Time, you shall have received from Baker &
Hostetler, counsel for the Company, an opinion, dated as of Closing
Time, to the effect that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of the State of Ohio.
26
<PAGE> 27
(ii) The Company has full corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus.
(iii) The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which
it owns real property except where the failure to qualify and
be in good standing would not have a material adverse effect
on the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(iv) If the Company has one or more significant
subsidiaries, as defined in Rule 405 of the 1933 Act (each a
"Significant Subsidiary"), each Significant Subsidiary has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to
conduct its business, and is duly qualified to transact
business and is in good standing in each jurisdiction in which
it owns real property, except where the failure to so qualify
and be in good standing would not have a material adverse
effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise.
(v) The number of issued and outstanding shares of
capital stock of the Company is as set forth in the Prospectus
under "Capitalization" and the outstanding shares of capital
stock have been duly authorized, validly issued, fully paid
and non-assessable. All of the issued and outstanding capital
stock of the Company's subsidiaries have been duly authorized
and validly issued, is fully paid and non-assessable and, to
the best of such counsel's knowledge, is owned by the Company
free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(vi) The Underwritten Securities being sold
pursuant to the applicable Terms Agreement and, if applicable,
the deposit of the Preferred Shares in accordance with the
provisions of a Deposit Agreement, have been duly and validly
authorized by all necessary corporate action and such
Underwritten Securities have been duly authorized for issuance
and sale pursuant to this Agreement and such Underwritten
Securities, when issued and delivered pursuant to this
Agreement against
27
<PAGE> 28
payment of the consideration therefor specified in the
applicable Terms Agreement or the Delayed Delivery Contracts,
the Underwritten Securities will be validly issued, fully paid
and non-assessable.
(vii) The issuance of the Underwritten Securities
is not subject to preemptive or other similar rights arising
by operation of law or, to the best of their knowledge,
otherwise.
(viii) If applicable, the Warrants have been duly
authorized and, when issued and delivered pursuant to this
Agreement and countersigned by the Warrant Agent as provided
in the Warrant Agreement, will have been duly executed,
countersigned, issued and delivered and will constitute valid
and legally binding obligations of the Company entitled to the
benefits provided by the Warrant Agreement under which they
are to be issued except as enforcement thereof may be limited
by bankruptcy, insolvency or other similar laws relating to or
affecting enforcement of creditors' rights generally or by
general equity principles (regardless of whether enforcement
is considered in a proceeding in equity or at law).
(ix) If applicable, the Common Shares issuable upon
conversion of any of the Preferred Shares or Depositary Shares
or upon the exercise of the Warrant Securities, have been duly
and validly authorized and reserved for issuance upon such
exercise by all necessary corporate action and such shares,
when issued upon such exercise, will be duly and validly
issued and will be fully paid and non-assessable, and the
issuance of such shares upon such exercise will not be subject
to preemptive or other similar rights arising by operation of
law or, to the best of such counsel's knowledge, otherwise.
(x) The applicable Warrant Agreement, if any, and
the applicable Deposit Agreement, if any, have been duly
authorized, executed and delivered by the Company, and
(assuming due authorization, execution and delivery by the
Warrant Agent in the case of the Warrant Agreement, and the
Preferred Shares Depositary, in the case of the Deposit
Agreement) constitutes a valid and legally binding agreement
of the Company enforceable in accordance with its terms except
as enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general
equity principles (regardless of whether enforcement is
considered in a proceeding in equity or at law); and the
Warrant
28
<PAGE> 29
Agreement, if any, and the Deposit Agreement, if any, each
conforms in all material respects to all statements relating
thereto contained in the Prospectus.
(xi) If applicable, upon execution and delivery
thereof pursuant to the terms of the Deposit Agreement, the
persons in whose names the Depositary Receipts are registered
will be entitled to the rights specified therein and in the
Deposit Agreement.
(xii) Each of this Agreement, the applicable Terms
Agreement and the Delayed Delivery Contracts, if any, has been
duly authorized, executed and delivered by
the Company.
(xiii) The Registration Statement is effective
under the 1933 Act and, to the best of their knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(xiv) The Registration Statement and the Prospectus,
excluding the documents incorporated by reference therein, as
of their respective effective or issue dates, comply as to
form in all material respects with the requirements for
registration statements on Form S-3 under the 1933 Act and the
1933 Act Regulations. If applicable, the Rule 434 Prospectus
conforms to the requirements of Rule 434 of the 1933 Act
Regulations in all material respects. It being understood,
however, that no opinion need be rendered with respect to the
financial statements, schedules and other financial and
statistical data included or incorporated by reference in the
Registration Statement or the Prospectus.
(xv) Each document filed pursuant to the 1934 Act
(other than the financial statements, schedules and other
financial and statistical data included therein, as to which
no opinion need be rendered) and incorporated or deemed to be
incorporated by reference in the Prospectus complied when so
filed as to form in all material respects with the 1934 Act
and the 1934 Act Regulations.
(xvi) If applicable, the relative rights,
preferences, interests and powers of the Preferred Shares or
Depositary Shares, as the case may be, are as set forth in the
Articles of Incorporation relating thereto, and all such
provisions are valid under Ohio Law; and, as applicable, the
form of certificate used to evidence the
29
<PAGE> 30
Preferred Shares being represented by the Depositary Shares
and the form of certificate used to evidence the related
Depositary Receipts are in due and proper form under Ohio Law
and comply with all applicable statutory requirements.
(xvii) The Underwritten Securities, the Warrant
Securities, and the Common Shares issuable upon conversion of
the Preferred Shares or Depositary Shares, if applicable,
conform in all material respects to the statements relating
thereto contained in the Prospectus.
(xviii) Nothing has come to such counsel's attention
that would lead it to believe that the Registration Statement
or any amendment thereto (excluding the financial statements
and financial schedules included or incorporated by reference
therein, as to which such counsel need express no belief), at
the time it became effective or at the time an Annual Report
on Form 10-K was filed by the Company with the Commission
(whichever is later), or at the Representation Date, contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (excluding
the financial statements and financial schedules included or
incorporated by reference therein, as to which such counsel
need express no belief), at the Representation Date or at
Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(xix) To the best of their knowledge, there are no
legal or governmental proceedings pending or threatened which
are required to be disclosed in the Prospectus, other than
those disclosed therein, and, to the best of their knowledge,
all pending legal or governmental proceedings to which the
Company or any of its subsidiaries is a party or of which any
of the property of the Company or its subsidiaries is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material to
the business of the Company and its subsidiaries considered as
one enterprise.
30
<PAGE> 31
(xx) To the best of their knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or
referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto, the descriptions thereof
or references thereto are correct in all material respects,
and, to the best of their knowledge, no default exists in the
due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to or filed which would have
a material adverse effect on the condition, financial or
otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as
one enterprise.
(xxi) No authorization, approval or consent of any court or
governmental authority or agency is required that has not been
obtained in connection with the consummation by the Company of
the transactions contemplated by this Agreement, the
applicable Terms Agreement, the applicable Deposit Agreement,
if any, or the applicable Warrant Agreement, if any, except
such as may be required under the 1933 Act, the 1934 Act, and
state securities laws or Blue Sky laws or real estate
syndication laws; to the best of their knowledge, the
execution and delivery of this Agreement and the Terms
Agreement, and the Deposit Agreement, and the consummation of
the transactions contemplated herein and therein and
compliance by the Company with its obligations hereunder and
thereunder will not (A) constitute a breach of, or default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the
Company or its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of its subsidiaries is
a party or by which they may be bound or to which any of the
property or assets of the Company or any of its subsidiaries
is subject, except where such breach, default, creation or
imposition would not have a material adverse effect on the
condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, (B) nor will such
action result in violation of the provisions of the Articles
of Incorporation or Code of Regulations or bylaws, as the case
may be, of the Company or its subsidiaries or any
31
<PAGE> 32
applicable law, administrative regulation or administrative or
court order or decree.
(xxii) Neither the Company nor any of its
subsidiaries is required to be registered under the 1940
Act.
(xxiii) The information in the Prospectus, if
applicable, under the captions "Description of Common Shares,"
"Description of Common Share Warrants," "Description of
Preferred Shares," "Description of Depositary Shares,"
"Certain Anti-Takeover Provisions of Ohio Law" and "Federal
Income Tax Considerations," and, if applicable, any similar
matters set forth in the Prospectus Supplement under a caption
or captions to be set forth in such opinion, to the extent
that it constitutes matters of law or legal conclusions, has
been reviewed by them and is correct in all material respects.
(xxiv) The Company has qualified as a REIT for the
taxable years ended December 31, 1993 and December 31, 1994,
and the Company is organized and operates in a manner that
will enable it to qualify to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code") for the
taxable year ended December 31, 1995 and thereafter provided
the Company continues to meet the asset composition, source of
income, shareholder diversification, distributions, record
keeping, and other requirements of the Code which are
necessary for the Company to qualify as a REIT.
(e) The Representatives shall have received from Brown & Wood,
counsel for the Underwriters, their opinion or opinions dated Closing
Time with respect to the matters set forth in (i), (vi) to (xiv),
inclusive, (xvi) to (xviii) of subsection (d) of this Section, and the
Company shall have furnished to such counsel such documents as they may
request for the purpose of enabling them to pass upon such matters.
In giving their opinion, Brown & Wood may rely as to matters
involving the laws of the State of Ohio upon the opinion of Baker &
Hostetler. Baker & Hostetler and Brown & Wood may rely (i) as to the
qualification of the Company or its subsidiaries to do business in any
state or jurisdiction, upon certificates of appropriate government
officials, and (ii) as to matters of fact, upon certificates and
written statements of officers and employees of and accountants for the
Company or its subsidiaries.
32
<PAGE> 33
(f) At the Closing Time (i) the Registration Statement and the
Prospectus shall contain all statements which are required to be stated
therein in accordance with the 1933 Act, and the Rules and Regulations
and in all material respects shall conform to the requirements of the
1933 Act, and the 1933 Act Regulations and neither the Registration
Statement nor the Prospectus shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
no action, suit or proceeding at law or in equity shall be pending or,
to the knowledge of the Company, threatened against the Company or its
subsidiaries which would be required to be set forth in the
Registration Statement and the Prospectus other than as set forth
therein, (ii) there shall not have been, since the date of the
applicable Terms Agreement or since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
any material adverse change in the condition, financial or otherwise,
of the Company and its subsidiaries considered as one enterprise or in
its earnings, business affairs or business prospects, whether or not
arising in the ordinary course of business, from that set forth in the
Registration Statement and the Prospectus, (iii) no proceeding shall be
pending or, to the knowledge of the Company, threatened against the
Company or its subsidiaries before or by any Federal, state or other
commission, board or administrative agency wherein an unfavorable
decision, ruling or finding would materially and adversely affect the
business, property, financial condition or income of the Company and
its subsidiaries considered as one enterprise other than as set forth
in the Registration Statement and the Prospectus, (iv) neither the
Company nor any of its subsidiaries shall be in default in the
performance or observance of any contract to which it is a party,
except such defaults that would not have a material adverse effect on
the condition, financial or otherwise, of the Company and its
subsidiaries considered as one enterprise or on the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, (v) no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act and no proceeding therefor shall have been
instituted or threatened by the Commission and (vi) you shall have
received at Closing Time a certificate of the President and the Chief
Financial Officer of the Company, dated as of Closing Time, evidencing
compliance with the provisions of this subsection (f). As used in this
subsection (f), the term "Prospectus" means the Prospectus in the form
first used to confirm sales of the Underwritten Securities.
33
<PAGE> 34
(g) You shall have received certificates, dated Closing Time,
of the President and the Chief Financial Officer of the Company to the
effect that the representations and warranties of the Company contained
in Section 2(a) are true and correct with the same force and effect as
though expressly made at and as of Closing Time.
(h) The Company shall have furnished to you such additional
certificates as you may have reasonably requested as to the accuracy,
at and as of Closing Time, of the representations and warranties made
herein by them, as to compliance, at and as of Closing Time, by them
with their covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to Closing Time, and as
to other conditions to the obligations of the Underwriters hereunder.
(i) In the event the Underwriters exercise their option
provided in a Terms Agreement as set forth in Section 3 hereof to
purchase all or any portion of the Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall
be true and correct as of each Date of Delivery, and you shall have
received:
(i) A letter from Price Waterhouse LLP in form and
substance satisfactory to you and dated such Date of Delivery,
substantially the same in scope and substance as the letter
furnished to you pursuant to Section 8(b), except that the
specified date in the letter furnished pursuant to this
Section 8(i) shall be a date not more than three days prior to
such Date of Delivery.
(ii) The opinion of Baker & Hostetler, counsel for
the Company, in form and substance satisfactory to Brown &
Wood, dated such Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the opinion
required by Section 8(d).
(iii) The opinion of Brown & Wood, counsel for the
Underwriters, dated such Date of Delivery, relating to the
Options Securities and otherwise to the same effect as the
opinion required by Section 8(e).
(iv) A certificate, dated such Date of Delivery, of
the President and the Chief Financial Officer of the Company
confirming that the certificate or certificates delivered at
Closing Time pursuant to Section 8(f) and Section 8(g) remains
or remain true as of such Date of Delivery.
34
<PAGE> 35
(v) Such additional certificates, dated such Date
of Delivery, as you may have reasonably requested pursuant to
Section 8(h).
If any of the conditions hereinabove provided for in this Section shall
not have been satisfied when and as required to be satisfied, the applicable
Terms Agreement may be terminated by you by notifying the Company of such
termination in writing or by telegram at or prior to Closing Time, but you shall
be entitled to waive any of such conditions.
9. TERMINATION. (a) This Agreement (excluding the
applicable Terms Agreement) may be terminated for any reason at any
time by the Company or by you upon the giving of 30 days' written
notice of such termination to the other party hereto.
(b) You may also terminate the applicable Terms Agreement, by notice to
the Company, at any time at or prior to the Closing Time if (i) trading in any
securities of the Company shall have been suspended by the Commission or a
national securities exchange or if trading generally on the New York or American
Stock Exchanges shall have been suspended or minimum or maximum prices shall
have been established on either such exchange, or a banking moratorium shall
have been declared by New York or United States authorities; (ii) Preferred
Shares or Depositary Shares are being offered and the rating assigned by any
nationally recognized statistical rating organization to any preferred stock of
the Company as of the date of the applicable Terms Agreement shall have been
lowered since such date or if any such rating organization shall have publicly
announced that it has placed any preferred stock of the Company on what is
commonly termed at "watch list" for possible downgrading; (iii) there shall have
been any material adverse change in the financial markets in the United States
or any outbreak or escalation of hostilities between the United States and any
foreign power, or of any other insurrection or armed conflict involving the
United States which, in your judgment, makes it impracticable or inadvisable to
offer or sell the Underwritten Securities; (iv) there shall have been, since the
date of the applicable Terms Agreement or since the respective dates as to which
information is given in the Registration Statement and the Prospectus, any
material adverse change in the condition (financial or otherwise), or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; or (v) there shall be any litigation
against the Company or the Properties, pending or threatened, which, in your
judgment, makes it impracticable or inadvisable to offer or deliver the
Underwritten Securities on the terms contemplated by the Prospectus. As used in
this Section 9(b), the term "Prospectus" means the Prospectus in the form first
used to confirm sales of the Underwritten Securities.
35
<PAGE> 36
(c) In the event of any such termination, the covenants set forth in
Section 4 with respect to any offering of Underwritten Securities shall remain
in effect so long as any Underwriter owns any such Underwritten Securities
purchased from the Company pursuant to the applicable Terms Agreement.
10. REIMBURSEMENT OF UNDERWRITERS. Notwithstanding any other provisions
hereof, if this Agreement or the applicable Terms Agreement shall be terminated
by you under Section 8, Section 9 or Section 12, the Company will bear and pay
the expenses specified in Section 5 hereof and, in addition to their obligations
pursuant to Section 6, hereof, except when you terminate this Agreement pursuant
to clause (a), (b)(i) or (b)(iii) of Section 9, the Company will reimburse the
reasonable out-of-pocket expenses of the several Underwriters (including
reasonable fees and disbursements of counsel for the Underwriters) incurred in
connection with this Agreement or the applicable Terms Agreement and the
proposed purchase of the Underwritten Securities, and promptly upon demand the
Company, will pay such amounts to you for and on behalf of such Underwriter. In
addition, the provisions of Section 6 shall survive any such termination.
11. DEFAULT BY UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase Underwritten Securities under
the applicable Terms Agreement at the Closing Time and the aggregate number of
Underwritten Securities which such defaulting Underwriter or Underwriters agreed
but failed to purchase does not exceed 10% of the total number of Underwritten
Securities which the Underwriters are obligated to purchase at the Closing Time,
the other Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the full amount of the
Underwritten Securities which such defaulting Underwriter or Underwriters agreed
but failed to purchase. If any Underwriter or Underwriters shall so default and
the aggregate number of Underwritten Securities with respect to which such
default or defaults occur is more than 10% of the total number of Underwritten
Securities and arrangements satisfactory to you and the Company for the purchase
of such Underwritten Securities by other persons are not made within 48 hours
after such default, the applicable Terms Agreement shall terminate.
If the remaining Underwriters or substituted underwriters are required
hereby or agree to take up all or part of the Underwritten Securities of a
defaulting Underwriter or Underwriters as provided in this Section 11, (i) the
Company shall have the right to postpone the Closing Time for a period of not
more than five full business days, in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the
36
<PAGE> 37
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and (ii) the respective numbers of Underwritten Securities to be
purchased by the remaining Underwriters or substituted underwriters shall be
taken as the basis of their underwriting obligation for all purposes of the
applicable Terms Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the Underwriters for
damages occasioned by its default hereunder. Any termination of the applicable
Terms Agreements pursuant to this Section 11 shall be without liability on the
part of any non-defaulting Underwriter or the Company, except for expenses to be
paid or reimbursed pursuant to Section 5 and except for the provisions of
Section 6.
12. DEFAULT BY THE COMPANY. If the Company shall fail at Closing Time
to sell and deliver the total number of Underwritten Securities which it is
obligated to sell pursuant to the applicable Terms Agreement, then such
agreement shall terminate without any liability on the part of any
non-defaulting party, other than obligations under Section 10 hereof. No action
taken pursuant to this Section 12 shall relieve the Company from liability, if
any, in respect of such default.
13. NOTICES. All communications hereunder shall be in writing and, if
sent to the Underwriters shall be mailed, delivered or telecopied and confirmed
to you, c/o Dean Witter Reynolds Inc., at Two World Trade Center, 65th Floor,
New York, New York 10048, Attention: W. Blake Baird, Managing Director, except
that notices given to an Underwriter pursuant to Section 6 hereof shall be sent
to such Underwriter at the address furnished by you or if sent to the Company
shall be mailed, delivered or telegraphed and confirmed at 34555 Chagrin
Boulevard, Moreland Hills, Ohio 44022, Attention: Scott A. Wolstein, President
and Chief Executive Officer.
14. SUCCESSORS. This Agreement and the applicable Terms Agreement shall
inure to the benefit of and be binding upon you and the Company and any
Underwriter who becomes a party to such Terms Agreement, the Company and their
respective successors and legal representatives. Nothing expressed or mentioned
in this Agreement or the applicable Terms Agreement is intended or shall be
construed to give any person other than the persons mentioned in the preceding
sentence any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provisions herein contained, this Agreement or such Terms
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person; except that the representations, warranties, covenants,
agreements and indemnities of the Company, contained in this Agreement shall
also be for the benefit of the person or persons, if any, who control any
Underwriter within the meaning of
37
<PAGE> 38
Section 15 of the 1933 Act, and the indemnities given by the several
Underwriters shall also be for the benefit of each director of the Company, each
of the Company's officers who has signed the Registration Statement and the
person or persons, if any, who control the Company within the meaning of Section
15 of the 1933 Act.
15. APPLICABLE LAW. This Agreement and the applicable Terms
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
state. Specified times of day refer to New York City time.
16. COUNTERPARTS. This Agreement and the applicable Terms
Agreement may be executed in one or more counterparts, and if executed in more
than one counterpart the executed counterparts shall constitute a single
instrument.
38
<PAGE> 39
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By:
---------------------------
Name:
Title:
Accepted and delivered,
as of the date first above written:
DEAN WITTER REYNOLDS INC.
By:
----------------------------------
Name:
Title:
39
<PAGE> 40
Exhibit A
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(an Ohio corporation)
[Title of Securities]
TERMS AGREEMENT
Dated: , 1996
To: Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Attention: Mr. Scott A. Wolstein
President and Chief Executive Officer
Dear Sirs:
We (the "Representative") understand that Developers Diversified Realty
Corporation, an Ohio corporation (the "Company"), proposes to issue and sell the
number of its [common shares, without par value, set forth below (the "Common
Shares")] [ Warrants (the "Warrants") to purchase Shares (the "Warrant
Securities")] [preferred shares, without par value, (the "Preferred Shares")]
[interests in Preferred Shares in the form of
depositary shares (the "Depositary Shares") represented by depositary
receipts (the "Depositary Receipts") (such [Common Shares] [Warrants] [Preferred
Shares] [Depositary Shares and Depositary Receipts] being collectively
hereinafter] [also] referred to as the "Underwritten Securities"). Subject to
the terms and conditions set forth or incorporated by reference herein, the
underwriters named below (the "Underwriters") offer to purchase, severally and
not jointly, the respective numbers of [Initial Underwritten Securities (as
defined in the Underwriting Agreement referenced to below)] [and] [Warrants] set
forth below opposite their respective names, and a proportionate share of Option
Securities (as defined in the Underwriting Agreement referred to below) to the
extent any are purchased, at the purchase price set forth below.
A-1
<PAGE> 41
Number of Shares
of Initial Number of
UNDERWRITER UNDERWRITTEN SECURITIES WARRANTS
- ----------- ----------------------- --------
---------- ---------
Total $ $
========== =========
The Underwritten Securities shall have the following terms:
<TABLE>
<S> <C> <C>
[COMMON SHARES] [PREFERRED SHARES] [DEPOSITARY SHARES]
<FN>
Title of Securities:
Number of Shares:
[If applicable, fractional amount of Preferred Shares represented by each Depositary Share:]
[Current Ratings:]
[Dividend Rate: [$ ] [% ], Payable]
[Stated Value:]
[Liquidation Preference:]
[Ranking:]
Public offering price per share: $ [, plus accumulated dividends, if any, from , 19 .]
Purchase price per share: $ [, plus accumulated dividends, if any, from , 19 .]
[Conversion provisions:]
[Redemption provisions:]
[Sinking fund provisions:]
Number of Option Securities, if any, that may be purchased by the Underwriters:
Delayed Delivery Contracts: [authorized] [not authorized]
[Date of Delivery:
Minimum Contract:
Maximum number of Shares:
Fee:]
</TABLE>
Additional co-managers, if any:
[Terms of Lock-up: The Company will not, for __ days from the date of the
Prospectus, except with the prior written consent of Dean Witter Reynolds Inc.,
sell, offer for sale, issue, distribute or otherwise dispose of any of its
equity securities (except for shares of Common Stock issued pursuant to the
Company's Dividend Reinvestment Plan or shares issued upon the exercise of stock
options or pursuant to other employee benefit plans), or sell or grant options,
rights or warrants with respect to any of its equity securities (other than the
grant of options to its directors or pursuant to the Company's Stock Option Plan
or pursuant to other employee benefit plans), or register for sale under the
1933 Act any of its equity securities (other than shares of Common Stock to be
issued pursuant to the Company's Dividend Reinvestment Plan or pursuant to the
exercise of stock options or other employee benefit plans) [other exceptions].]
Other terms:
Closing time, date and location:
WARRANTS
Number of Warrants to be issued:
Warrant Agent:
Issuable jointly with _______ Shares: [Yes] [No]
[Number of Warrants issued
with each ______ Share:]
A-2
<PAGE> 42
[Detachable data:]
Date from which Warrants are exercisable:
Date on which Warrants expire:
Exercise price(s) of Warrants:
Initial public offering price: $
Purchase price: $
Title of Warrant Securities:
Principal amount purchasable upon exercise of one Warrant:
Interest rate: Payable:
Date of maturity:
[Delayed Delivery Contracts: [authorized] [not authorized]
[Date of delivery:
Minimum contract:
Maximum aggregate principal amount:
Fee: %]
Other terms:
[Closing date and location:]]
All the provisions contained in the document attached as Annex A hereto
entitled "Developers Diversified Realty Corporation-Preferred Shares, Depositary
Shares, Common Shares and Warrants to Purchase Common Shares-Underwriting
Agreement Basic Provisions" are hereby incorporated by reference in their
entirety herein and shall be deemed to be a part of this Terms Agreement to the
same extent as if such provisions had been set forth in full herein. Terms
defined in such document are used herein as therein defined.
Please accept this offer by signing a copy of this Terms Agreement in
the space set forth below and returning the signed copy to us.
Very truly yours,
DEAN WITTER REYNOLDS INC.
By: Dean Witter Reynolds Inc.
By:
--------------------------------
Name:
Title:
Acting on behalf of themselves and
the other named Underwriters.
Accepted:
DEVELOPERS DIVERSIFIED REALTY CORPORATION
By:
--------------------------------------
A-3
<PAGE> 43
Name:
Title:
A-4
<PAGE> 44
Exhibit B
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(an Ohio corporation)
[Title of Securities]
DELAYED DELIVERY CONTRACT
, 19
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Attention: Mr. Scott A. Wolstein
President and Chief Executive Officer
Dear Sirs:
The undersigned hereby agrees to purchase from Developers Diversified
Realty Corporation (the "Company"), and the Company agrees to sell to the
undersigned on __________, 19__ (the "Delivery Date"),
of the Company's [insert title of security] (the "Securities"), offered by the
Company's Prospectus dated __________, 19__, as supplemented by its Prospectus
Supplement dated ___________, 19__, receipt of which is hereby acknowledged at a
purchase price of [$__________] [and, $__________ per Warrant, respectively] to
the Delivery Date, and on the further terms and conditions set forth in this
contract.
Payment for the Securities which the undersigned has agreed to purchase
on the Delivery Date shall be made to the Company or its order by certified or
official bank check in New York Clearing House funds at the office of
, on the Delivery Date, upon delivery to
the undersigned of the Securities to be purchased by the undersigned in
definitive form and in such denominations and registered in such names as the
undersigned may designate by written or telegraphic communication addressed to
the Company not less than five full business days prior to the Delivery Date.
B-1
<PAGE> 1
Exhibit 1(c)
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(an Ohio corporation)
MEDIUM-TERM NOTES
DUE 9 MONTHS OR MORE FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
_____ __, 1996
DEAN WITTER REYNOLDS INC.
Two World Trade Center
New York, New York 10048
MORGAN STANLEY & CO. INCORPORATED
1251 Avenue of the Americas
New York, New York 10020
FIRST CHICAGO CAPITAL MARKETS, INC.
One First National Plaza
Chicago, Illinois 60670
CS FIRST BOSTON CORPORATION
55 East 52nd Street
New York, New York 10055
LEHMAN BROTHERS
LEHMAN BROTHERS INC.
3 World Financial Center
New York, New York 10285
SMITH BARNEY INC.
390 Greenwich Street
New York, New York 10013
Dear Sirs:
1. INTRODUCTORY. Developers Diversified Realty Corporation,
an Ohio corporation (the "Company"), confirms its agreement with Dean Witter
Reynolds Inc., Morgan Stanley & Co. Incorporated, First Chicago Capital Markets,
Inc., CS First Boston Corporation, Lehman
<PAGE> 2
Brothers, Lehman Brothers Inc. (including its affiliate Lehman Government
Securities Inc.) (each, an "Agent," and collectively, the "Agents") and Smith
Barney Inc. with respect to the issue and sale by the Company of its debt
securities denominated "Medium-Term Notes Due 9 Months or More from Date of
Issue" (the "Notes"). The Notes will be either Senior Notes (the "Senior Notes")
or Subordinated Notes (the "Subordinated Notes"). The Senior Notes will be
issued under an indenture dated as of May 1, 1994, as amended, supplemented or
modified from time to time (the "Senior Indenture"), between the Company and
National City Bank, as trustee (the "Senior Trustee"), and the Subordinated
Notes will be issued under an indenture dated as of May 1, 1994, as amended,
supplemented or modified from time to time (the "Subordinated Indenture"),
between the Company and Chemical Bank, as trustee (the "Subordinated Trustee").
The term "Trustee" as used herein shall refer to either the Senior Trustee or
the Subordinated Trustee, as appropriate, for Senior Notes or Subordinated
Notes. The Senior Indenture and the Subordinated Indenture, each as amended,
supplemented or modified from time to time, are each sometimes referred to as
the "Indenture." Each series of Senior Notes or Subordinated Notes may vary, as
applicable, as to aggregate principal amount, maturity date, interest rate or
formula and timing of payments thereof, redemption and/or repayment provisions,
and any other variable terms which the Senior Indenture or the Subordinated
Indenture, as the case may be, contemplates may be set forth in the Senior Notes
and the Subordinated Notes as issued from time to time. The Senior Notes or the
Subordinated Notes may be offered either together or separately. As used herein,
"Notes" shall mean the Senior Notes or the Subordinated Notes or any combination
thereof.
As of the date hereof, the Company has authorized the issuance and sale
of up to U.S. $150,000,000 aggregate initial offering price (or its equivalent,
based upon the applicable exchange rate at the time of issuance, in such foreign
or composite currencies as the Company shall designate at the time of issuance)
of Notes to or through the Agents pursuant to the terms of this Agreement. It is
understood, however, that the Company may from time to time authorize the
issuance of additional Notes and that such additional Notes may be sold to or
through the Agents pursuant to the terms of this Agreement, all as though the
issuance of such Notes were authorized as of the date hereof. This Agreement
provides both for the sale of Notes by the Company to one or more Agents as
principal for resale to investors and other purchasers and for the sale of Notes
by the Company directly to investors (as may from time to time be agreed to by
the Company and the applicable Agent), in which case such Agent will act as an
agent of the Company in soliciting purchases of the Notes.
2
<PAGE> 3
As used herein, "you" and "your," unless the context otherwise
requires, shall mean the parties to whom this Agreement is addressed together
with the other parties, if any, identified in the Prospectus (as hereinafter
defined) as additional Agents with respect to the Notes.
2. APPOINTMENT AS AGENT. (a) Subject to the terms and conditions stated
herein and subject to the reservation by the Company of the right to sell Notes
directly on its own behalf, the Company hereby agrees that Notes will be sold
exclusively to or through the Agents. The Company agrees that it will not
appoint any other agents to act on its behalf, or to assist it, in the placement
of the Notes.
(b) The Company shall not sell or approve the solicitation of purchases
of Notes in excess of the amount which shall be authorized by the Company from
time to time or in excess of the aggregate initial offering price of Notes
registered pursuant to the Registration Statement. The Agents shall have no
responsibility for maintaining records with respect to the aggregate initial
offering price of Notes sold, or of otherwise monitoring the availability of
Notes for sale, under the Registration Statement.
(c) The Agents shall not have any obligation to purchase Notes from the
Company as principal, but one or more Agents may agree from time to time to
purchase Notes as principal for resale to investors and other purchasers
determined by such Agent or Agents. Any such purchase of Notes by an Agent as
principal shall be made in accordance with Section 4(a) hereof.
(d) If agreed upon by an Agent and the Company, such Agent, acting
solely as agent for the Company and not as principal, will solicit purchases of
the Notes. Such Agent will communicate to the Company, orally, each offer to
purchase Notes solicited by it on an agency basis, other than those offers
rejected by such Agent. Such Agent shall have the right, in its discretion
reasonably exercised, to reject any proposed purchase of Notes, as a whole or in
part, and any such rejection shall not be deemed a breach of its agreement
contained herein. The Company may accept or reject any proposed purchase of
Notes, in whole or in part. Such Agent shall make reasonable efforts to assist
the Company in obtaining performance by each purchaser whose offer to purchase
Notes has been solicited by it and accepted by the Company. Such Agent shall not
have any liability to the Company in the event that any such purchase is not
consummated for any reason. If the Company shall default on its obligation to
deliver Notes to a purchaser whose offer it has accepted, the Company shall (i)
hold such Agent harmless against any loss, claim or damage arising from or as a
result of such default by the Company, and (ii) notwithstanding
3
<PAGE> 4
such default, pay to such Agent any commission to which it would otherwise be
entitled.
(e) The Company and the Agents agree that any Notes purchased by one or
more Agents as principal shall be purchased, and any Notes the placement of
which an Agent arranges as agent shall be placed by such Agent, in reliance on
the representations, warranties, covenants and agreements of the Company
contained herein and on the terms and conditions and in the manner provided
herein.
3. REPRESENTATIONS AND WARRANTIES. (a) The Company represents and
warrants to you, as of the date hereof, as of the date of each acceptance by the
Company of an offer for the purchase of Notes (whether to one or more Agents as
principal or through an Agent as agent), as of the date of each delivery of
Notes (whether to one or more Agents as principal or through an Agent as agent)
(the date of each such delivery to one or more Agents as principal being
hereinafter referred to as a "Settlement Date"), and as of any time the
Registration Statement (as defined below) or the Prospectus (as defined below)
shall be amended or supplemented or there is filed with the Securities and
Exchange Commission (the "Commission") any document incorporated by reference
into the Prospectus (as defined below) (each of the times referenced above being
referred to herein as a "Representation Date"), that:
(i) Registration Statements on Form S-3 (Nos. 333- ,
33-90182 and 33-94182) for the registration of the Notes,
under the Securities Act of 1933, as amended (the "1933 Act"),
and the offering thereof from time to time in accordance with
Rule 415 of the rules and regulations of the Securities and
Exchange Commission (the "Commission") under the 1933 Act (the
"1933 Act Regulations"), have heretofore been delivered to
you, have been prepared by the Company in conformity with the
requirements of the 1933 Act and the 1933 Act Regulations and
have been filed with the Commission under the 1933 Act. One
or more amendments to such registration, as may have been
required and copies of which have heretofore been delivered to
you, have been so prepared and filed prior to the execution of
this Agreement. Each such registration statement (as amended,
if applicable) has been declared effective by the Commission
and each of the Senior Indenture and the Subordinated
Indenture has been qualified under the Trust Indenture Act of
1939, as amended (the "1939 Act"). Such registration
statements (and any further registration statements which may
be filed by the Company for the purpose of registering
additional Notes and in connection with which this Agreement
is included or incorporated by reference as an exhibit), on
the one hand, and the prospectus constituting a part thereof
and any prospectus supplement and pricing supplement relating
4
<PAGE> 5
to the offering of Notes, on the other hand, including all documents
incorporated therein by reference, as from time to time amended or
supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act") or otherwise, are referred to herein
as the "Registration Statement" and the "Prospectus," respectively,
except that if any revised prospectus shall be provided to the Agents
by the Company for use in connection with the offering of Notes,
whether or not such revised prospectus is required to be filed by the
Company pursuant to Rule 424(b) of the 1933 Act Regulations, the term
"Prospectus" shall refer to such prospectus from and after the time it
is first provided to the Agents for such use. If the Company elects to
rely on Rule 434 under the 1933 Act Regulations, all references to the
Prospectus shall be deemed to include, without limitation, the form of
prospectus and the term sheet, taken together, provided to the Agents
by the Company in reliance on Rule 434 under the 1933 Act (the "Rule
434 Prospectus"). If the Company files a registration statement to
register a portion of the Securities and relies on Rule 462(b) for such
registration statement to become effective upon filing with the
Commission (the "Rule 462 Registration Statement"), then any reference
to "Registration Statement" herein shall be deemed to be to the
registration statements referred to above (Nos. 333- , 33-94182 and
33-90182) and the Rule 462 Registration Statement, as each such
registration statement may be amended pursuant to the 1933 Act. All
references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (and all other references of
like import) shall be deemed to mean and include all such financial
statements and schedules and other information which is or is deemed to
be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include, without limitation, the
filing of any document under the 1934 Act which is or is deemed to be
incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
(ii) At the time the Registration Statement became effective,
and at each time thereafter at which an Annual Report on Form 10-K was
filed by the Company with the Commission, the Registration Statement
and the Prospectus conformed, and as of each applicable Representation
Date will conform, in all material respects to the requirements of the
1933 Act, the 1933 Act Regulations and the 1939 Act. At the time the
Registration Statement became effective and at each time thereafter at
which an Annual Report on Form 10-K was
5
<PAGE> 6
filed by the Company with the Commission, the Registration Statement
did not, and as of the applicable Representation Date, will not,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, as of the date
hereof does not, and as of each applicable Representation Date will
not, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing representations and warranties
shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of any Agent, specifically for use in the preparation thereof or
to that part of the Registration Statement which shall constitute the
Statement of Eligibility under the 1939 Act (Form T-1) (the "Statement
of Eligibility") of the Senior Trustee and the Subordinated Trustee
under the Senior Indenture and the Subordinated Indenture.
(iii) The documents incorporated or deemed to be incorporated
by reference in the Prospectus pursuant to Item 12 of Form S-3 under
the 1933 Act, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations"), and, when
read together with the other information in the Prospectus, at the time
the Registration Statement became effective and as of the applicable
Representation Date or during the period specified in Section 5(e), did
not and will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, of the Company and its
subsidiaries considered as one enterprise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by
the Company or its subsidiaries which are material with respect to the
Company and its subsidiaries considered as one enterprise other than
those in the ordinary course of
6
<PAGE> 7
business, and (C) except for regular quarterly dividends on the
Company's common shares, and regular dividends declared, paid or made
in accordance with the terms of any class or series of the Company's
preferred shares, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(v) The consolidated financial statements and supporting
schedules of the Company included in, or incorporated by reference
into, the Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated subsidiaries as
of the dates indicated and the results of their operations for the
periods specified and the consolidated financial statements of
Developers Diversified Group ("DDG") included in, or incorporated by
reference into, the Registration Statement and the Prospectus present
fairly the results of its operations for the periods specified; except
as otherwise stated in the Registration Statement and the Prospectus,
said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis;
and the supporting schedules included or incorporated by reference in
the Registration Statement and the Prospectus present fairly in all
material respects the information required to be stated therein. The
historical statements of revenues and certain operating expenses
included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the revenues and those operating expenses
included in such statements for the periods specified in conformity
with generally accepted accounting principles; the pro forma condensed
consolidated financial statements included or incorporated by reference
in the Registration Statement and the Prospectus, if any, present
fairly the pro forma financial position of the Company and its
consolidated subsidiaries as at the dates indicated and the pro forma
results of their operations for the periods specified; and the pro
forma condensed consolidated financial statements have been derived
from information prepared in conformity with generally accepted
accounting principles applied on a consistent basis, the assumptions on
which such pro forma financial statements have been prepared are
reasonable and are set forth in the notes thereto, such pro forma
financial statements have been prepared, and the pro forma adjustments
set forth therein have been applied, in accordance with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations,
and such pro forma adjustments have been properly applied to the
historical amounts in the compilation of such statements.
(vi) Price Waterhouse LLP, who have expressed their
opinion on the audited financial statements and related
7
<PAGE> 8
schedules included in, or incorporated by reference into, the
Registration Statement, are independent public accountants within the
meaning of the 1933 Act and the applicable 1933 Act Regulations.
(vii) The Company has been duly organized and is validly
existing and in good standing as a corporation under the laws of the
State of Ohio, with power and authority (corporate and other) to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus; the Company
is in possession of and operating in compliance with all material
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders required for the conduct of its
business, all of which are valid and in full force and effect; and the
Company is duly qualified to do business and in good standing as a
foreign corporation in all other jurisdictions where its ownership or
leasing of properties or the conduct of its business requires such
qualification, except where failure to qualify and be in good standing
would not have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(viii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise.
(ix) The Indenture has been duly and validly authorized,
executed and delivered by the Company and constitutes the valid and
legally binding agreement of the Company, enforceable in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general equity
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(x) The Notes have been duly authorized by the Company for
issuance and sale pursuant to this Agreement and, when
8
<PAGE> 9
issued, authenticated and delivered pursuant to the provisions of the
Indenture against payment of the consideration therefor specified in
the Prospectus or agreed upon pursuant to the terms of this Agreement,
the Notes will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws relating to or affecting enforcement of creditors' rights
generally or by general equity principles (regardless or whether
enforcement is considered in a proceeding in equity or at law); the
Notes and the Indenture conform in all material respects to all
statements relating thereto contained in the Prospectus; and the Notes
will be entitled to the benefits provided by the Indenture.
(xi) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened against or affecting
the Company or its subsidiaries, which is required to be disclosed in
the Prospectus (other than as disclosed therein), or which might result
in any material adverse change in the condition, financial or
otherwise, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, or might materially and
adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement, or
the Indenture, or the transactions contemplated herein and therein; all
pending legal or governmental proceedings to which the Company or any
of its subsidiaries is a party or of which any of their respective
property is the subject which are not described in the Prospectus,
including routine litigation incidental to the business, are,
considered in the aggregate, not material; and there are no material
contracts or documents of the Company or its subsidiaries which are
required to be filed as exhibits to the Registration Statement by the
1933 Act or by the 1933 Act Regulations which have not been so filed.
(xii) Neither the Company nor any of its subsidiaries is in
violation of its respective articles of incorporation or other
organizational document, or its Code of Regulations or bylaws, as the
case may be (the "Code of Regulations"), or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party
or by which it or its properties may be bound, where such defaults in
the aggregate would have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries
9
<PAGE> 10
considered as one enterprise; and the execution and delivery of this
Agreement and the Indenture, and the consummation of the transactions
contemplated herein and therein have been duly authorized by all
necessary corporate action and compliance by the Company with its
obligations hereunder and thereunder will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or any of its subsidiaries is a party or by which it
may be bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such action result in
any violation of the provisions of the Articles of Incorporation or
Code of Regulations or, to the best of its knowledge, any law,
administrative regulation or administrative or court order or decree;
and no consent, approval, authorization or order of any court or
governmental authority or agency is required for the consummation by
the Company of the transactions contemplated by this Agreement or the
Indenture, except such as has been obtained or as may be required under
the 1933 Act, the 1934 Act, state securities or Blue Sky laws or real
estate syndication laws in connection with the purchase and
distribution of the Notes by the Agents.
(xiii) The Company has full right, power and authority to enter
into this Agreement, and this Agreement has been, and as of the
applicable Representation Date will have been duly authorized, executed
and delivered by the Company.
(xiv) With respect to its taxable years ended December 31,
1995 and its taxable years ending thereafter, the Company has operated
and will continue to operate so as to qualify as a Real Estate
Investment Trust ("REIT"), the Company qualified as a REIT for its
taxable years ended December 31, 1993 and December 31, 1994 and the
Company intends to file a form 1120REIT and be taxed as a REIT with
respect to its taxable year ended December 31, 1995.
(xv) Neither the Company nor any of its subsidiaries is
required to be registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xvi) Neither the Company nor any of its subsidiaries is
required to own or possess any trademarks, service marks, trade names
or copyrights in order to conduct the business now operated by them.
10
<PAGE> 11
(xvii) If applicable, the Notes have been approved for listing
on the New York Stock Exchange.
(xviii) (A) The Company or its subsidiaries have good and
marketable title or leasehold interest, as the case may be, to the
portfolio properties (the "Portfolio Properties") described in the
Prospectus (or documents incorporated by reference therein) as being
owned by the Company or its subsidiaries (except with respect to
properties described in the Prospectus or documents incorporated by
reference therein) as being held by the Company through joint ventures,
in each case free and clear of all liens, encumbrances, claims,
security interests and defects (collectively, the "Defects"), except
such as do not materially adversely affect the value of such property
or interests and do not materially interfere with the use made and
proposed to be made of such property or interests by the Company or
such subsidiaries, as the case may be; (B) the joint venture interest
in each property described in the Prospectus (or documents incorporated
by reference therein) as being held by the Company through a joint
venture, is owned, free and clear of all Defects except for such
Defects that will not have a material adverse effect on the business,
earnings or business prospects of the Company and its subsidiaries
considered as one enterprise; (C) all liens, charges, encumbrances,
claims, or restrictions on or affecting the properties and assets of
the Company or its subsidiaries which are required to be disclosed in
the Prospectus are disclosed therein; (D) none of the Company, its
subsidiaries or, to the best of the Company's knowledge, any lessee of
any of the Portfolio Properties is in default under any of the leases
governing the Portfolio Properties and the Company does not know of any
event which, but for the passage of time or the giving of notice, or
both, would constitute a default under any of such leases, except such
defaults that would not have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise; (E) no tenant under any of the leases pursuant to which
the Company or its subsidiaries leases any of the Portfolio Properties
has an option or right of first refusal to purchase the premises
demised under such lease (except for (i) Kmart Corporation, (ii) the
tenants at the Portfolio Property located in Solon, Ohio, (iii) as
otherwise described in the Prospectus (or documents incorporated by
reference therein) and (iv) such other options or rights of first
refusal that, if exercised, would not have a material adverse effect on
the condition, financial or otherwise, or on the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise); (F) each of the Portfolio Properties
complies with all
11
<PAGE> 12
applicable codes and zoning laws and regulations, except for such
failures to comply which would not individually or in the aggregate
have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise; and
(G) the Company does not have knowledge of any pending or threatened
condemnation, zoning change, or other proceeding or action that will in
any manner affect the size of, use of, improvements on, construction
on, or access to the Portfolio Properties, except such proceedings or
actions that would not have a material adverse effect on the condition,
financial or otherwise, or on the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise.
(xix) The Company or its subsidiaries have title insurance on
each of the Portfolio Properties (except with respect to each property
described in the Prospectus (or documents incorporated by reference
therein) as held by the Company through a joint venture) in an amount
at least equal to the greater of (A) the cost of acquisition of such
Portfolio Property and (B) the cost of construction of the improvements
located on such Portfolio Property, except, in each case, where the
failure to maintain such title insurance would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; the joint venture owning
each property described in the Prospectus (or documents incorporated by
reference therein) as held by the Company through a joint venture has
title insurance on such property in an amount at least equal to the
greater of (A) the cost of acquisition of such Portfolio Property by
such joint venture and (B) the cost of construction of the improvements
located on such Portfolio Property, except, in each case, where the
failure to maintain such title insurance would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(xx) The mortgages and deeds of trust encumbering the
Portfolio Properties are not convertible and neither the Company nor
any of its subsidiaries hold a participating interest therein and said
mortgages and deeds of trust are not cross-defaulted or
cross-collateralized to any property not owned by the Company or its
subsidiaries.
(xxi) The Company has no knowledge of (a) the unlawful
presence of any hazardous substances, hazardous materials, toxic
substances or waste materials (collectively, "Hazardous
12
<PAGE> 13
Materials") on any of the Portfolio Properties or of (b) any unlawful
spills, release, discharges or disposal of Hazardous Materials that
have occurred or are presently occurring from the Portfolio Properties
as a result of any construction on or operation and use of the
Portfolio Properties, which presence or occurrence would materially
adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise. In connection with the
construction on or operation and use of the Portfolio Properties, the
Company represents that, as of the date of this Agreement, the Company
has no knowledge of any material failure to comply with all applicable
local, state and federal environmental laws, regulations, ordinances
and administrative and judicial orders relating to the generation,
recycling, reuse, sale, storage, handling, transport and disposal of
any Hazardous Materials that would have a material adverse effect on
the condition, financial or otherwise, or on the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(xxii) The Senior Notes are rated not less than Baa3 by
Moody's Investors Service, Inc. and BBB by Standard & Poor's
Corporation. The Subordinated Notes are rated not less than
Ba1 by Moody's Investors Service, Inc. and BBB- by Standard &
Poor's Corporation.
(b) Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Agents shall be deemed a representation and
warranty by the Company, as the case may be, to each Agent participating in such
offering as to the matters covered thereby on the date of such certificate and,
unless subsequently amended or supplemented, at the applicable Representation
Date subsequent thereto.
4. PURCHASES AS PRINCIPAL; SOLICITATIONS AS AGENT. (a) Unless otherwise
agreed by an Agent and the Company, Notes shall be purchased by such Agent as
principal. Such purchases shall be made in accordance with terms agreed upon by
one or more Agents and the Company (which terms, unless otherwise agreed, shall,
to the extent applicable, include those terms specified in Exhibit A hereto and
be agreed upon orally, with written confirmation prepared by such Agent or
Agents and mailed to the Company). An Agent's commitment to purchase Notes as
principal shall be deemed to have been made on the basis of the representations
and warranties of the Company herein contained and shall be subject to the terms
and conditions herein set forth. Unless the context otherwise requires,
references herein to "this Agreement" shall include the agreement of one or more
Agents to purchase Notes from the Company as principal. Each purchase of Notes,
unless otherwise agreed, shall
13
<PAGE> 14
be at a discount from the principal amount of each such Note equivalent to the
applicable commission set forth in Schedule A hereto. The Agents may engage the
services of any other broker or dealer in connection with the resale of the
Notes purchased by them as principal and may allow any portion of the discount
received in connection with such purchases from the Company to such brokers and
dealers. At the time of each purchase of Notes by one or more Agents as
principal, such Agent or Agents shall specify the requirements for the stand-off
agreement, officers' certificate, comfort letter and opinions of counsel
pursuant to Sections 5(k), 11(b), 11(c), and 11(d) hereof.
(b) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, when agreed
by the Company and an Agent, such Agent, as an agent of the Company, will use
its reasonable efforts to solicit offers to purchase the Notes upon the terms
and conditions set forth herein and in the Prospectus. The Agents are not
authorized to appoint sub-agents with respect to Notes sold through them as
agent. All Notes sold through an Agent as agent will be sold at 100% of their
principal amount unless otherwise agreed to by the Company and such Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Notes through an Agent, as agent, commencing at
any time for any period of time or permanently. As soon as practicable after
receipt of instructions from the Company, such Agent will suspend solicitation
of purchases from the Company until such time as the Company has advised such
Agent that such solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Senior Note sold by the Company as a result of a solicitation made by such Agent
as set forth in Schedule A hereto. The schedule of commissions payable in
connection with sales of Senior Notes will also apply to sales of Subordinated
Notes unless otherwise agreed to by the Company and the applicable Agent.
(c) The purchase price, interest rate or formula, maturity date and
other terms of the Notes (as applicable) specified in Exhibit A hereto shall be
agreed upon by the Company and the applicable Agent or Agents and specified in a
pricing supplement to the Prospectus (each, a "Pricing Supplement") to be
prepared in connection with each sale of Notes. Except as may be otherwise
specified in the applicable Pricing Supplement, the Notes will be issued in
denominations of U.S. $1,000 or any larger amount that is an integral multiple
of U.S. $1,000. Administrative procedures with respect to the sale of Notes
shall be agreed upon from time to time by the Company, the Agents and the
Trustees (the
14
<PAGE> 15
"Procedures"). The Agents and the Company agree to perform, and the Company
agrees to cause the Trustees to agree to perform, their respective duties and
obligations specifically provided to be performed by them in the Procedures.
5. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants
with the Agents participating in the offering of Notes that:
(a) The Company will notify the Agents immediately, and confirm such
notice in writing, of (i) the effectiveness of any amendment to the Registration
Statement, (ii) the transmittal to the Commission for filing of any amendment or
supplement to the Prospectus or any document to be filed pursuant to the 1934
Act (other than any amendment, supplement or document relating solely to
securities other than the Notes), (iii) the receipt of any comments from the
Commission with respect to the Registration Statement or the Prospectus, (iv)
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information, (v)
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose
and (vi) any change in the rating assigned by any nationally recognized
statistical rating organization to any debt securities of the Company or the
public announcement by any nationally recognized statistical rating organization
that it has under surveillance or review, with possible negative implications,
its rating of any debt securities of the Company. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Company will give the Agents advance notice of its intention to
file or prepare any additional registration statement with respect to the
registration of additional Notes, any amendment to the Registration Statement or
any amendment or supplement to the Prospectus (other than an amendment or
supplement providing solely for a change in the interest rate or formula
applicable to the Notes or a change relating solely to securities other than the
Notes), whether by the filing of documents pursuant to the 1934 Act or the 1933
Act or otherwise, and will furnish to the Agents copies of any such amendment or
supplement or other documents proposed to be filed or used a reasonable time in
advance of such proposed filing or use, as the case may be, and will not file
any such amendment or supplement or other documents in a form to which the
Agents or counsel for the Agents shall reasonably object.
(c) The Company will deliver to the Agent as many signed and conformed
copies of the Registration Statement (as originally
15
<PAGE> 16
filed) and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated by reference in the
Prospectus) as the Agents reasonably request. The Company will furnish to the
Agents as many copies of the Prospectus (as amended or supplemented) as the
Agents reasonably request so long as the Agents are required to deliver a
Prospectus in connection with sales or solicitations of offers to purchase the
Notes.
(d) The Company will prepare, with respect to any Notes to be sold to
or through one or more Agents pursuant to this Agreement, a Pricing Supplement
with respect to such Notes in a form previously approved by the Agents and will
file such Pricing Supplement pursuant to Rule 424(b) under the 1933 Act not
later than the close of business of the Commission on the first business day
after the date on which such Pricing Supplement is first used.
(e) Except as otherwise provided in subsection (l) of this Section 5,
if at any time during the term of this Agreement any event shall occur or
condition exist as a result of which it is necessary, in the opinion of counsel
for the Agents or counsel for the Company, to amend or supplement the Prospectus
in order that the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time the Prospectus is delivered to a purchaser, or if it shall be
necessary, in the opinion of either such counsel, to amend or supplement the
Registration Statement or the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company shall give
immediate notice, confirmed in writing, to the Agents to cease the solicitation
of offers to purchase the Notes in an Agent's capacity as agent and to cease
sales of any Notes an Agent may then own as principal, and the Company will
promptly amend the Registration Statement and the Prospectus, whether by filing
documents pursuant to the 1934 Act or the 1933 Act or otherwise, as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement and Prospectus comply with such requirements.
(f) Except as otherwise provided in subsection (l) of this Section 5,
on or prior to the date on which there shall be released to the general public
interim financial statement information related to the Company with respect to
each of the first three quarters of any fiscal year or preliminary financial
statement information with respect to any fiscal year, the Company shall furnish
such information to the Agents, confirmed in writing, and shall cause the
Prospectus to be amended or supplemented to include or incorporate by reference
financial information with respect thereto and corresponding information for the
comparable period of
16
<PAGE> 17
the preceding fiscal year, as well as such other information and explanations as
shall be necessary for an understanding thereof or as shall be required by the
1933 Act or the 1933 Act Regulations.
(g) Except as otherwise provided in subsection (l) of this Section 5,
on or prior to the date on which there shall be released to the general public
financial information included in or derived from the audited financial
statements of the Company for the preceding fiscal year, the Company shall
furnish such information to the Agents, confirmed in writing, and shall cause
the Registration Statement and the Prospectus to be amended, whether by the
filing of documents pursuant to the 1934 Act or the 1933 Act or otherwise, to
include or incorporate by reference such audited financial statements and the
report or reports, and consent or consents to such inclusion or incorporation by
reference, of the independent accountants with respect thereto, as well as such
other information and explanations as shall be necessary for an understanding of
such financial statements or as shall be required by the 1933 Act or the 1933
Act Regulations.
(h) The Company will make generally available to its security holders
as soon as practicable, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 Act Regulations) covering each twelve month period
beginning, in each case, not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in such Rule 158) of the
Registration Statement with respect to each sale of Notes.
(i) The Company will endeavor, in cooperation with the Agents, to
qualify the Notes for offering and sale under the applicable securities laws and
real estate syndication laws of such states and other jurisdictions of the
United States as the Agents may designate, and will maintain such qualifications
in effect for as long as may be required for the distribution of the Notes;
PROVIDED, HOWEVER, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. The Company will file such
statements and reports as may be required by the laws of each jurisdiction in
which the Notes have been qualified as above provided. The Company will promptly
advise the Agents of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Notes for sale in any such state
or jurisdiction or the initiating or threatening of any proceeding for such
purpose.
(j) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act in connection with sales of the
Notes, will file all documents required to be filed with the Commission pursuant
to Sections 13,
17
<PAGE> 18
14 or 15 of the 1934 Act within the time periods prescribed by the 1934 Act and
the 1934 Act Regulations.
(k) If specified by the applicable Agent or Agents in connection with a
purchase of Notes as principal, between the date of the agreement to purchase
such Notes and the Settlement Date with respect to such purchase, the Company
will not, without the prior written consent of such Agent or Agents, offer or
sell, grant any option for the sale of, or enter into any agreement to sell, any
debt securities of the Company (other than the Notes that are to be sold
pursuant to such agreement and commercial paper in the ordinary course of
business).
(l) The Company shall not be required to comply with the provisions of
subsections (e), (f) or (g) of this Section 5 for any period during which (i)
the Agents have not agreed with the Company to solicit purchases of Notes in
accordance with Section 2(d) or have suspended such solicitation and (ii) no
Agent is holding any Notes purchased as principal pursuant hereto, until the
time the Agents have agreed with the Company to solicit such purchases of the
Notes or have resumed solicitation in accordance with Section 2(d) or an Agent
shall subsequently purchase Notes from the Company as principal.
(m) The Company will use its best efforts to meet the requirements to
qualify as a REIT under the Internal Revenue Code of 1986, as amended (the
"Code") for the taxable year in which sales of the Notes are to occur, unless
otherwise specified in the Prospectus.
6. PAYMENT OF EXPENSES. The Company will pay, directly or by
reimbursement, all expenses incident to the performance of its obligations under
this Agreement, including (i) the preparation and filing of the Registration
Statement and all amendments thereto and the Prospectus and any amendments or
supplements thereto; (ii) the preparation, filing and reproduction of this
Agreement; (iii) the preparation, printing, issuance and delivery of the Notes,
including any fees and expenses relating to the use of Notes in book-entry form;
(iv) the fees and disbursements of the Company's accountants and counsel, of the
Trustee and its counsel, and of any calculation agent or exchange rate agent;
(v) the reasonable fees and disbursements of counsel to the Agents incurred in
connection with the establishment of the program relating to the Notes and
incurred from time to time in connection with the transactions contemplated
hereby; (vi) the qualification of the Notes under state securities laws in
accordance with the provisions of Section 5(i) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Agents in connection
therewith and in connection with the preparation of any Blue Sky or Legal
Investment Survey; (vii) the printing and delivery to the Agents in
18
<PAGE> 19
quantities as hereinabove stated of copies of the Registration Statement and any
amendments thereto, and of the Prospectus and any amendments or supplements
thereto, and the delivery by the Agents of the Prospectus and any amendments or
supplements thereto in connection with solicitations or confirmations of sales
of the Notes; (viii) the preparation, reproduction and delivery to the Agents of
copies of the Indenture and all supplements and amendments thereto; (ix) any
fees charged by rating agencies for the rating of the Notes; (x) the fees and
expenses incurred in connection with any listing of Notes on a securities
exchange; (xi) the fees and expenses incurred with respect to any filing with
the National Association of Securities Dealers, Inc.; (xii) any advertising and
other out-of-pocket expenses of the Agents incurred with the approval of the
Company; and (xiii) the cost of providing any CUSIP or other identification
numbers for the Notes.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Agent, and each person, if any, who controls
any Agent within the meaning of Section 15 of the 1933 Act, against any losses,
claims, damages, liabilities or expenses (including the reasonable cost of
investigating and defending against any claims therefor and reasonable counsel
fees incurred in connection therewith), joint or several, as incurred, which may
be based upon the 1933 Act, or any other statute or at common law, arising out
of any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, unless any such statement or omission was made in reliance upon, and
in conformity with, written information furnished to the Company by any Agent,
directly or through you or any other Agent, specifically for use in the
preparation thereof; provided, however, that the Company shall not be liable
with respect to any claims made against any Agent or any such controlling person
under this subsection unless such Agent or controlling person shall have
notified the Company in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been served upon such Agent or controlling person, but failure to notify
the Company of any such claim shall not relieve either of them from any
liability which they may have to such Agent or controlling person otherwise than
on account of the indemnity agreement contained in this paragraph. The Company
will be entitled to participate at its own expense in the defense, or, if
19
<PAGE> 20
it so elects, to assume the defense of any suit brought to enforce any such
liability, and, if the Company elects to assume the defense, such defense shall
be conducted by counsel chosen by it. In the event the Company elects to assume
the defense of any such suit and retain such counsel, the Agent or Agents or
controlling person or persons, defendant or defendants in the suit, may retain
additional counsel but shall bear the fees and expenses of such counsel unless
(i) the Company shall have specifically authorized the retaining of such counsel
or (ii) the parties to such suit include such Agent or Agents or controlling
person or persons and the Company and such Agent or Agents or controlling person
or persons have been advised by counsel that one or more legal defenses may be
available to it or to them which may not be available to the Company, in which
case the Company shall not be entitled to assume the defense of such suit
notwithstanding their obligation to bear the fees and expenses of such counsel.
The Company shall not be liable to indemnify any person for any settlement of
any such claim effected without the Company's written consent. This indemnity
agreement will be in addition to any liability which the Company might otherwise
have.
(b) Each Agent severally agrees to indemnify and hold harmless the
Company, each of its directors, each of the Company's officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against any losses, claims, damages,
liabilities or expenses (including the reasonable cost of investigating and
defending against any claims therefor and reasonable counsel fees incurred in
connection therewith), joint or several, as incurred, which may be based upon
the 1933 Act, or any other statute or at common law, arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto) or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but only insofar as any such statement or omission was made in
reliance upon, and in conformity with, written information furnished to the
Company by such Agent, directly or through you or any other Agent, specifically
for use in the preparation thereof; provided, however, that an Agent shall not
be liable with respect to any claims made against the Company or any person
against whom the action is brought unless the Company or such person shall have
notified such Agent in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been
20
<PAGE> 21
served upon the Company or such person, but failure to notify such Agent of such
claim shall not relieve it from any liability which it may have to the Company
or such person otherwise than on account of its indemnity agreement contained in
this paragraph. Such Agent shall be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any suit brought
to enforce any such liability, but, if such Agent elects to assume the defense,
such defense shall be conducted by counsel chosen by it. In the event that any
Agent elects to assume the defense of any such suit and retain such counsel, the
Company, said officer and directors and other Agent or Agents or controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, respectively, unless (i)
such Agent shall have specifically authorized the retaining of such counsel or
(ii) the parties to such suit include any indemnified party and such Agent, and
any such indemnified party has been advised by counsel that one or more legal
defenses may be available to it which may not be available to such Agent, in
which case such Agent shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such counsel.
The Agent against whom indemnity may be sought shall not be liable to indemnify
any person for any settlement of any such claim effected without such Agent's
consent. This indemnity agreement will be in addition to any liability which
such Agent might otherwise have.
(c) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as incurred, in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Agent on the other from the offering of the Notes. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party, as incurred, in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Agents on the other in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Agents and the parties'
21
<PAGE> 22
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Agents agree that it
would not be just and equitable if contribution were determined by pro rata
allocation (even if the Agents were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to above. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such claim. Notwithstanding the
provisions of this subsection (c), no Agent shall be required to contribute any
amount in excess of the amount by which the total price at which the Notes
purchased by or through it and distributed to the public were offered to the
public exceeds the amount of any damages which such Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Agents' obligations to contribute are several in proportion to their respective
underwriting obligations and not joint.
8. SURVIVAL OF INDEMNITIES, REPRESENTATION, WARRANTIES, ETC. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, and the Agents, as set forth in this Agreement
or certificates of officers of the Company submitted pursuant hereto or thereto,
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any Agent or the Company or any of their officers or directors
or any controlling person, and shall survive delivery of and payment for the
Notes.
9. CONDITIONS OF AGENTS' OBLIGATIONS. The respective obligations of the
Agents to purchase Notes as agent of the Company, and the obligations of any
purchasers of the Notes sold through an Agent as agent, are subject to the
accuracy of the representations and warranties made herein by the Company, to
the accuracy of the statements of the Company's officers or directors in any
certificate furnished in connection therewith pursuant to the provisions hereof,
to the performance and observance by the Company of all of its covenants and
agreements herein contained and other provisions hereof to be satisfied in
connection therewith, and to the following additional conditions:
(a) On the date hereof, you shall have received from Price
Waterhouse LLP a letter, dated as of the date hereof and in form and
substance satisfactory to you, to the effect that:
22
<PAGE> 23
(i) they are independent accountants with respect to
the Company and its subsidiaries and DDG within the meaning of
the 1933 Act and the 1933 Act Regulations; (ii) it is their
opinion that the consolidated financial statements and
supporting schedules of the Company and DDG included or
incorporated by reference in the Registration Statement and
the Prospectus and covered by their opinions therein comply in
form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1934 Act, and the related
published rules and regulations; (iii) it is their opinion
that the financial statements of the properties acquired or
proposed to be acquired by the Company included in the
Company's Forms 8-K dated May 8, 1995 and November 3, 1995,
each of which is incorporated by reference in the Company's
Registration Statement and covered by their opinions therein
comply as to form with the applicable accounting requirements
of the 1933 Act and the 1934 Act with respect to real estate
operations acquired or to be acquired; (iv) they have
performed limited procedures, not constituting an audit,
including a reading of the latest available unaudited interim
consolidated financial statements of the Company and its
subsidiaries, a reading of the minute books of the Company and
its subsidiaries, inquiries of certain officials of the
Company and its subsidiaries who have responsibility for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, and on the
basis of such limited review and procedures nothing came to
their attention that caused them to believe that (A) the
unaudited interim consolidated financial statements and
financial statement schedules, if any, of the Company included
or incorporated by reference in the Registration Statement and
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
1934 Act and the related published rules and regulations
thereunder or that any material modification should be made to
the unaudited condensed interim financial statements included
in or incorporated by reference in the Registration Statement
and the Prospectus for them to be in conformity with generally
accepted accounting principles, (B) the unaudited pro forma
condensed financial statements included in the Company's
aforementioned Forms 8-K, the Company's Form 8 dated December
1, 1995 and the Company's Form 8-K dated May 31, 1996 do not
comply as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X under
the 1933 Act or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation
of such
23
<PAGE> 24
statements, (C) the information included or incorporated by
reference in the Registration Statement and the applicable
Prospectus under the caption "Selected Consolidated Financial
Data" did not conform in all material respects with the
disclosure requirements of item 301 of Regulation S-K, or (D)
at a specified date not more than three days prior to the date
of such letter, there has been any change in the capital stock
of the Company or in the consolidated long term debt of the
Company or any decrease in the net assets of the Company, as
compared with the amounts shown in the most recent
consolidated balance sheet included or incorporated by
reference in the Registration Statement and the Prospectus or,
during the period from the date of the most recent
consolidated statement of operations of the Company included
or incorporated by reference in the Registration Statement and
the Prospectus to a specified date not more than three days
prior to the date of such letter, there were any decreases, as
compared with the corresponding period in the preceding year,
in consolidated revenues, or decrease in consolidated net
income or consolidated net income per share of the Company,
except in all instances for changes, increases or decreases
which the Registration Statement and the Prospectus disclose
have occurred or may occur; and (v) in addition to the audit
referred to in their opinions and the limited procedures
referred to in clause (iv) above, they have carried out
certain specified procedures, not constituting an audit, with
respect to certain amounts, percentages and financial
information which are included or incorporated by reference in
the Registration Statement and the Prospectus and which are
specified by you, and have found such amounts, percentages and
financial information to be in agreement with the relevant
accounting, financial and other records of the Company and its
subsidiaries identified in such letter.
(b) On the date hereof, you shall have received from Baker &
Hostetler, counsel for the Company, an opinion, dated as of the date
hereof, to the effect that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under
the laws of the State of Ohio.
(ii) The Company has full corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Prospectus.
24
<PAGE> 25
(iii) The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which it owns
real property except where the failure to qualify and be in
good standing would not have a material adverse effect on the
condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(iv) If the Company has one or more significant
subsidiaries, as defined in Rule 405 of the 1933 Act (each a
"Significant Subsidiary"), each Significant Subsidiary has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to
conduct its business, and is duly qualified to transact
business and is in good standing in each jurisdiction in which
it owns real property, except where the failure to so qualify
and be in good standing would not have a material adverse
effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise.
(v) The Notes have been duly and validly authorized
by all necessary corporate action and, when executed,
authenticated and delivered pursuant to the provisions of this
Agreement and the Indenture against payment of the
consideration therefor, the Notes will constitute valid and
legally binding obligations of the Company entitled to the
benefits provided by the Indenture and enforceable in
accordance with their terms except as enforcement thereof may
be limited by bankruptcy, insolvency or other similar laws
relating to or affecting enforcement of creditors' rights
generally or by general equity principles (regardless of
whether enforcement is considered in a proceeding in equity or
at law), and except further as enforcement thereof may be
limited by (1) requirements that a claim with respect to any
Notes denominated other than in U.S. dollars (or a foreign
currency or composite currency judgment in respect of such
claim) be converted into U.S. dollars at a rate of exchange
prevailing on a date determined pursuant to applicable law or
(2) governmental authority to limit, delay or prohibit the
making of payments outside the United States.
(vi) This Agreement has been duly authorized,
executed and delivered by the Company.
25
<PAGE> 26
(vii) The Indenture has been duly and validly authorized,
executed and delivered by the Company and (assuming due
authorization, execution and delivery by the Trustee)
constitutes the valid and legally binding agreement of the
Company, enforceable in accordance with its terms except as
enforcement thereof may be limited by bankruptcy, insolvency
or other similar laws relating to or affecting enforcement of
creditors' rights generally or by general equity principles
(regardless of whether enforcement is considered in a
proceeding in equity or at law).
(viii) The Indenture has been duly qualified under the
1939 Act.
(ix) The Registration Statement is effective under the
1933 Act and, to the best of their knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission.
(x) The Registration Statement and the Prospectus,
excluding the documents incorporated by reference therein, as
of their respective effective or issue dates, comply as to
form in all material respects with the requirements for
registration statements on Form S-3 under the 1933 Act and the
1933 Act Regulations; it being understood, however, that no
opinion need be rendered with respect to the financial
statements, schedules and other financial and statistical data
included or incorporated by reference in the Registration
Statement or the Prospectus or with respect to the Statement
of Eligibility of the Trustee. If applicable, the Rule 434
Prospectus conforms to the requirements of Rule 434 of the
1933 Act Regulations in all material respects.
(xi) Each document filed pursuant to the 1934 Act (other
than the financial statements, schedules and other financial
and statistical data included therein, as to which no opinion
need be rendered) and incorporated or deemed to be
incorporated by reference in the Prospectus complied when so
filed as to form in all material respects with the 1934 Act
and the 1934 Act Regulations.
(xii) Nothing has come to such counsel's attention that
would lead it to believe that the Registration Statement or
any amendment thereto (excluding the financial statements and
financial schedules included or incorporated by reference
therein, as to which such
26
<PAGE> 27
counsel need express no belief), at the time it became
effective or at the time an Annual Report on Form 10-K was
filed by the Company with the Commission (whichever is later),
or at the date hereof (or, if such opinion is being delivered
in connection with the purchase of Notes by one or more Agents
as principal pursuant to Section 11(c) hereof, at the date of
any agreement by such Agent or Agents to purchase Notes as
principal), contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or
any amendment or supplement thereto (excluding the financial
statements and financial schedules included or incorporated by
reference therein, as to which such counsel need express no
belief), at the date hereof (or, if such opinion is being
delivered in connection with the purchase of Notes by one or
more Agents as principal pursuant to Section 11(c) hereof, at
the date of any agreement by such Agent or Agents to purchase
Notes as principal and at the Settlement Date with respect
thereto, as the case may be), included or includes an untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
(xiii) To the best of their knowledge, there are no legal or
governmental proceedings pending or threatened which are
required to be disclosed in the Prospectus, other than those
disclosed therein, and, to the best of their knowledge, all
pending legal or governmental proceedings to which the Company
or its subsidiaries is a party or of which any of the property
of the Company or its subsidiaries is the subject which are
not described in the Registration Statement, including
ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material to the business of
the Company and its subsidiaries considered as one enterprise.
(xiv) To the best of their knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or
referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto, the descriptions thereof
or references thereto are correct in all material respects,
and, to the best of their knowledge, no default exists in the
due performance or
27
<PAGE> 28
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument so described,
referred to or filed which would have a material adverse
effect on the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise.
(xv) No authorization, approval or consent of any court or
governmental authority or agency is required that has not been
obtained in connection with the consummation by the Company of
the transactions contemplated by this Agreement and the
Indenture except such as may be required under the 1933 Act,
the 1934 Act, and state securities laws or Blue Sky laws or
real estate syndication laws; to the best of their knowledge,
the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein and
therein and compliance by the Company with its obligations
hereunder and thereunder will not (A) constitute a breach of,
or default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of
the Company or its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of its subsidiaries is
a party or by which they may be bound or to which any of the
property or assets of the Company or any of its subsidiaries
is subject, except where such breach, default, creation or
imposition would not have a material adverse effect on the
condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, (B) nor will such
action result in violation of the provisions of the Articles
of Incorporation or Code of Regulations of the Company or
subsidiaries or any applicable law, administrative regulation
or administrative or court order or decree.
(xvi) Neither the Company nor any of its subsidiaries
is required to be registered under the 1940 Act.
(xvii) The information in the Prospectus, if applicable,
under the captions "Certain Anti-Takeover Provisions of Ohio
Law," "Certain Federal Income Tax Considerations" and "Federal
Income Tax Considerations," to the extent that it constitutes
matters of law or legal conclusions, has been reviewed by them
and is correct in all material respects.
28
<PAGE> 29
(xviii) The Company has qualified as a REIT for its taxable
years ended December 31, 1993 and December 31, 1994, and the
Company is organized and operates in a manner that will enable
it to qualify to be taxed as a REIT under the Code for the
taxable year ended December 31, 1995 and thereafter provided
the Company continues to meet the asset composition, source of
income, shareholder diversification, distributions, record
keeping, and other requirements of the Code which are
necessary for the Company to qualify as a REIT.
(c) On the date hereof, you shall have received from Brown &
Wood, counsel for the Agents, their opinion or opinions dated as of the
date hereof with respect to the matters set forth in (i), (v) to (x),
inclusive, and (xii) of subsection (b) of this Section 9, and the
Company shall have furnished to such counsel such documents as they may
request for the purpose of enabling them to pass upon such matters.
In giving their opinion, Brown & Wood may rely as to matters
involving the laws of the State of Ohio upon the opinion of Baker &
Hostetler. Baker & Hostetler and Brown & Wood may rely (i) as to the
qualification of the Company or its subsidiaries to do business in any
state or jurisdiction, upon certificates of appropriate government
officials, and (ii) as to matters of fact, upon certificates and
written statements of officers and employees of and accountants for the
Company or its subsidiaries.
(d) At the date hereof, the Agents shall have received a
certificate of the Chief Executive Officer and President and the Chief
Financial Officer of the Company, dated as of the date hereof, to the
effect that (i) since the respective dates as of which information is
given in the Prospectus or since the date of the applicable agreement
by one or more Agents to purchase Notes as principal, there has not
been any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) the
representations and warranties of the Company contained in Section 3
hereof are true and correct with the same force and effect as though
expressly made at and as of the date of such certificate and (iii) the
Company has performed or complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
date of such certificate. As used in this Section 9(d), the term
"Prospectus" means the Prospectus in the form first provided to the
applicable Agent or Agents for use in confirming sales of the Notes.
29
<PAGE> 30
(e) On the date hereof and on each Settlement Date, counsel to
the Agents shall have been furnished with such documents and opinions
as such counsel may reasonably require for the purpose of enabling such
counsel to pass upon the issuance and sale of Notes as herein
contemplated and related proceedings, or in order to evidence the
accuracy and completeness of any of the representations and warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of Notes as herein contemplated shall be satisfactory in form and
substance to the Agents and to counsel to the Agents.
If any condition specified in this Section 9 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the applicable Agent or Agents by notice to the Company at any time and any
such termination shall be without liability of any party to any other party,
except that the covenant regarding provision of an earnings statement set forth
in Section 5(h) hereof, the provision concerning payment of expenses under
Section 6 hereof, the indemnity and contribution agreement set forth in Section
7 hereof, the provisions concerning the survival of indemnities,
representations, warranties, etc. of Section 8 hereof, the provision relating to
successors set forth in Section 14, and the provision relating to applicable law
set forth in Section 15 hereof shall remain in effect.
10. DELIVERY OF AND PAYMENT FOR NOTES SOLD THROUGH AN AGENT. Delivery
of Notes sold through an Agent as agent shall be made by the Company to such
Agent for the account of any purchaser only against payment therefor in
immediately available funds. In the event that a purchaser shall fail either to
accept delivery of or to make payment for a Note on the date fixed for
settlement, such Agent shall promptly notify the Company and deliver such Note
to the Company and, if such Agent has theretofore paid the Company for such
Note, the Company will promptly return such funds to such Agent. If such failure
occurred for any reason other than default by such Agent in the performance of
its obligations hereunder, the Company will reimburse such Agent on an equitable
basis for its loss of the use of the funds for the period such funds were
credited to the Company's account.
11. ADDITIONAL COVENANTS OF THE COMPANY. The Company covenants and
agrees with the Agents that:
(a) Each acceptance by the Company of an offer for the purchase of
Notes (whether to one or more Agents as principal or through an Agent as agent),
and each delivery of Notes (whether to one or more Agents as principal or
through an Agent as agent), shall be deemed to be an affirmation that the
representations and
30
<PAGE> 31
warranties of the Company contained in this Agreement and in any certificate
theretofore delivered to the Agents in connection therewith pursuant hereto are
true and correct at the time of such acceptance or sale, as the case may be, and
an undertaking that such representations and warranties will be true and correct
at the time of delivery to such Agent or Agents or to the purchaser or its
agent, as the case may be, of the Note or Notes relating to such acceptance or
sale, as the case may be, as though made at and as of each such time (and it is
understood that such representations and warranties shall relate to the
Registration Statement and Prospectus as amended and supplemented to each such
time).
(b) Each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for a change in the interest rate or formula applicable to the
Notes or similar changes, and other than by an amendment or supplement which
relates exclusively to the issuance of securities other than the Notes), (ii)
there is filed with the Commission any document incorporated by reference into
the Prospectus (other than any Current Report on Form 8-K relating exclusively
to the issuance of securities other than the Notes), (iii) (if required in
connection with the purchase of Notes by one or more Agents as principal) the
Company sells Notes to such Agent or Agents as principal or (iv) if the Company
issues and sells Notes in a form not previously certified to the Agents by the
Company, the Company shall furnish or cause to be furnished to the Agent(s)
forthwith a certificate dated the date of filing with the Commission of such
supplement or document, the date of effectiveness of such amendment, or the date
of such sale, as the case may be, in form satisfactory to the Agent(s) to the
effect that the statements contained in the certificate referred to in Section
9(d) hereof which were last furnished to the Agents are true and correct at the
time of such amendment, supplement, filing or sale, as the case may be, as
though made at and as of such time (except that such statements shall be deemed
to relate to the Registration Statement and the Prospectus as amended and
supplemented to such time) or, in lieu of such certificate, a certificate of the
same tenor as the certificate referred to in Section 9(d) hereof, modified as
necessary to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such certificate.
(c) Each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for a change in the interest rate or formula applicable to the
Notes or similar changes or solely for the inclusion of additional financial
information, and other than by an amendment or supplement which relates
exclusively to the issuance of securities other than the Notes), (ii) there is
filed with the Commission any document incorporated
31
<PAGE> 32
by reference into the Prospectus (other than any Current Report on Form 8-K,
unless the Agents shall otherwise specify), (iii) (if required in connection
with the purchase of Notes by one or more Agents as principal) the Company sells
Notes to such Agent or Agents as principal or (iv) if the Company issues and
sells Notes in a form not previously certified to the Agents by the Company, the
Company shall furnish or cause to be furnished forthwith to the Agent(s) and to
counsel to the Agents the written opinions of Baker & Hostetler, counsel to the
Company, dated the date of filing with the Commission of such supplement or
document, the date of effectiveness of such amendment, or the date of such sale,
as the case may be, in form and substance satisfactory to the Agent(s), of the
same tenor as the opinion referred to in Section 9(b) hereof, but modified, as
necessary, to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such opinion or, in lieu of such
opinion, counsel last furnishing such opinion to the Agents shall furnish the
Agent(s) with a letter substantially to the effect that the Agent(s) may rely on
such last opinion to the same extent as though it was dated the date of such
letter authorizing reliance (except that statements in such last opinion shall
be deemed to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such letter authorizing reliance);
PROVIDED, HOWEVER, that counsel need not render the opinion required under
Section 9(b)(xviii) upon the filing of any Quarterly Report on Form 10-Q which
does not include information relating to such tax matters, unless the Agents
shall otherwise specify.
(d) Each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented to include additional financial information
(other than by an amendment or supplement which relates exclusively to the
issuance of securities other than the Notes), (ii) there is filed with the
Commission any document incorporated by reference into the Prospectus which
contains additional financial information, or (iii) (if required in connection
with the purchase of Notes by one or more Agents as principal) the Company sells
Notes to such Agent or Agents as principal, the Company shall cause Price
Waterhouse LLP to furnish to the Agent(s) a letter, dated the date of
effectiveness of such amendment, supplement or document with the Commission, or
the date of such sale, as the case may be, in form satisfactory to the Agent(s),
of the same tenor as the portions of the letter referred to in clauses (i) and
(ii) of Section 9(a) hereof but modified to relate to the Registration Statement
and Prospectus as amended and supplemented to the date of such letter, and of
the same general tenor as the portions of the letter referred to in clauses (iv)
and (v) of said Section 9(a) with such changes as may be necessary to reflect
changes in the financial statements and other information derived from the
accounting records of the Company.
32
<PAGE> 33
12. TERMINATION. (a) This Agreement (excluding any agreement hereunder
by one or more Agents to purchase Notes as principal) may be terminated for any
reason, at any time by either the Company or an Agent, as to itself, upon the
giving of 10 days' written notice of such termination to the other party hereto.
(b) The applicable Agent or Agents may terminate any agreement
hereunder by such Agent or Agents to purchase Notes as principal, immediately
upon notice to the Company, at any time prior to the Settlement Date relating
thereto (i) if there has been, since the date of such agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there shall have occurred any material
adverse change in the financial markets in the United States or any outbreak or
escalation of hostilities or other national or international calamity or crisis
the effect of which is such as to make it, in the judgment of such Agent or
Agents, impracticable to market the Notes or enforce contracts for the sale of
the Notes, or (iii) if trading in any securities of the Company has been
suspended by the Commission or a national securities exchange, or if trading
generally on either the American Stock Exchange or the New York Stock Exchange
shall have been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by either
of said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium shall have been declared by either Federal
or New York authorities or if a banking moratorium shall have been declared by
the relevant authorities in the country or countries of origin of any foreign
currency or currencies in which the Notes are denominated or payable, or (iv) if
the rating assigned by any nationally recognized statistical rating organization
to any debt securities of the Company as of the date of such agreement shall
have been lowered since that date or if any such rating organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any debt securities of the Company, or (v)
if there shall have come to the attention of such Agent or Agents any facts that
would cause them to believe that the Prospectus, at the time it was required to
be delivered to a purchaser of Notes, included an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time of such
delivery, not misleading. As used in this Section 12(b), the term "Prospectus"
means the Prospectus in the form first provided to the applicable Agent or
Agents for use in confirming sales of the related Notes.
33
<PAGE> 34
(c) In the event of any such termination, neither party will have any
liability to the other party hereto, except that (i) the Agents shall be
entitled to any commission earned in accordance with the third paragraph of
Section 4(b) hereof, (ii) if at the time of termination (a) any Agent shall own
any Notes purchased by it as principal with the intention of reselling them or
(b) an offer to purchase any of the Notes has been accepted by the Company but
the time of delivery to the purchaser or his agent of the Note or Notes relating
thereto has not occurred, the covenants set forth in Sections 5 and 11 hereof
shall remain in effect until such Notes are so resold or delivered, as the case
may be, and (iii) the covenant set forth in Section 5(h) hereof, the provisions
of Section 6 hereof, the indemnity and contribution agreements set forth in
Section 7 hereof, and the provisions of Sections 8, 14 and 15 hereof shall
remain in effect.
13. NOTICES. All communications hereunder shall be in writing and shall
be mailed, delivered or telecopied and confirmed, and any such notice shall be
effective when received at the address specified below:
If to the Company:
Developers Diversified Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Attention: Scott A. Wolstein
President and Chief Executive Officer
Telecopy No.: 216-247-0434
If to the Agents:
Dean Witter Reynolds Inc.
Two World Trade Center
65th Floor
New York, New York 10048
Attention: W. Blake Baird
Managing Director
Telecopy No.: 212-392-8719
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
Attention: Manager - Continuously Offered Products
Telecopy No.: 212-764-7490
34
<PAGE> 35
CS First Boston Corporation
55 East 52nd Street
New York, New York 10055
Attention: Short and Medium Term Finance Department
Telecopy No.: 212-318-1498
First Chicago Capital Markets, Inc.
One First National Plaza, Suite 0030
Chicago, Illinois 60670
Attention: Chief Credit Officer
Telecopy No.: 312-732-4172
Lehman Brothers
Lehman Brothers Inc.
3 World Financial Center
12th Floor
New York, New York 10285-1200
Attention: Roger Blissett
Telecopy No.: 212-528-1718
Smith Barney Inc.
390 Greenwich Street
4th Floor
New York, New York 10013
Attention: MTN Product Management/Origination
Mark R. Meyer
Telecopy No.: 212-723-8854
14. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon you and the Company and their respective successors and legal
representatives. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person other than the persons mentioned in the
preceding sentence any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person; except that the representations, warranties, covenants, agreements and
indemnities of the Company, contained in this Agreement shall also be for the
benefit of the person or persons, if any, who control any Agent within the
meaning of Section 15 of the 1933 Act, and the indemnities given by the several
Agents shall also be for the benefit of each director of the Company, each of
the Company's officers who has signed the Registration Statement and the person
or persons, if any, who control the Company within the meaning of Section 15 of
the 1933 Act.
35
<PAGE> 36
15. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed in said state. Specified times of day refer to New York
City time.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and if executed in more than one counterpart the executed
counterparts shall constitute a single instrument.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By:
--------------------------------
Name:
Title:
Accepted and delivered,
as of the date first above written:
DEAN WITTER REYNOLDS INC.
By:
----------------------------------
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
By:
----------------------------------
Name:
Title:
36
<PAGE> 37
CS FIRST BOSTON CORPORATION
By:
---------------------------------
Name:
Title:
FIRST CHICAGO CAPITAL MARKETS, INC.
By:
---------------------------------
Name:
Title:
LEHMAN BROTHERS INC.
By:
---------------------------------
Name:
Title:
SMITH BARNEY INC.
By:
---------------------------------
Name:
Title:
37
<PAGE> 38
EXHIBIT A
The following terms, if applicable, shall be agreed to by one or more
Agents and the Company in connection with each sale of Notes:
Principal Amount: $__________
(or principal amount of foreign currency or composite
currency)
Senior or Subordinated Rank:
Interest Rate:
If Fixed Rate Note, Interest Rate:
If Floating Rate Note:
Interest Rate Basis:
Initial Interest Rate, if any:
Spread and/or Spread Multiplier, if any:
Interest Reset Date(s):
Interest Payment Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date:
Fixed Interest Rate:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
If Repayable:
Optional Repayment Date(s):
Stated Maturity Date:
Purchase Price: ____%, plus accrued interest, if any, from
--------------------
Settlement Date and Time:
Specified Currency:
Authorized Denominations:
Additional/Other Terms:
Also, in connection with the purchase of Notes by one or more Agents as
principal, agreement as to whether the following will be required:
Officers' Certificate pursuant to Section 11(b) of the Distribution
Agreement.
A-1
<PAGE> 39
Legal Opinions pursuant to Section 11(c) of the Distribution
Agreement.
Comfort Letter pursuant to Section 11(d) of the Distribution
Agreement.
Stand-off Agreement pursuant to Section 5(k) of the Distribution
Agreement.
A-2
<PAGE> 40
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Senior Note equal to the principal amount of such Senior Note multiplied
by the appropriate percentage set forth below (the commission payable with
respect to sales of Senior Notes will also apply to sales of Subordinated Notes
unless otherwise agreed by the Company and the applicable Agent):
<TABLE>
<CAPTION>
PERCENT OF
PRINCIPAL
MATURITY RANGES AMOUNT
- --------------- ------
<S> <C>
From 9 months to less than 1 year............................ .125%
From 1 year to less than 18 months........................... .150
From 18 months to less than 2 years.......................... .200
From 2 years to less than 3 years............................ .250
From 3 years to less than 4 years............................ .350
From 4 years to less than 5 years............................ .450
From 5 years to less than 6 years............................ .500
From 6 years to less than 7 years............................ .550
From 7 years to less than 10 years........................... .600
From 10 years to less than 15 years.......................... .625
From 15 years to less than 20 years.......................... .700
From 20 years to 30 years.................................... .750
Greater than 30 years........................................ *
<FN>
- --------
* As agreed to by the Company and the applicable Agent at the time of sale.
</TABLE>
<PAGE> 1
EXHIBIT 4(a)
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
DEVELOPERS DIVERSIFIED REALTY CORPORATION
FIRST: The name of the Corporation shall be Developers Diversified
Realty Corporation.
SECOND: The place in the State of Ohio where the principal office of
the Corporation is located is Moreland Hills, Cuyahoga County.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be formed under Sections
1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The authorized number of shares of the Corporation is
59,000,000, consisting of 50,000,000 Common Shares, without par value
(hereinafter called "Common Shares"), 1,500,000 Class A Cumulative Preferred
Shares, without par value (hereinafter called "Class A Shares"), 1,500,000 Class
B Cumulative Preferred Shares, without par value (hereinafter called "Class B
Shares"), 1,500,000 Class C Cumulative Preferred Shares, without par value
(hereinafter called "Class C Shares"), 1,500,000 Class D Cumulative Preferred
Shares, without par value (hereinafter called "Class D Shares"), 1,500,000 Class
E Cumulative Preferred Shares, without par value (hereinafter called "Class E
Shares"), and 1,500,000 Noncumulative Preferred Shares, without par value
(hereinafter called "Noncumulative Shares").
DIVISION A
I. The Class A Cumulative Preferred Shares. The Class A Shares shall have
the following express terms:
Section 1. Series. The Class A Shares may be issued from time to time
in one or more series. All Class A Shares shall be of equal rank and shall
be identical, except in respect of the matters that may be fixed by the
Board of Directors as hereinafter provided, and each share of a series shall
be identical with all other shares of such series, except as to the dates
from which dividends shall accrue and be cumulative. All Class A Shares
shall rank on a parity with the Class B Shares, the Class C Shares, the
Class D Shares, the Class E Shares and the Noncumulative Shares and shall be
identical to all Class B Shares, Class C Shares, Class D Shares, Class E
Shares and Noncumulative Shares except (1) in respect of the matters that
may be fixed by the Board of Directors as provided in clauses (a) through
(i),
<PAGE> 2
inclusive, of this Section 1 and (2) only dividends on Class A Shares, Class
B Shares, Class C Shares, Class D Shares and Class E Shares shall be
cumulative as set forth herein. Subject to the provisions of Sections 2
through 5, both inclusive, and Item VII of this Division, which provisions
shall apply to all Class A Shares, the Board of Directors hereby is
authorized to cause such shares to be issued in one or more series and, with
respect to each such series to determine and fix prior to the issuance
thereof (and thereafter, to the extent provided in clause (b) of this
Section) the following:
(a) The designation of the series, which may be by distinguishing
number, letter or title;
(b) The authorized number of shares of the series, which number
the Board of Directors may (except where otherwise provided in the
creation of the series) increase or decrease from time to time before
or after the issuance thereof (but not below the number of shares
thereof then outstanding);
(c) The dividend rate or rates of the series, including the means
by which such rates may be established;
(d) The date or dates from which dividends shall accrue and be
cumulative and the dates on which and the period or periods for which
dividends, if declared, shall be payable, including the means by which
such dates and periods may be established;
(e) The redemption rights and price or prices, if any, for shares
of the series;
(f) The terms and amount of the sinking fund, if any, for the
purchase or redemption of shares of the series;
(g) The amounts payable on shares of the series in the event of
any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation;
(h) Whether the shares of the series shall be convertible into
Common Shares or shares of any other class and, if so, the conversion
rate or rates or price or prices, any adjustments thereof and all other
terms and conditions upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in Subsection
5(d) or 5(e) of this Item I) on the issuance of shares of the same
series or of any other class or series.
2
<PAGE> 3
The Board of Directors is authorized to adopt from time to time
amendments to the Amended and Restated Articles of Incorporation, as amended,
fixing, with respect to each such series, the matters described in clauses (a)
through (i), inclusive, of this Section and is authorized to take such actions
with respect thereto as may be required by law in order to effect such
amendments.
Section 2. Dividends.
(a) The holders of Class A Shares of each series, in
preference to the holders of Common Shares and of any other class of
shares ranking junior to the Class A Shares, shall be entitled to
receive out of any funds legally available therefor, and when and as
declared by the Board of Directors, dividends in cash at the rate or
rates for such series fixed in accordance with the provisions of
Section 1 above and no more, payable on the dates fixed for such
series. Such dividends shall accrue and be cumulative, in the case of
shares of each particular series, from and after the date or dates
fixed with respect to such series. No dividends shall be paid upon or
declared or set apart for any series of the Class A Shares for any
dividend period unless at the same time (i) a like proportionate
dividend for the dividend periods terminating on the same or any
earlier date, ratably in proportion to the respective annual dividend
rates fixed therefor, shall have been paid upon or declared or set
apart for all Class A Shares of all series then issued and outstanding
and entitled to receive such dividend and (ii) the dividends payable
for the dividend periods terminating on the same or any earlier date
(but, with respect to Noncumulative Shares, only with respect to the
then current dividend period), ratably in proportion to the respective
dividend rates fixed therefor, shall have been paid upon or declared or
set apart for all Class B Shares, Class C Shares, Class D Shares, Class
E Shares and Noncumulative Shares then issued and outstanding and
entitled to receive such dividends.
(b) So long as any Class A Shares shall be outstanding no
dividend, except a dividend payable in Common Shares or other shares
ranking junior to the Class A Shares, shall be paid or declared or any
distribution be made, except as aforesaid, in respect of the Common
Shares or any other shares ranking junior to the Class A Shares, nor
shall any Common Shares or any other shares ranking junior to the Class
A Shares be purchased, retired or otherwise acquired by the
Corporation, except out of the proceeds of the sale of Common Shares or
other shares of the Corporation ranking junior to the Class A Shares
received by the Corporation subsequent to the date of first issuance of
Class A Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A
Shares, Class B Shares, Class C Shares, Class D Shares and
Class E Shares including the full dividends for all current
dividend periods, shall have been declared and paid or a sum
sufficient for payment thereof set apart;
3
<PAGE> 4
(2) All unpaid dividends on Noncumulative Shares for
the then current dividend period shall have been declared and
paid or a sum sufficient for payment therefor set apart; and
(3) There shall be no arrearages with respect to the
redemption of Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares or Noncumulative Shares of any
series from any sinking fund provided for shares of such
series in accordance with the provisions of Section 1 of this
Item I.
(c) The foregoing restrictions on the payment of dividends or
other distributions on, or on the purchase, redemption retirement or
other acquisition of, Common Shares or any other shares ranking on a
parity with or junior to the Class A Shares shall be inapplicable to
(i) any payments in lieu of issuance of fractional shares thereof,
whether upon any merger, conversion, stock dividend or otherwise, (ii)
the conversion of Class A Shares, Class B Shares, Class C Shares, Class
D Shares, Class E Shares or Noncumulative Shares into Common Shares, or
(iii) the exercise by the Corporation of its rights pursuant to Item
VIII(d) of this Division A, Section 4(d) of Division B or any similar
Section hereafter contained in these Amended and Restated Articles of
Incorporation, as amended, with respect to any other class or series of
capital stock hereafter created or authorized.
(d) If, for any taxable year, the Corporation elects to
designate as "capital gain dividends" (as defined in Section 857 of the
Code), any portion (the "Capital Gains Amount") of the dividends paid
or made available for the year to holders of all classes of stock (the
"Total Dividends"), then, to the extent permissible under the Code and
to the extent it does not cause any dividends to fail to qualify for
the dividends paid deduction under Section 561 of the Code, the portion
of the Capital Gains Amount that shall be allocable to holders of the
Class A Shares shall be the amount that the total dividends paid or
made available to the holders of the Class A Shares for the year bears
to the Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the
Corporation:
(1) May, from time to time at the option of the Board
of Directors, redeem all or any part of any redeemable series
of Class A Shares at the time outstanding at the applicable
redemption price for such series fixed in accordance with the
provisions of Section 1 of this Item I; and
(2) Shall, from time to time, make such redemptions
of each series of Class A Shares as may be required to fulfill
the requirements of any sinking fund provided for shares of
such series at the applicable sinking fund
4
<PAGE> 5
redemption price fixed in accordance with the provisions of
Section 1 of this Item I; and shall in each case pay all
accrued and unpaid dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed,
postage prepaid, to the holders of record of the Class A Shares to be
redeemed at their respective addresses then appearing on the books of
the Corporation, not less than 30 days nor more than 60 days prior to
the date fixed for such redemption, or such other time prior thereto as
the Board of Directors shall fix for any series pursuant to Section 1
of this Item I prior to the issuance thereof. At any time after notice
as provided above has been deposited in the mail, the Corporation may
deposit the aggregate redemption price of Class A Shares to be
redeemed, together with accrued and unpaid dividends thereon to the
redemption date, with any bank or trust company in Cleveland, Ohio, or
New York, New York, having capital and surplus of not less than
$100,000,000, named in such notice and direct that there be paid to the
respective holders of the Class A Shares so to be redeemed amounts
equal to the redemption price of the Class A Shares so to be redeemed,
together with such accrued and unpaid dividends thereon, on surrender
of the share certificate or certificates held by such holders; and upon
the deposit of such notice in the mail and the making of such deposit
of money with such bank or trust company, such holders shall cease to
be shareholders with respect to such shares; and from and after the
time such notice shall have been so deposited and such deposit of money
shall have been so made, such holders shall have no rights or claim
against the Corporation with respect to such shares, except only the
right to receive such money from such bank or trust company without
interest or to exercise before the redemption date any unexpired
privileges of conversion. In the event less than all of the outstanding
Class A Shares are to be redeemed, the Corporation shall select by lot
the shares so to be redeemed in such manner as shall be prescribed by
the Board of Directors.
(2) If the holders of Class A Shares which have been
called for redemption shall not within six years after such
deposit claim the amount deposited for the redemption thereof,
any such bank or trust company shall, upon demand, pay over to
the Corporation such unclaimed amounts and thereupon such bank
or trust company and the Corporation shall be relieved of all
responsibility in respect thereof and to such holders.
(c) Any Class A Shares which are (1) redeemed by the
Corporation pursuant to the provisions of this Section, (2) purchased
and delivered in satisfaction of any sinking fund requirements provided
for shares of such series, (3) converted in accordance with the express
terms thereof, or (4) otherwise acquired by the Corporation, shall
resume the status of authorized but unissued Class A Shares without
serial designation.
5
<PAGE> 6
(d) Except in connection with the exercise of the
Corporation's rights pursuant to Section (d) of Item VIII of this
Division A, Section 4(d) of Division B or any similar Section hereafter
contained in these Amended and Restated Articles of Incorporation, as
amended, with respect to any other class or series of capital stock
hereafter created or authorized, the Corporation may not purchase or
redeem (for sinking fund purposes or otherwise) less than all of the
Class A Shares then outstanding except in accordance with a stock
purchase offer made to all holders of record of Class A Shares, unless
all dividends on all Class A Shares then outstanding for all previous
and current dividend periods shall have been declared and paid or funds
therefor set apart and all accrued sinking fund obligations applicable
thereto shall have been complied with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Class A Shares of any series shall be
entitled to receive in full out of the assets of the Corporation,
including its capital, before any amount shall be paid or distributed
among the holders of the Common Shares or any other shares ranking
junior to the Class A Shares, the amounts fixed with respect to shares
of such series in accordance with Section 1 of this Item I, plus an
amount equal to all dividends accrued and unpaid thereon to the date of
payment of the amount due pursuant to such liquidation, dissolution or
winding up of the affairs of the Corporation. In the event the net
assets of the Corporation legally available therefor are insufficient
to permit the payment upon all outstanding Class A Shares, Class B
Shares, Class C Shares, Class D Shares, Class E Shares and
Noncumulative Shares of the full preferential amount to which they are
respectively entitled, then such net assets shall be distributed
ratably upon all outstanding Class A Shares, Class B Shares, Class C
Shares, Class D Shares, Class E Shares and Noncumulative Shares in
proportion to the full preferential amount to which each such share is
entitled.
(2) After payment to the holders of Class A Shares of
the full preferential amounts as aforesaid, the holders of
Class A Shares, as such, shall have no right or claim to any
of the remaining assets of the Corporation.
(b) The merger or consolidation of the Corporation into or
with any other Corporation, the merger of any other Corporation into
it, or the sale, lease or conveyance of all or substantially all the
assets of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for the purposes of this Section.
Section 5. Voting.
(a) The holders of Class A Shares shall have no voting rights,
except as provided in this Section or required by law.
6
<PAGE> 7
(b) (1) If, and so often as, the Corporation shall be in
default in the payment of dividends on any series of Class A Shares at
the time outstanding, whether or not earned or declared, for a number
of consecutive dividend payment periods which in the aggregate contain
at least 540 days, all holders of such Class A Shares, voting
separately as a class, together with all Class B Shares, Class C
Shares, Class D Shares, Class E Shares and Noncumulative Shares upon
which like voting rights have been conferred and are exercisable under
the circumstances described in Subsection 5(c), shall be entitled to
elect, as herein provided, a total of two members of the Board of
Directors of the Corporation; provided, however, that the holders of
such Class A Shares shall not exercise such special class voting rights
except at meetings of such shareholders for the election of directors
at which the holders of not less than 50% of such Class A Shares are
present in person or by proxy; and provided further, that the special
class voting rights provided for in this paragraph when the same shall
have become vested shall remain so vested until all accrued and unpaid
dividends on such Class A Shares then outstanding shall have been paid
or declared and a sum sufficient for the payment thereof set aside for
payment, whereupon the holders of such Class A Shares shall be divested
of their special class voting rights in respect of subsequent elections
of directors, subject to the revesting of such special class voting
rights in the event above specified in this paragraph.
(2) In the event of default entitling holders of
Class A Shares to elect two directors as specified in
paragraph (1) of this Subsection, a special meeting of such
holders for the purpose of electing such directors shall be
called by the Secretary of the Corporation upon written
request of, or may be called by, the holders of record of at
least 10% of the Class A Shares upon which such default in the
payment of dividends exists and notice thereof shall be given
in the same manner as that required for the annual meeting of
shareholders; provided, however, that the Corporation shall
not be required to call such special meeting if the annual
meeting of shareholders shall be called to be held within 90
days after the date of receipt of the foregoing written
request from the holders of Class A Shares. At any meeting at
which such holders of Class A Shares shall be entitled to
elect directors, holders of 50% of such Class A Shares,
present in person or by proxy, shall be sufficient to
constitute a quorum, and the vote of the holders of a majority
of such shares so present at any such meeting at which there
shall be such a quorum shall be sufficient to elect the
members of the Board of Directors which such holders of Class
A Shares are entitled to elect as herein provided.
Notwithstanding any provision of these Amended and Restated
Articles of Incorporation, as amended, or the Code of
Regulations of the Corporation or any action taken by the
holders of any class of shares fixing the number of directors
of the Corporation, the two directors who may be elected by
such holders of Class A Shares pursuant to this Subsection
shall serve in addition to any other directors then in office
or proposed to be elected otherwise than pursuant to this
Subsection. Nothing in this Subsection shall prevent any
change otherwise permitted in the total
7
<PAGE> 8
number of or classifications of directors of the Corporation
or require the resignation of any director elected otherwise
than pursuant to this Subsection. Notwithstanding any
classification of the other directors of the Corporation, the
two directors elected by such holders of Class A Shares shall
be elected annually for terms expiring at the next succeeding
annual meeting of shareholders.
(3) Upon any divesting of the special class voting
rights of the holders of the Class A Shares in respect of
elections of directors as provided in this Subsection, the
terms of office of all directors then in office elected by
such holders shall terminate immediately thereupon. If the
office of any director elected by such holders voting as a
class becomes vacant by reason of death, resignation, removal
from office or otherwise, the remaining director elected by
such holders voting as a class may elect a successor who shall
hold office for the unexpired term in respect of which such
vacancy occurred.
(c) If at any time when the holders of Class A Shares are
entitled to elect directors pursuant to the foregoing provisions of
this Section the holders of any Class B Shares, Class C Shares, Class D
Shares, Class E Shares or Noncumulative Shares are entitled to elect
directors pursuant hereto by reason of any default in the payment of
dividends thereon, then the voting rights of the Class A Shares, the
Class B Shares, the Class C Shares, the Class D Shares, the Class E
Shares and the Noncumulative Shares then entitled to vote shall be
combined (with each class of shares having a number of votes
proportional to the aggregate liquidation preference of its outstanding
shares). In such case, the holders of Class A Shares and of all such
other shares then entitled so to vote, voting as a class, shall elect
such directors. If the holders of any such other shares have elected
such directors prior to the happening of the default or event
permitting the holders of Class A Shares to elect directors, or prior
to a written request for the holding of a special meeting being
received by the Secretary of the Corporation as required above, then a
new election shall be held with all such other shares and the Class A
Shares voting together as a single class for such directors, resulting
in the termination of the term of such previously elected directors
upon the election of such new directors.
(d) The affirmative vote of the holders of at least two-thirds
of the Class A Shares at the time outstanding, voting separately as a
class, given in person or by proxy either in writing or at a meeting
called for the purpose, shall be necessary to effect either of the
following:
(1) Any amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Amended and Restated Articles of Incorporation, as
amended, or of the Code of Regulations of the Corporation
which affects adversely and materially the preferences or
voting or other rights of the holders of Class A Shares which
are set forth in
8
<PAGE> 9
these Amended and Restated Articles of Incorporation, as
amended; provided, however, neither the amendment of these
Amended and Restated Articles of Incorporation, as amended, so
as to authorize, create or change the authorized or
outstanding number of Class A Shares or of any shares ranking
on a parity with or junior to the Class A Shares nor the
amendment of the provisions of the Code of Regulations so as
to change the number or classification of directors of the
Corporation shall be deemed to affect adversely and materially
preferences or voting or other rights of the holders of Class
A Shares; or
(2) The authorization, creation or increase in the
authorized number of any shares, or any security convertible
into shares, in either case ranking prior to such series of
Class A Shares.
(e) In the event, and only to the extent, that (1) Class A
Shares are issued in more than one series and (2) Ohio law permits the
holders of a series of a class of capital stock to vote separately as a
class, the affirmative vote of the holders of at least two-thirds of
each series of Class A Shares at the time outstanding, voting
separately as a class, given in person or by proxy either in writing or
at a meeting called for the purpose of voting on such matters, shall be
required for any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of these Amended
and Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially
the preferences or voting or other rights of the holders of such series
which are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the amendment of
these Amended and Restated Articles of Incorporation, as amended, so as
to authorize, create or change the authorized or outstanding number of
Class A Shares or of any shares ranking on a parity with or junior to
the Class A Shares nor the Amendment of the provisions of the Code of
Regulations so as to change the number or classification of directors
of the Corporation shall be deemed to affect adversely and materially
the preferences or voting or other rights of the holders of such
series.
Section 6. 9 1/2% Class A Cumulative Redeemable Preferred
Shares. Of the 1,500,000 authorized Class A Shares, 460,000 shares are
designated as a series entitled "9 1/2% Class A Cumulative Redeemable
Preferred Shares" (hereinafter called "9 1/2% Class A Preferred
Shares"). The 9 1/2% Class A Preferred Shares shall have the express
terms set forth in this Item I as being applicable to all Class A
Shares as a class and, in addition, the following express terms
applicable to all 9 1/2% Class A Preferred Shares as a series of Class
A Shares:
(a) The annual dividend rate of the 9 1/2% Class A
Preferred Shares shall be 9 1/2% of the liquidation preference
of $250.00 per share.
9
<PAGE> 10
(b) Dividends on the 9 1/2% Class A Preferred Shares
shall be payable, if declared, quarterly on or about the 15th
day of March, June, September, and December each year, the
first quarterly dividend being payable, if declared, on
December 15, 1995. The dividends payable for each full
quarterly dividend period on each 9 1/2% Class A Preferred
Shares shall be $5.94.
Dividends for the initial dividend period on the 9
1/2% Class A Preferred Shares, or for any period shorter or
longer than a full dividend period on the 9 1/2% Class A
Preferred Shares, shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. The aggregate
dividend payable quarterly to each holder of 9 1/2% Class A
Preferred Shares shall be rounded to the nearest one
one-hundredth of one cent with $.00005 being rounded upward.
Each dividend shall be payable to the holders of record on
such record date, no less than 10 nor more than 30 days
preceding the payment date thereof, as shall be fixed from
time to time by the Corporation's Board of Directors.
(c) Dividends on 9 1/2% Class A Preferred Shares
shall be cumulative as follows:
(1) With respect to shares included in the
initial issue of 9 1/2% Class A Preferred Shares and
shares issued any time thereafter up to and including
the record date for the payment of the first dividend
on the initial issue of 9 1/2% Class A Preferred
Shares, dividends shall be cumulative from the date
of the initial issue of 9 1/2% Class A Preferred
Shares; and
(2) With respect to shares issued any time
after the aforesaid record date, dividends shall be
cumulative from the dividend payment date next
preceding the date of issue of such shares, except
that if such shares are issued during the period
commencing the day after the record date for the
payment of a dividend on 9 1/2% Class A Preferred
Shares and ending on the payment date of that
dividend, dividends with respect to such shares shall
be cumulative from that dividend payment date.
(d) Except as required to preserve the Corporation's
status as a real estate investment trust under the Internal
Revenue Code of 1986, as amended, the 9 1/2% Class A Preferred
Shares may not be redeemed prior to November 15, 2000. At any
time or from time to time on and after November 15, 2000 the
Corporation, at its option upon not less than thirty (30) nor
more than sixty (60) days' written notice, may redeem all or
any part of the 9 1/2% Class A Preferred Shares at a
redemption price of $250.00 per share plus, in each case, an
amount equal to all dividends accrued and unpaid thereon to
the redemption
10
<PAGE> 11
date, without interest. The redemption price (other than the
portion thereof consisting of accrued and unpaid dividends) is
payable solely out of the sale proceeds of other capital
shares of the Corporation, which may include any equity
securities (including common shares and preferred shares),
shares, interests, participation or other ownership interests
(however designated) and any rights (other than debt
securities convertible into or exchangeable for equity
securities), or options to purchase any of the foregoing.
(e) The amount payable per 9 1/2% Class A Preferred
Share in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation shall be $250.00, plus an amount equal to all
dividends accrued and unpaid thereon to the date of payment.
(f) All dividend payments made on the 9 1/2% Class A
Preferred Shares, at any time during which the Corporation is
in default in the payment of dividends on such 9 1/2% Class A
Preferred Shares for any dividend period, shall, for the
purposes of Section 5(b)(1) of this Item I, be deemed to be
made in respect of the earliest dividend period with respect
to which the Corporation is in default.
II. The Class B Cumulative Preferred Shares. The Class B Cumulative
Preferred Shares shall have the following express terms:
Section 1. Series. The Class B Shares may be issued from time
to time in one or more series. All Class B Shares shall be of equal
rank and shall be identical, except in respect of the matters that may
be fixed by the Board of Directors as hereinafter provided, and each
share of a series shall be identical with all other shares of such
series, except as to the dates from which dividends shall accrue and be
cumulative. All Class B Shares shall rank on a parity with the Class A
Shares, the Class C Shares, the Class D Shares, the Class E Shares and
the Noncumulative Shares and shall be identical to all Class A Shares,
Class C Shares, Class D Shares, Class E Shares and Noncumulative Shares
except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this
Section 1 and (2) only dividends on the Class A Shares, the Class B
Shares, the Class C Shares, the Class D Shares and the Class E Shares
are cumulative as set forth herein. Subject to the provisions of
Sections 2 through 5, both inclusive, and Item VII of this Division,
which provisions shall apply to all Class B Shares, the Board of
Directors hereby is authorized to cause such shares to be issued in one
or more series and with respect to each such series to determine and
fix prior to the issuance thereof (and thereafter, to the extent
provided in clause (b) of this Section) the following:
(a) The designation of the series, which may be by
distinguishing number, letter or title;
11
<PAGE> 12
(b) The authorized number of shares of the series,
which number the Board of Directors may (except where
otherwise provided in the creation of the series) increase or
decrease from time to time before or after the issuance
thereof (but not below the number of shares thereof then
outstanding);
(c) The dividend rate or rates of the series,
including the means by which such rates may be established;
(d) The date or dates from which dividends shall
accrue and be cumulative and the dates on which and the period
or periods for which dividends, if declared, shall be payable,
including the means by which such dates and periods may be
established;
(e) The redemption rights and price or prices, if
any, for shares of the series;
(f) The terms and amount of the sinking fund, if any,
for the purchase or redemption of shares of the series;
(g) The amounts payable on shares of the series in
the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation;
(h) Whether the shares of the series shall be
convertible into Common Shares or shares of any other class
and, if so, the conversion rate or rates or price or prices,
any adjustments thereof and all other terms and conditions
upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in
Subsection 5(d) or 5(e) of this Item II) on the issuance of
shares of the same series or of any other class or series.
The Board of Directors is authorized to adopt from time to time
amendments to the Amended and Restated Articles of Incorporation, as amended,
fixing, with respect to each such series, the matters described in clauses (a)
through (i), both inclusive, of this Section and is authorized to take such
actions with respect thereto as may be required by law in order to effect such
amendments.
Section 2. Dividends.
(a) The holders of Class B Shares of each series, in
preference to the holders of Common Shares and of any other class of
shares ranking junior to the Class B Shares, shall be entitled to
receive out of any funds legally available therefor, and when and as
declared by the Board of Directors, dividends in cash at the rate or
rates
12
<PAGE> 13
for such series fixed in accordance with the provisions of Section 1
above and no more, payable on the dates fixed for such series. Such
dividends shall accrue and be cumulative, in the case of shares of each
particular series, from and after the date or dates fixed with respect
to such series. No dividends shall be paid upon or declared or set
apart for any series of the Class B Shares for any dividend period
unless at the same time (i) a like proportionate dividend for the
dividend periods terminating on the same or any earlier date, ratably
in proportion to the respective annual dividend rates fixed therefor,
shall have been paid upon or declared or set apart for all Class B
Shares of all series then issued and outstanding and entitled to
receive such dividend and (ii) the dividends payable for the dividend
periods terminating on the same or any earlier date (but, with respect
to the Noncumulative Shares, only with respect to the then current
dividend period), ratably in proportion to the respective dividend
rates fixed therefor, shall have been paid upon or declared or set
apart for all Class A Shares, Class C Shares, Class D Shares, Class E
Shares and Noncumulative Shares then issued and outstanding and
entitled to receive such dividends.
(b) So long as any Class B Shares shall be outstanding no
dividend, except a dividend payable in Common Shares or other shares
ranking junior to the Class B Shares, shall be paid or declared or any
distribution be made, except as aforesaid, in respect of the Common
Shares or any other shares ranking junior to the Class B Shares, nor
shall any Common Shares or any other shares ranking junior to the Class
B Shares be purchased, retired or otherwise acquired by the
Corporation, except out of the proceeds of the sale of Common Shares or
other shares of the Corporation ranking junior to the Class B Shares
received by the Corporation subsequent to the date of first issuance of
Class B Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A
Shares, Class B Shares, Class C Shares, Class D Shares and
Class E Shares including the full dividends for all current
dividend periods, shall have been declared and paid or a sum
sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for
the then current dividend period shall have been declared and
paid or a sum sufficient for payment thereof set apart; and
(3) There shall be no arrearages with respect to the
redemption of Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares or Noncumulative Shares of any
series from any sinking fund provided for shares of such
series in accordance with the provisions of Section 1 of this
Item II.
(c) The foregoing restrictions on the payment of dividends or
other distributions on, or on the purchase, redemption, retirement or
other acquisition of, Common Shares or any other shares ranking on a
parity with or junior to the Class B
13
<PAGE> 14
Shares shall be inapplicable to (i) any payments in lieu of issuance of
fractional shares thereof, whether upon any merger, conversion, stock
dividend or otherwise, (ii) the conversion of Class A Shares, Class B
Shares, Class C Shares, Class D Shares, Class E Shares or Noncumulative
Shares into Common Shares or (iii) the exercise by the Corporation of
its rights pursuant to Item VIII(d) of this Division A, Section 4(d) of
Division B or any similar Section hereafter contained in these Amended
and Restated Articles of Incorporation, as amended, with respect to any
other class or series of capital stock hereafter created or authorized.
(d) If, for any taxable year, the Corporation elects to
designate as "capital gain dividends" (as defined in Section 857 of the
Code), any portion (the "Capital Gains Amount") of the dividends paid
or made available for the year to holders of all classes of stock (the
"Total Dividends"), then, to the extent permissible under the Code and
to the extent that it does not cause any dividends to fail to qualify
for the dividends paid deduction under Section 561 of the Code, the
portion of the Capital Gains Amount that shall be allocable to holders
of the Class B Shares shall be the amount that the total dividends paid
or made available to the holders of the Class B Shares for the year
bears to the Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the
Corporation:
(1) May, from time to time at the option of the Board
of Directors, redeem all or any part of any redeemable series
of Class B Shares at the time outstanding at the applicable
redemption price for such series fixed in accordance with the
provisions of Section 1 of this Item II; and
(2) Shall, from time to time, make such redemptions
of each series of Class B Shares as may be required to fulfill
the requirements of any sinking fund provided for shares of
such series at the applicable sinking fund redemption price
fixed in accordance with the provisions of Section 1 of this
Item II; and shall in each case pay all accrued and unpaid
dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed,
postage prepaid, to the holders of record of the Class B Shares to be
redeemed at their respective addresses then appearing on the books of
the Corporation, not less than 30 days nor more than 60 days prior to
the date fixed for such redemption, or such other time prior thereto as
the Board of Directors shall fix for any series pursuant to Section 1
of this Item II prior to the issuance thereof. At any time after notice
as provided above has been deposited in the mail, the Corporation may
deposit the aggregate redemption price of Class B Shares to be
redeemed, together with accrued and unpaid dividends thereon to the
redemption date, with any bank or trust company in Cleveland, Ohio,
14
<PAGE> 15
or New York, New York, having capital and surplus of not less than
$100,000,000, named in such notice and direct that there be paid to the
respective holders of the Class B Shares so to be redeemed amounts
equal to the redemption price of the Class B Shares so to be redeemed,
together with such accrued and unpaid dividends thereon, on surrender
of the share certificate or certificates held by such holders; and upon
the deposit of such notice in the mail and the making of such deposit
of money with such bank or trust company, such holders shall cease to
be shareholders with respect to such shares; and from and after the
time such notice shall have been so deposited and such deposit of money
shall have been so made, such holders shall have no rights or claim
against the Corporation with respect to such shares, except only the
right to receive such money from such bank or trust company without
interest or to exercise before the redemption date any unexpired
privileges of conversion. In the event less than all of the outstanding
Class B Shares are to be redeemed, the Corporation shall select by lot
the shares so to be redeemed in such manner as shall be prescribed by
the Board of Directors.
(2) If the holders of Class B Shares which have been
called for redemption shall not within six years after such
deposit claim the amount deposited for the redemption thereof,
any such bank or trust company shall, upon demand, pay over to
the Corporation such unclaimed amounts and thereupon such bank
or trust company and the Corporation shall be relieved of all
responsibility in respect thereof and to such holders.
(c) Any Class B Shares which are (1) redeemed by the
Corporation pursuant to the provisions of this Section, (2) purchased
and delivered in satisfaction of any sinking fund requirements provided
for shares of such series, (3) converted in accordance with the express
terms thereof, or (4) otherwise acquired by the Corporation, shall
resume the status of authorized but unissued Class B Shares without
serial designation.
(d) Except in connection with the exercise of the
Corporation's rights pursuant to Section (d) of Item VIII of this
Division A, Section 4(d) of Division B or any similar Section hereafter
contained in these Amended and Restated Articles of Incorporation, as
amended, with respect to any other class or series of capital stock
hereafter created or authorized, the Corporation may not purchase or
redeem (for sinking fund purposes or otherwise) less than all of the
Class B Shares then outstanding except in accordance with a stock
purchase offer made to all holders of record of Class B Shares, unless
all dividends on all Class B Shares then outstanding for all previous
and current dividend periods shall have been declared and paid or funds
therefor set apart and all accrued sinking fund obligations applicable
thereto shall have been complied with.
Section 4. Liquidation.
15
<PAGE> 16
(a) (1) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Class B Shares of any series shall be
entitled to receive in full out of the assets of the Corporation,
including its capital, before any amount shall be paid or distributed
among the holders of the Common Shares or any other shares ranking
junior to the Class B Shares, the amounts fixed with respect to shares
of such series in accordance with Section 1 of this Item II, plus an
amount equal to all dividends accrued and unpaid thereon to the date of
payment of the amount due pursuant to such liquidation, dissolution or
winding up of the affairs of the Corporation. In the event the net
assets of the Corporation legally available therefor are insufficient
to permit the payment upon all outstanding Class A Shares, Class B
Shares, Class C Shares, Class D Shares, Class E Shares and
Noncumulative Shares of the full preferential amount to which they are
respectively entitled, then such net assets shall be distributed
ratably upon all outstanding Class A Shares, Class B Shares, Class C
Shares, Class D Shares, Class E Shares and Noncumulative Shares in
proportion to the full preferential amount to which each such share is
entitled.
(2) After payment to the holders of Class B Shares of
the full preferential amounts as aforesaid, the holders of
Class B Shares, as such, shall have no right or claim to any
of the remaining assets of the Corporation.
(b) The merger or consolidation of the Corporation into or
with any other Corporation, the merger of any other corporation into
it, or the sale, lease or conveyance of all or substantially all the
assets of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for the purposes of this Section.
Section 5. Voting.
(a) The holders of Class B Shares shall have no voting rights,
except as provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall be in
default in the payment of dividends on any series of Class B Shares at
the time outstanding, whether or not earned or declared, for a number
of consecutive dividend payment periods which in the aggregate contain
at least 540 days, all holders of Class B Shares, voting separately as
a class, together with all Class A Shares, Class C Shares, Class D
Shares, Class E Shares and Noncumulative Shares upon which like voting
rights have been conferred and are exercisable under the circumstances
described in Subsection 5(c), shall be entitled to elect, as herein
provided, a total of two members of the Board of Directors of the
Corporation; provided, however, that the holders of such Class B Shares
shall not exercise such special class voting rights except at meetings
of such shareholders for the election of directors at which the holders
of not less than 50% of such Class B Shares are present in person or by
proxy; and provided further, that the special class voting rights
provided for in this paragraph when the same shall
16
<PAGE> 17
have become vested shall remain so vested until all accrued and unpaid
dividends on such Class B Shares then outstanding shall have been paid
or declared and a sum sufficient therefor set aside for payment,
whereupon the holders of such Class B Shares shall be divested of their
special class voting rights in respect of subsequent elections of
directors, subject to the revesting of such special class voting rights
in the event above specified in this paragraph.
(2) In the event of default entitling holders of
Class B Shares to elect two directors as specified in
paragraph (1) of this Subsection, a special meeting of such
holders for the purpose of electing such directors shall be
called by the Secretary of the Corporation upon written
request of, or may be called by, the holders of record of at
least 10% of the Class B Shares upon which such default in the
payment of dividends exists and notice thereof shall be given
in the same manner as that required for the annual meeting of
shareholders; provided, however, that the Corporation shall
not be required to call such special meeting if the annual
meeting of shareholders shall be called to be held within 90
days after the date of receipt of the foregoing written
request from the holders of Class B Shares. At any meeting at
which such holders of Class B Shares shall be entitled to
elect directors, holders of 50% of such Class B Shares,
present in person or by proxy, shall be sufficient to
constitute a quorum, and the vote of the holders of a majority
of such shares so present at any such meeting at which there
shall be such a quorum shall be sufficient to elect the
members of the Board of Directors which such holders of Class
B Shares are entitled to elect as herein provided.
Notwithstanding any provision of these Amended and Restated
Articles of Incorporation, as amended, or the Code of
Regulations of the Corporation or any action taken by the
holders of any class of shares fixing the number of directors
of the Corporation, the two directors who may be elected by
such holders of Class B Shares pursuant to this Subsection
shall serve in addition to any other directors then in office
or proposed to be elected otherwise than pursuant to this
Subsection. Nothing in this Subsection shall prevent any
change otherwise permitted in the total number of or
classifications of directors of the Corporation nor require
the resignation of any director elected otherwise than
pursuant to this Subsection. Notwithstanding any
classification of the other directors of the Corporation, the
two directors elected by such holders of Class B Shares shall
be elected annually for terms expiring at the next succeeding
annual meeting of shareholders.
(3) Upon any divesting of the special class voting
rights of the holders of the Class B Shares in respect of
elections of directors as provided in this Subsection, the
terms of office of all directors then in office elected by
such holders shall terminate immediately thereupon. If the
office of any director elected by such holders voting as a
class becomes vacant by reason of death, resignation, removal
from office or otherwise, the remaining director elected
17
<PAGE> 18
by such holders voting as a class may elect a successor who
shall hold office for the unexpired term in respect of which
such vacancy occurred.
(c) If at any time when the holders of Class B Shares are
entitled to elect directors pursuant to the foregoing provisions of
this Section the holders of any Class A Shares, Class C Shares, Class D
Shares, Class E Shares or Noncumulative Shares are entitled to elect
directors pursuant hereto by reason of any default in the payment of
dividends thereon, then the voting rights of the Class A Shares, the
Class B Shares, the Class C Shares, the Class D Shares, the Class E
Shares and the Noncumulative Shares then entitled to vote shall be
combined (with class of shares having a number of votes proportional to
the aggregate liquidation preference of its outstanding shares). In
such case, the holders of Class B Shares and of all such other shares
then entitled so to vote, voting as a class, shall elect such
directors. If the holders of any such other shares have elected such
directors prior to the happening of the default or event permitting the
holders of Class B Shares to elect directors, or prior to a written
request for the holding of a special meeting being received by the
Secretary of the Corporation as required above, then a new election
shall be held with all such other shares and the Class B Shares voting
together as a single class for such directors, resulting in the
termination of the term of such previously elected directors upon the
election of such new directors.
(d) The affirmative vote of the holders of at least two-thirds
of the Class B Shares at the time outstanding, voting separately as a
class, given in person or by proxy either in writing or at a meeting
called for the purpose, shall be necessary to effect either of the
following:
(1) Any amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Amended and Restated Articles of Incorporation, as
amended, or of the Code of Regulations of the Corporation
which affects adversely and materially the preferences or
voting or other rights of the holders of Class B Shares which
are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of
Incorporation, as amended, so as to authorize, create or
change the authorized or outstanding number of Class B Shares
or of any shares ranking on a parity with or junior to the
Class B Shares nor the amendment of the provisions of the Code
of Regulations so as to change the number or classification of
directors of the Corporation shall be deemed to affect
adversely and materially preferences or voting or other rights
of the holders of Class B Shares; or
(2) The authorization, creation or increase in the
authorized number of any shares, or any security convertible
into shares, in either case ranking prior to such Class B
Shares.
18
<PAGE> 19
(e) In the event, and only to the extent, that (1) Class B
Shares are issued in more than one series and (2) Ohio law permits the
holders of a series of a class of capital stock to vote separately as a
class, the affirmative vote of the holders of at least two-thirds of
each series of Class B Shares at the time outstanding, voting
separately as a class, given in person or by proxy either in writing or
at a meeting called for the purpose of voting on such matters, shall be
required for any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of these Amended
and Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially
the preferences or voting or other rights of the holders of such series
which are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the amendment of
these Amended and Restated Articles of Incorporation, as amended, so as
to authorize, create or change the authorized or outstanding number of
Class B Shares or of any shares remaining on a parity with or junior to
the Class B Shares nor the amendment of the provisions of the Code of
Regulations so as to change the number of classification of directors
of the Corporation shall be deemed to affect adversely and materially
preferences or voting or other rights of the holders of such series.
Section 6. 9.44% Class B Cumulative Redeemable Preferred
Shares. Of the 1,500,000 authorized Class B Shares, 177,500 shares are
designated as a series entitled "9.44% Class B Cumulative Redeemable
Preferred Shares" (hereinafter called "9.44% Class B Preferred
Shares"). The 9.44% Class B Preferred Shares shall have the express
terms set forth in this Item II as being applicable to all Class B
Shares as a class and, in addition, the following express terms
applicable to all 9.44% Class B Preferred Shares as a series of Class B
Shares:
(a) The annual dividend rate of the 9.44% Class B
Preferred Shares shall be 9.44% of the liquidation preference
of $250.00 per share.
(b) Dividends on the 9.44% Class B Preferred Shares
shall be payable, if declared, quarterly on or about the 15th
day of March, June, September, and December each year, the
first quarterly dividend being payable, if declared, on March
15, 1996. The dividends payable for each full quarterly
dividend period on each 9.44% Class B Preferred Shares shall
be $5.90.
Dividends for the initial dividend period on the
9.44% Class B Preferred Shares, or for any period shorter or
longer than a full dividend period on the 9.44% Class B
Preferred Shares, shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. The aggregate
dividend payable quarterly to each holder of 9.44% Class B
Preferred Shares shall be rounded to the nearest one
one-hundredth of one cent with $.00005 being rounded upward.
Each dividend shall be payable to the holders of record on
19
<PAGE> 20
such record date, no less than 10 nor more than 30 days
preceding the payment date thereof, as shall be fixed from
time to time by the Corporation's Board of Directors.
(c) Dividends on 9.44% Class B Preferred Shares shall
be cumulative as follows:
(1) With respect to shares included in the initial
issue of 9.44% Class B Preferred Shares and shares
issued any time thereafter up to and including the
record date for the payment of the first dividend on
the initial issue of 9.44% Class B Preferred Shares,
dividends shall be cumulative from the date of the
initial issue of 9.44% Class B Preferred Shares; and
(2) With respect to shares issued any time after the
aforesaid record date, dividends shall be cumulative
from the dividend payment date next preceding the
date of issue of such shares, except that if such
shares are issued during the period commencing the
day after the record date for the payment of a
dividend on 9.44% Class B Preferred Shares and ending
on the payment date of that dividend, dividends with
respect to such shares shall be cumulative from that
dividend payment date.
(d) Except as required to preserve the Corporation's
status as a real estate investment trust under the Internal
Revenue Code of 1986, as amended, the 9.44% Class B Preferred
Shares may not be redeemed prior to December 26, 2000. At any
time or from time to time on and after December 26, 2000 the
Corporation, at its option upon not less than thirty (30) nor
more than sixty (60) days' written notice, may redeem all or
any part of the 9.44% Class B Preferred Shares at a redemption
price of $250.00 per share plus, in each case, an amount equal
to all dividends accrued and unpaid thereon to the redemption
date, without interest. The redemption price (other than the
portion thereof consisting of accrued and unpaid dividends) is
payable solely out of the sale proceeds of other capital
shares of the Corporation, which may include any equity
securities (including common shares and preferred shares),
shares, interests, participation or other ownership interests
(however designated) and any rights (other than debt
securities convertible into or exchangeable for equity
securities), or options to purchase any of the foregoing.
(e) The amount payable per 9.44% Class B Preferred
Share in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation shall be $250.00, plus an amount equal to all
dividends accrued and unpaid thereon to the date of payment.
20
<PAGE> 21
(f) All dividend payments made on the 9.44% Class B
Preferred Shares, at any time during which the Corporation is
in default in the payment of dividends on such 9.44% Class B
Preferred Shares for any dividend period, shall, for the
purposes of Section 5(b)(1) of this Item II, be deemed to be
made in respect of the earliest dividend period with respect
to which the Corporation is in default.
III. The Class C Cumulative Preferred Shares. The Class C Shares
shall have the following express terms:
Section 1. Series. The Class C Shares may be issued from time
to time in one or more series. All Class C Shares shall be of equal
rank and shall be identical, except in respect of the matters that may
be fixed by the Board of Directors as hereinafter provided, and each
share of a series shall be identical with all other shares of such
series, except as to the dates from which dividends shall accrue and be
cumulative. All Class C Shares shall rank on a parity with the Class A
Shares, the Class B Shares, the Class D Shares, the Class E Shares and
the Noncumulative Shares and shall be identical to all Class A Shares,
Class B Shares, Class D Shares, Class E Shares and Noncumulative Shares
except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this
Section 1 and (2) only dividends on Class A Shares, Class B Shares,
Class C Shares, Class D Shares and Class E Shares shall be cumulative
as set forth herein. Subject to the provisions of Sections 2 through 5,
both inclusive, and Item VII of this Division, which provisions shall
apply to all Class C Shares, the Board of Directors hereby is
authorized to cause such shares to be issued in one or more series and,
with respect to each such series to determine and fix prior to the
issuance thereof (and thereafter, to the extent provided in clause (b)
of this Section) the following:
(a) The designation of the series, which may be by
distinguishing number, letter or title;
(b) The authorized number of shares of the series,
which number the Board of Directors may (except where
otherwise provided in the creation of the series) increase or
decrease from time to time before or after the issuance
thereof (but not below the number of shares thereof then
outstanding);
(c) The dividend rate or rates of the series,
including the means by which such rates may be established;
(d) The date or dates from which dividends shall
accrue and be cumulative and the dates on which and the period
or periods for which dividends, if declared, shall be payable,
including the means by which such dates and periods may be
established;
21
<PAGE> 22
(e) The redemption rights and price or prices, if
any, for shares of the series;
(f) The terms and amount of the sinking fund, if any,
for the purchase or redemption of shares of the series;
(g) The amounts payable on shares of the series in
the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation;
(h) Whether the shares of the series shall be
convertible into Common Shares or shares of any other class
and, if so, the conversion rate or rates or price or prices,
any adjustments thereof and all other terms and conditions
upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in
Subsection 5(d) or 5(e) of this Item III) on the issuance of
shares of the same series or of any other class or series.
The Board of Directors is authorized to adopt from time to time
amendments to the Amended and Restated Articles of Incorporation, as amended,
fixing, with respect to each such series, the matters described in clauses (a)
through (i), inclusive, of this Section and is authorized to take such actions
with respect thereto as may be required by law in order to effect such
amendments.
Section 2. Dividends.
(a) The holders of Class C Shares of each series, in
preference to the holders of Common Shares and of any other class of
shares ranking junior to the Class C Shares, shall be entitled to
receive out of any funds legally available therefor, and when and as
declared by the Board of Directors, dividends in cash at the rate or
rates for such series fixed in accordance with the provisions of
Section 1 above and no more, payable on the dates fixed for such
series. Such dividends shall accrue and be cumulative, in the case of
shares of each particular series, from and after the date or dates
fixed with respect to such series. No dividends shall be paid upon or
declared or set apart for any series of the Class C Shares for any
dividend period unless at the same time (i) a like proportionate
dividend for the dividend periods terminating on the same or any
earlier date, ratably in proportion to the respective annual dividend
rates fixed therefor, shall have been paid upon or declared or set
apart for all Class C Shares of all series then issued and outstanding
and entitled to receive such dividend and (ii) the dividends payable
for the dividend periods terminating on the same or any earlier date
(but, with respect to Noncumulative Shares, only with respect to the
then current dividend period), ratably in proportion to the respective
dividend rates fixed therefor, shall have been paid upon or declared or
set apart for all Class A Shares,
22
<PAGE> 23
Class B Shares, Class D Shares, Class E Shares and Noncumulative Shares
then issued and outstanding and entitled to receive such dividends.
(b) So long as any Class C Shares shall be outstanding no
dividend, except a dividend payable in Common Shares or other shares
ranking junior to the Class C Shares, shall be paid or declared or any
distribution be made, except as aforesaid, in respect of the Common
Shares or any other shares ranking junior to the Class C Shares, nor
shall any Common Shares or any other shares ranking junior to the Class
C Shares be purchased, retired or otherwise acquired by the
Corporation, except out of the proceeds of the sale of Common Shares or
other shares of the Corporation ranking junior to the Class C Shares
received by the Corporation subsequent to the date of first issuance of
Class C Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A
Shares, Class B Shares, Class C Shares, Class D Shares and
Class E Shares including the full dividends for all current
dividend periods, shall have been declared and paid or a sum
sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for
the then current dividend period shall have been declared and
paid or a sum sufficient for payment therefor set apart; and
(3) There shall be no arrearages with respect to the
redemption of Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares or Noncumulative Shares of any
series from any sinking fund provided for shares of such
series in accordance with the provisions of Section 1 of this
Item III.
(c) The foregoing restrictions on the payment of dividends or
other distributions on, or on the purchase, redemption retirement or
other acquisition of, Common Shares or any other shares ranking on a
parity with or junior to the Class C Shares shall be inapplicable to
(i) any payments in lieu of issuance of fractional shares thereof,
whether upon any merger, conversion, stock dividend or otherwise, (ii)
the conversion of Class A Shares, Class B Shares, Class C Shares, Class
D Shares, Class E Shares or Noncumulative Shares into Common Shares, or
(iii) the exercise by the Corporation of its rights pursuant to Item
VIII(d) of this Division A, Section 4(d) of Division B or any similar
Section hereafter contained in these Amended and Restated Articles of
Incorporation, as amended, with respect to any other class or series of
capital stock hereafter created or authorized.
(d) If, for any taxable year, the Corporation elects to
designate as "capital gain dividends" (as defined in Section 857 of the
Code), any portion (the "Capital Gains Amount") of the dividends paid
or made available for the year to holders of all classes of stock (the
"Total Dividends"), then, to the extent permissible under the
23
<PAGE> 24
Code and to the extent it does not cause any dividends to fail to
qualify for the dividends paid deduction under Section 561 of the Code,
the portion of the Capital Gains Amount that shall be allocable to
holders of the Class C Shares shall be the amount that the total
dividends paid or made available to the holders of the Class C Shares
for the year bears to the Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the
Corporation:
(1) May, from time to time at the option of the Board
of Directors, redeem all or any part of any redeemable series
of Class C Shares at the time outstanding at the applicable
redemption price for such series fixed in accordance with the
provisions of Section 1 of this Item III; and
(2) Shall, from time to time, make such redemptions
of each series of Class C Shares as may be required to fulfill
the requirements of any sinking fund provided for shares of
such series at the applicable sinking fund redemption price
fixed in accordance with the provisions of Section 1 of this
Item III; and shall in each case pay all accrued and unpaid
dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed,
postage prepaid, to the holders of record of the Class C Shares to be
redeemed at their respective addresses then appearing on the books of
the Corporation, not less than 30 days nor more than 60 days prior to
the date fixed for such redemption, or such other time prior thereto as
the Board of Directors shall fix for any series pursuant to Section 1
of this Item III prior to the issuance thereof. At any time after
notice as provided above has been deposited in the mail, the
Corporation may deposit the aggregate redemption price of Class C
Shares to be redeemed, together with accrued and unpaid dividends
thereon to the redemption date, with any bank or trust company in
Cleveland, Ohio, or New York, New York, having capital and surplus of
not less than $100,000,000, named in such notice and direct that there
be paid to the respective holders of the Class C Shares so to be
redeemed amounts equal to the redemption price of the Class C Shares so
to be redeemed, together with such accrued and unpaid dividends
thereon, on surrender of the share certificate or certificates held by
such holders; and upon the deposit of such notice in the mail and the
making of such deposit of money with such bank or trust company, such
holders shall cease to be shareholders with respect to such shares; and
from and after the time such notice shall have been so deposited and
such deposit of money shall have been so made, such holders shall have
no rights or claim against the Corporation with respect to such shares,
except only the right to receive such money from such bank or trust
company without interest or to exercise before the redemption date any
unexpired privileges of conversion. In the event less than all of the
outstanding Class C Shares are to be redeemed, the
24
<PAGE> 25
Corporation shall select by lot the shares so to be redeemed in such
manner as shall be prescribed by the Board of Directors.
(2) If the holders of Class C Shares which have been
called for redemption shall not within six years after such
deposit claim the amount deposited for the redemption thereof,
any such bank or trust company shall, upon demand, pay over to
the Corporation such unclaimed amounts and thereupon such bank
or trust company and the Corporation shall be relieved of all
responsibility in respect thereof and to such holders.
(c) Any Class C Shares which are (1) redeemed by the
Corporation pursuant to the provisions of this Section, (2) purchased
and delivered in satisfaction of any sinking fund requirements provided
for shares of such series, (3) converted in accordance with the express
terms thereof, or (4) otherwise acquired by the Corporation, shall
resume the status of authorized but unissued Class C Shares without
serial designation.
(d) Except in connection with the exercise of the
Corporation's rights pursuant to Section (d) of Item VIII of this
Division A, Section 4(d) of Division B or any similar Section hereafter
contained in these Amended and Restated Articles of Incorporation, as
amended, with respect to any other class or series of capital stock
hereafter created or authorized, the Corporation may not purchase or
redeem (for sinking fund purposes or otherwise) less than all of the
Class C Shares then outstanding except in accordance with a stock
purchase offer made to all holders of record of Class C Shares, unless
all dividends on all Class C Shares then outstanding for all previous
and current dividend periods shall have been declared and paid or funds
therefor set apart and all accrued sinking fund obligations applicable
thereto shall have been complied with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Class C Shares of any series shall be
entitled to receive in full out of the assets of the Corporation,
including its capital, before any amount shall be paid or distributed
among the holders of the Common Shares or any other shares ranking
junior to the Class C Shares, the amounts fixed with respect to shares
of such series in accordance with Section 1 of this Item III, plus an
amount equal to all dividends accrued and unpaid thereon to the date of
payment of the amount due pursuant to such liquidation, dissolution or
winding up of the affairs of the Corporation. In the event the net
assets of the Corporation legally available therefor are insufficient
to permit the payment upon all outstanding Class A Shares, Class B
Shares, Class C Shares, Class D Shares, Class E Shares and
Noncumulative Shares of the full preferential amount to which they are
respectively entitled, then such net assets shall be distributed
ratably upon all
25
<PAGE> 26
outstanding Class A Shares, Class B Shares, Class C Shares, Class D
Shares, Class E Shares and Noncumulative Shares in proportion to the
full preferential amount to which each such share is entitled.
(2) After payment to the holders of Class C Shares of
the full preferential amounts as aforesaid, the holders of
Class C Shares, as such, shall have no right or claim to any
of the remaining assets of the Corporation.
(b) The merger or consolidation of the Corporation into or
with any other Corporation, the merger of any other Corporation into
it, or the sale, lease or conveyance of all or substantially all the
assets of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for the purposes of this Section.
Section 5. Voting.
(a) The holders of Class C Shares shall have no voting rights,
except as provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall be in
default in the payment of dividends on any series of Class C Shares at
the time outstanding, whether or not earned or declared, for a number
of consecutive dividend payment periods which in the aggregate contain
at least 540 days, all holders of such Class C Shares, voting
separately as a class, together with all Class A Shares, Class B
Shares, Class D Shares, Class E Shares and Noncumulative Shares upon
which like voting rights have been conferred and are exercisable under
the circumstances described in Subsection 5(c), shall be entitled to
elect, as herein provided, a total of two members of the Board of
Directors of the Corporation; provided, however, that the holders of
such Class C Shares shall not exercise such special class voting rights
except at meetings of such shareholders for the election of directors
at which the holders of not less than 50% of such Class C Shares are
present in person or by proxy; and provided further, that the special
class voting rights provided for in this paragraph when the same shall
have become vested shall remain so vested until all accrued and unpaid
dividends on such Class C Shares then outstanding shall have been paid
or declared and a sum sufficient for the payment thereof set aside for
payment, whereupon the holders of such Class C Shares shall be divested
of their special class voting rights in respect of subsequent elections
of directors, subject to the revesting of such special class voting
rights in the event above specified in this paragraph. All dividend
payments made on the Class C Shares, at any time during which the
Corporation is in default in the payment of dividends on such Class C
Shares for any dividend period, shall be deemed to be made in respect
of the earliest dividend period with respect to which the Corporation
is in default.
(2) In the event of default entitling holders of
Class C Shares to elect two directors as specified in
paragraph (1) of this Subsection, a special meeting
26
<PAGE> 27
of such holders for the purpose of electing such directors
shall be called by the Secretary of the Corporation upon
written request of, or may be called by, the holders of record
of at least 10% of the Class C Shares upon which such default
in the payment of dividends exists and notice thereof shall be
given in the same manner as that required for the annual
meeting of shareholders; provided, however, that the
Corporation shall not be required to call such special meeting
if the annual meeting of shareholders shall be called to be
held within 90 days after the date of receipt of the foregoing
written request from the holders of Class C Shares. At any
meeting at which such holders of Class C Shares shall be
entitled to elect directors, holders of 50% of such Class C
Shares, present in person or by proxy, shall be sufficient to
constitute a quorum, and the vote of the holders of a majority
of such shares so present at any such meeting at which there
shall be such a quorum shall be sufficient to elect the
members of the Board of Directors which such holders of Class
C Shares are entitled to elect as herein provided.
Notwithstanding any provision of these Amended and Restated
Articles of Incorporation, as amended, or the Code of
Regulations of the Corporation or any action taken by the
holders of any class of shares fixing the number of directors
of the Corporation, the two directors who may be elected by
such holders of Class C Shares pursuant to this Subsection
shall serve in addition to any other directors then in office
or proposed to be elected otherwise than pursuant to this
Subsection. Nothing in this Subsection shall prevent any
change otherwise permitted in the total number of or
classifications of directors of the Corporation or require the
resignation of any director elected otherwise than pursuant to
this Subsection. Notwithstanding any classification of the
other directors of the Corporation, the two directors elected
by such holders of Class C Shares shall be elected annually
for terms expiring at the next succeeding annual meeting of
shareholders.
(3) Upon any divesting of the special class voting
rights of the holders of the Class C Shares in respect of
elections of directors as provided in this Subsection, the
terms of office of all directors then in office elected by
such holders shall terminate immediately thereupon. If the
office of any director elected by such holders voting as a
class becomes vacant by reason of death, resignation, removal
from office or otherwise, the remaining director elected by
such holders voting as a class may elect a successor who shall
hold office for the unexpired term in respect of which such
vacancy occurred.
(c) If at any time when the holders of Class C Shares are
entitled to elect directors pursuant to the foregoing provisions of
this Section the holders of any Class A Shares, Class B Shares, Class D
Shares, Class E Shares or Noncumulative Shares are entitled to elect
directors pursuant hereto by reason of any default in the payment of
dividends thereon, then the voting rights of the Class A Shares, the
Class B Shares, the Class C Shares, the Class D Shares, the Class E
Shares and the
27
<PAGE> 28
Noncumulative Shares then entitled to vote shall be combined (with each
class of shares having a number of votes proportional to the aggregate
liquidation preference of its outstanding shares). In such case, the
holders of Class C Shares and of all such other shares then entitled so
to vote, voting as a class, shall elect such directors. If the holders
of any such other shares have elected such directors prior to the
happening of the default or event permitting the holders of Class C
Shares to elect directors, or prior to a written request for the
holding of a special meeting being received by the Secretary of the
Corporation as required above, then a new election shall be held with
all such other shares and the Class C Shares voting together as a
single class for such directors, resulting in the termination of the
term of such previously elected directors upon the election of such new
directors.
(d) The affirmative vote of the holders of at least two-thirds
of the Class C Shares at the time outstanding, voting separately as a
class, given in person or by proxy either in writing or at a meeting
called for the purpose, shall be necessary to effect either of the
following:
(1) Any amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Amended and Restated Articles of Incorporation, as
amended, or of the Code of Regulations of the Corporation
which affects adversely and materially the preferences or
voting or other rights of the holders of Class C Shares which
are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of
Incorporation, as amended, so as to authorize, create or
change the authorized or outstanding number of Class C Shares
or of any shares ranking on a parity with or junior to the
Class C Shares nor the amendment of the provisions of the Code
of Regulations so as to change the number or classification of
directors of the Corporation shall be deemed to affect
adversely and materially preferences or voting or other rights
of the holders of Class C Shares; or
(2) The authorization, creation or increase in the
authorized number of any shares, or any security convertible
into shares, in either case ranking prior to such series of
Class C Shares.
(e) In the event, and only to the extent, that (1) Class C
Shares are issued in more than one series and (2) Ohio law permits the
holders of a series of a class of capital stock to vote separately as a
class, the affirmative vote of the holders of at least two-thirds of
each series of Class C Shares at the time outstanding, voting
separately as a class, given in person or by proxy either in writing or
at a meeting called for the purpose of voting on such matters, shall be
required for any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of these Amended
and Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely
28
<PAGE> 29
and materially the preferences or voting or other rights of the holders
of such series which are set forth in these Amended and Restated
Articles of Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of Incorporation, as
amended, so as to authorize, create or change the authorized or
outstanding number of Class C Shares or of any shares ranking on a
parity with or junior to the Class C Shares nor the Amendment of the
provisions of the Code of Regulations so as to change the number or
classification of directors of the Corporation shall be deemed to
affect adversely and materially the preferences or voting or other
rights of the holders of such series.
IV. The Class D Cumulative Preferred Shares. The Class D Shares
shall have the following express terms:
Section 1. Series. The Class D Shares may be issued from time
to time in one or more series. All Class D Shares shall be of equal
rank and shall be identical, except in respect of the matters that may
be fixed by the Board of Directors as hereinafter provided, and each
share of a series shall be identical with all other shares of such
series, except as to the dates from which dividends shall accrue and be
cumulative. All Class D Shares shall rank on a parity with the Class A
Shares, the Class B Shares, the Class C Shares, the Class E Shares and
the Noncumulative Shares and shall be identical to all Class A Shares,
Class B Shares, Class C Shares, Class E Shares and Noncumulative Shares
except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this
Section 1 and (2) only dividends on Class A Shares, Class B Shares,
Class C Shares, Class D Shares and Class E Shares shall be cumulative
as set forth herein. Subject to the provisions of Sections 2 through 5,
both inclusive, and Item VII of this Division, which provisions shall
apply to all Class D Shares, the Board of Directors hereby is
authorized to cause such shares to be issued in one or more series and,
with respect to each such series to determine and fix prior to the
issuance thereof (and thereafter, to the extent provided in clause (b)
of this Section) the following:
(a) The designation of the series, which may be by
distinguishing number, letter or title;
(b) The authorized number of shares of the series,
which number the Board of Directors may (except where
otherwise provided in the creation of the series) increase or
decrease from time to time before or after the issuance
thereof (but not below the number of shares thereof then
outstanding);
(c) The dividend rate or rates of the series,
including the means by which such rates may be established;
(d) The date or dates from which dividends shall
accrue and be cumulative and the dates on which and the period
or periods for which
29
<PAGE> 30
dividends, if declared, shall be payable, including the means
by which such dates and periods may be established;
(e) The redemption rights and price or prices, if
any, for shares of the series;
(f) The terms and amount of the sinking fund, if any,
for the purchase or redemption of shares of the series;
(g) The amounts payable on shares of the series in
the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation;
(h) Whether the shares of the series shall be
convertible into Common Shares or shares of any other class
and, if so, the conversion rate or rates or price or prices,
any adjustments thereof and all other terms and conditions
upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in
Subsection 5(d) or 5(e) of this Item IV) on the issuance of
shares of the same series or of any other class or series.
The Board of Directors is authorized to adopt from time to time
amendments to the Amended and Restated Articles of Incorporation, as amended,
fixing, with respect to each such series, the matters described in clauses (a)
through (i), inclusive, of this Section and is authorized to take such actions
with respect thereto as may be required by law in order to effect such
amendments.
Section 2. Dividends.
(a) The holders of Class D Shares of each series, in
preference to the holders of Common Shares and of any other class of
shares ranking junior to the Class D Shares, shall be entitled to
receive out of any funds legally available therefor, and when and as
declared by the Board of Directors, dividends in cash at the rate or
rates for such series fixed in accordance with the provisions of
Section 1 above and no more, payable on the dates fixed for such
series. Such dividends shall accrue and be cumulative, in the case of
shares of each particular series, from and after the date or dates
fixed with respect to such series. No dividends shall be paid upon or
declared or set apart for any series of the Class D Shares for any
dividend period unless at the same time (i) a like proportionate
dividend for the dividend periods terminating on the same or any
earlier date, ratably in proportion to the respective annual dividend
rates fixed therefor, shall have been paid upon or declared or set
apart for all Class D Shares of all series then issued and outstanding
and entitled to receive such dividend and (ii) the dividends payable
for the dividend periods terminating on the same or any
30
<PAGE> 31
earlier date (but, with respect to Noncumulative Shares, only with
respect to the then current dividend period), ratably in proportion to
the respective dividend rates fixed therefor, shall have been paid upon
or declared or set apart for all Class A Shares, Class B Shares, Class
C Shares, Class E Shares and Noncumulative Shares then issued and
outstanding and entitled to receive such dividends.
(b) So long as any Class D Shares shall be outstanding no
dividend, except a dividend payable in Common Shares or other shares
ranking junior to the Class D Shares, shall be paid or declared or any
distribution be made, except as aforesaid, in respect of the Common
Shares or any other shares ranking junior to the Class D Shares, nor
shall any Common Shares or any other shares ranking junior to the Class
D Shares be purchased, retired or otherwise acquired by the
Corporation, except out of the proceeds of the sale of Common Shares or
other shares of the Corporation ranking junior to the Class D Shares
received by the Corporation subsequent to the date of first issuance of
Class D Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A
Shares, Class B Shares, Class C Shares, Class D Shares and
Class E Shares, including the full dividends for all current
dividend periods, shall have been declared and paid or a sum
sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for
the then current dividend period shall have been declared and
paid or a sum sufficient for payment therefor set apart; and
(3) There shall be no arrearages with respect to the
redemption of Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares or Noncumulative Shares of any
series from any sinking fund provided for shares of such
series in accordance with the provisions of Section 1 of this
Item IV.
(c) The foregoing restrictions on the payment of dividends or
other distributions on, or on the purchase, redemption retirement or
other acquisition of, Common Shares or any other shares ranking on a
parity with or junior to the Class D Shares shall be inapplicable to
(i) any payments in lieu of issuance of fractional shares thereof,
whether upon any merger, conversion, stock dividend or otherwise, (ii)
the conversion of Class A Shares, Class B Shares, Class C Shares, Class
D Shares, Class E Shares or Noncumulative Shares into Common Shares, or
(iii) the exercise by the Corporation of its rights pursuant to Item
VIII(d) of this Division A, Section 4(d) of Division B or any similar
Section hereafter contained in these Amended and Restated Articles of
Incorporation, as amended, with respect to any other class or series of
capital stock hereafter created or authorized.
31
<PAGE> 32
(d) If, for any taxable year, the Corporation elects to
designate as "capital gain dividends" (as defined in Section 857 of the
Code), any portion (the "Capital Gains Amount") of the dividends paid
or made available for the year to holders of all classes of stock (the
"Total Dividends"), then, to the extent permissible under the Code and
to the extent it does not cause any dividends to fail to qualify for
the dividends paid deduction under Section 561 of the Code, the portion
of the Capital Gains Amount that shall be allocable to holders of the
Class D Shares shall be the amount that the total dividends paid or
made available to the holders of the Class D Shares for the year bears
to the Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the
Corporation:
(1) May, from time to time at the option of the Board
of Directors, redeem all or any part of any redeemable series
of Class D Shares at the time outstanding at the applicable
redemption price for such series fixed in accordance with the
provisions of Section 1 of this Item IV; and
(2) Shall, from time to time, make such redemptions
of each series of Class D Shares as may be required to fulfill
the requirements of any sinking fund provided for shares of
such series at the applicable sinking fund redemption price
fixed in accordance with the provisions of Section 1 of this
Item IV; and shall in each case pay all accrued and unpaid
dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed,
postage prepaid, to the holders of record of the Class D Shares to be
redeemed at their respective addresses then appearing on the books of
the Corporation, not less than 30 days nor more than 60 days prior to
the date fixed for such redemption, or such other time prior thereto as
the Board of Directors shall fix for any series pursuant to Section 1
of this Item IV prior to the issuance thereof. At any time after notice
as provided above has been deposited in the mail, the Corporation may
deposit the aggregate redemption price of Class D Shares to be
redeemed, together with accrued and unpaid dividends thereon to the
redemption date, with any bank or trust company in Cleveland, Ohio, or
New York, New York, having capital and surplus of not less than
$100,000,000, named in such notice and direct that there be paid to the
respective holders of the Class D Shares so to be redeemed amounts
equal to the redemption price of the Class D Shares so to be redeemed,
together with such accrued and unpaid dividends thereon, on surrender
of the share certificate or certificates held by such holders; and upon
the deposit of such notice in the mail and the making of such deposit
of money with such bank or trust company, such holders shall cease to
be shareholders with respect to such shares; and from and after the
time such notice shall have been so deposited and such deposit of money
shall have been so made, such holders shall have
32
<PAGE> 33
no rights or claim against the Corporation with respect to such shares,
except only the right to receive such money from such bank or trust
company without interest or to exercise before the redemption date any
unexpired privileges of conversion. In the event less than all of the
outstanding Class D Shares are to be redeemed, the Corporation shall
select by lot the shares so to be redeemed in such manner as shall be
prescribed by the Board of Directors.
(2) If the holders of Class D Shares which have been
called for redemption shall not within six years after such
deposit claim the amount deposited for the redemption thereof,
any such bank or trust company shall, upon demand, pay over to
the Corporation such unclaimed amounts and thereupon such bank
or trust company and the Corporation shall be relieved of all
responsibility in respect thereof and to such holders.
(c) Any Class D Shares which are (1) redeemed by the
Corporation pursuant to the provisions of this Section, (2) purchased
and delivered in satisfaction of any sinking fund requirements provided
for shares of such series, (3) converted in accordance with the express
terms thereof, or (4) otherwise acquired by the Corporation, shall
resume the status of authorized but unissued Class D Shares without
serial designation.
(d) Except in connection with the exercise of the
Corporation's rights pursuant to Section (d) of Item VIII of this
Division A, Section 4(d) of Division B or any similar Section hereafter
contained in these Amended and Restated Articles of Incorporation, as
amended, with respect to any other class or series of capital stock
hereafter created or authorized, the Corporation may not purchase or
redeem (for sinking fund purposes or otherwise) less than all of the
Class D Shares then outstanding except in accordance with a stock
purchase offer made to all holders of record of Class D Shares, unless
all dividends on all Class D Shares then outstanding for all previous
and current dividend periods shall have been declared and paid or funds
therefor set apart and all accrued sinking fund obligations applicable
thereto shall have been complied with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Class D Shares of any series shall be
entitled to receive in full out of the assets of the Corporation,
including its capital, before any amount shall be paid or distributed
among the holders of the Common Shares or any other shares ranking
junior to the Class D Shares, the amounts fixed with respect to shares
of such series in accordance with Section 1 of this Item IV, plus an
amount equal to all dividends accrued and unpaid thereon to the date of
payment of the amount due pursuant to such liquidation, dissolution or
winding up of the affairs of the Corporation. In the event the net
assets of the
33
<PAGE> 34
Corporation legally available therefor are insufficient to permit the
payment upon all outstanding Class A Shares, Class B Shares, Class C
Shares, Class D Shares, Class E Shares and Noncumulative Shares of the
full preferential amount to which they are respectively entitled, then
such net assets shall be distributed ratably upon all outstanding Class
A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares and Noncumulative Shares in proportion to the full preferential
amount to which each such share is entitled.
(2) After payment to the holders of Class D Shares of
the full preferential amounts as aforesaid, the holders of
Class D Shares, as such, shall have no right or claim to any
of the remaining assets of the Corporation.
(b) The merger or consolidation of the Corporation into or
with any other Corporation, the merger of any other Corporation into
it, or the sale, lease or conveyance of all or substantially all the
assets of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for the purposes of this Section.
Section 5. Voting.
(a) The holders of Class D Shares shall have no voting rights,
except as provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall be in
default in the payment of dividends on any series of Class D Shares at
the time outstanding, whether or not earned or declared, for a number
of consecutive dividend payment periods which in the aggregate contain
at least 540 days, all holders of such Class D Shares, voting
separately as a class, together with all Class A Shares, Class B
Shares, Class C Shares, Class E Shares and Noncumulative Shares upon
which like voting rights have been conferred and are exercisable under
the circumstances described in Subsection 5(c), shall be entitled to
elect, as herein provided, a total of two members of the Board of
Directors of the Corporation; provided, however, that the holders of
such Class D Shares shall not exercise such special class voting rights
except at meetings of such shareholders for the election of directors
at which the holders of not less than 50% of such Class D Shares are
present in person or by proxy; and provided further, that the special
class voting rights provided for in this paragraph when the same shall
have become vested shall remain so vested until all accrued and unpaid
dividends on such Class D Shares then outstanding shall have been paid
or declared and a sum sufficient for the payment thereof set aside for
payment, whereupon the holders of such Class D Shares shall be divested
of their special class voting rights in respect of subsequent elections
of directors, subject to the revesting of such special class voting
rights in the event above specified in this paragraph. All dividend
payments made on the Class D Shares, at any time during which the
Corporation is in default in the payment of dividends on such Class D
Shares for any dividend period, shall be
34
<PAGE> 35
deemed to be made in respect of the earliest dividend period with
respect to which the Corporation is in default.
(2) In the event of default entitling holders of
Class D Shares to elect two directors as specified in
paragraph (1) of this Subsection, a special meeting of such
holders for the purpose of electing such directors shall be
called by the Secretary of the Corporation upon written
request of, or may be called by, the holders of record of at
least 10% of the Class D Shares upon which such default in the
payment of dividends exists and notice thereof shall be given
in the same manner as that required for the annual meeting of
shareholders; provided, however, that the Corporation shall
not be required to call such special meeting if the annual
meeting of shareholders shall be called to be held within 90
days after the date of receipt of the foregoing written
request from the holders of Class D Shares. At any meeting at
which such holders of Class D Shares shall be entitled to
elect directors, holders of 50% of such Class D Shares,
present in person or by proxy, shall be sufficient to
constitute a quorum, and the vote of the holders of a majority
of such shares so present at any such meeting at which there
shall be such a quorum shall be sufficient to elect the
members of the Board of Directors which such holders of Class
D Shares are entitled to elect as herein provided.
Notwithstanding any provision of these Amended and Restated
Articles of Incorporation, as amended, or the Code of
Regulations of the Corporation or any action taken by the
holders of any class of shares fixing the number of directors
of the Corporation, the two directors who may be elected by
such holders of Class D Shares pursuant to this Subsection
shall serve in addition to any other directors then in office
or proposed to be elected otherwise than pursuant to this
Subsection. Nothing in this Subsection shall prevent any
change otherwise permitted in the total number of or
classifications of directors of the Corporation or require the
resignation of any director elected otherwise than pursuant to
this Subsection. Notwithstanding any classification of the
other directors of the Corporation, the two directors elected
by such holders of Class D Shares shall be elected annually
for terms expiring at the next succeeding annual meeting of
shareholders.
(3) Upon any divesting of the special class voting
rights of the holders of the Class D Shares in respect of
elections of directors as provided in this Subsection, the
terms of office of all directors then in office elected by
such holders shall terminate immediately thereupon. If the
office of any director elected by such holders voting as a
class becomes vacant by reason of death, resignation, removal
from office or otherwise, the remaining director elected by
such holders voting as a class may elect a successor who shall
hold office for the unexpired term in respect of which such
vacancy occurred.
35
<PAGE> 36
(c) If at any time when the holders of Class D Shares are
entitled to elect directors pursuant to the foregoing provisions of
this Section the holders of any Class A Shares, Class B Shares, Class C
Shares, Class E Shares or Noncumulative Shares are entitled to elect
directors pursuant hereto by reason of any default in the payment of
dividends thereon, then the voting rights of the Class A Shares, the
Class B Shares, the Class C Shares, the Class D Shares, the Class E
Shares and the Noncumulative Shares then entitled to vote shall be
combined (with each class of shares having a number of votes
proportional to the aggregate liquidation preference of its outstanding
shares). In such case, the holders of Class D Shares and of all such
other shares then entitled so to vote, voting as a class, shall elect
such directors. If the holders of any such other shares have elected
such directors prior to the happening of the default or event
permitting the holders of Class D Shares to elect directors, or prior
to a written request for the holding of a special meeting being
received by the Secretary of the Corporation as required above, then a
new election shall be held with all such other shares and the Class D
Shares voting together as a single class for such directors, resulting
in the termination of the term of such previously elected directors
upon the election of such new directors.
(d) The affirmative vote of the holders of at least two-thirds
of the Class D Shares at the time outstanding, voting separately as a
class, given in person or by proxy either in writing or at a meeting
called for the purpose, shall be necessary to effect either of the
following:
(1) Any amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Amended and Restated Articles of Incorporation, as
amended, or of the Code of Regulations of the Corporation
which affects adversely and materially the preferences or
voting or other rights of the holders of Class D Shares which
are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of
Incorporation, as amended, so as to authorize, create or
change the authorized or outstanding number of Class D Shares
or of any shares ranking on a parity with or junior to the
Class D Shares nor the amendment of the provisions of the Code
of Regulations so as to change the number or classification of
directors of the Corporation shall be deemed to affect
adversely and materially preferences or voting or other rights
of the holders of Class D Shares; or
(2) The authorization, creation or increase in the
authorized number of any shares, or any security convertible
into shares, in either case ranking prior to such series of
Class D Shares.
(e) In the event, and only to the extent, that (1) Class D
Shares are issued in more than one series and (2) Ohio law permits the
holders of a series of a class of capital stock to vote separately as a
class, the affirmative vote of the holders of at
36
<PAGE> 37
least two-thirds of each series of Class D Shares at the time
outstanding, voting separately as a class, given in person or by proxy
either in writing or at a meeting called for the purpose of voting on
such matters, shall be required for any amendment, alteration or
repeal, whether by merger, consolidation or otherwise, of any of the
provisions of these Amended and Restated Articles of Incorporation, as
amended, or of the Code of Regulations of the Corporation which affects
adversely and materially the preferences or voting or other rights of
the holders of such series which are set forth in these Amended and
Restated Articles of Incorporation, as amended; provided, however,
neither the amendment of these Amended and Restated Articles of
Incorporation, as amended, so as to authorize, create or change the
authorized or outstanding number of Class D Shares or of any shares
ranking on a parity with or junior to the Class D Shares nor the
Amendment of the provisions of the Code of Regulations so as to change
the number or classification of directors of the Corporation shall be
deemed to affect adversely and materially the preferences or voting or
other rights of the holders of such series.
V. The Class E Cumulative Preferred Shares. The Class E Shares
shall have the following express terms:
Section 1. Series. The Class E Shares may be issued from time
to time in one or more series. All Class E Shares shall be of equal
rank and shall be identical, except in respect of the matters that may
be fixed by the Board of Directors as hereinafter provided, and each
share of a series shall be identical with all other shares of such
series, except as to the dates from which dividends shall accrue and be
cumulative. All Class E Shares shall rank on a parity with the Class A
Shares, the Class B Shares, the Class C Shares, the Class D Shares and
the Noncumulative Shares and shall be identical to all Class A Shares,
Class B Shares, Class C Shares, Class D Shares and Noncumulative Shares
except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this
Section 1 and (2) only dividends on Class A Shares, Class B Shares,
Class C Shares, Class D Shares and Class E Shares shall be cumulative
as set forth herein. Subject to the provisions of Sections 2 through 5,
both inclusive, and Item VII of this Division, which provisions shall
apply to all Class E Shares, the Board of Directors hereby is
authorized to cause such shares to be issued in one or more series and,
with respect to each such series to determine and fix prior to the
issuance thereof (and thereafter, to the extent provided in clause (b)
of this Section) the following:
(a) The designation of the series, which may be by
distinguishing number, letter or title;
(b) The authorized number of shares of the series,
which number the Board of Directors may (except where
otherwise provided in the creation of the series) increase or
decrease from time to time before or after the issuance
thereof (but not below the number of shares thereof then
outstanding);
37
<PAGE> 38
(c) The dividend rate or rates of the series,
including the means by which such rates may be established;
(d) The date or dates from which dividends shall
accrue and be cumulative and the dates on which and the period
or periods for which dividends, if declared, shall be payable,
including the means by which such dates and periods may be
established;
(e) The redemption rights and price or prices, if
any, for shares of the series;
(f) The terms and amount of the sinking fund, if any,
for the purchase or redemption of shares of the series;
(g) The amounts payable on shares of the series in
the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation;
(h) Whether the shares of the series shall be
convertible into Common Shares or shares of any other class
and, if so, the conversion rate or rates or price or prices,
any adjustments thereof and all other terms and conditions
upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in
Subsection 5(d) or 5(e) of this Item V) on the issuance of
shares of the same series or of any other class or series.
The Board of Directors is authorized to adopt from time to time
amendments to the Amended and Restated Articles of Incorporation, as amended,
fixing, with respect to each such series, the matters described in clauses (a)
through (i), inclusive, of this Section and is authorized to take such actions
with respect thereto as may be required by law in order to effect such
amendments.
Section 2. Dividends.
(a) The holders of Class E Shares of each series, in
preference to the holders of Common Shares and of any other class of
shares ranking junior to the Class E Shares, shall be entitled to
receive out of any funds legally available therefor, and when and as
declared by the Board of Directors, dividends in cash at the rate or
rates for such series fixed in accordance with the provisions of
Section 1 above and no more, payable on the dates fixed for such
series. Such dividends shall accrue and be cumulative, in the case of
shares of each particular series, from and after the date or dates
fixed with respect to such series. No dividends shall be paid upon or
declared or set apart for any series of the Class E Shares for any
dividend period unless at the
38
<PAGE> 39
same time (i) a like proportionate dividend for the dividend periods
terminating on the same or any earlier date, ratably in proportion to
the respective annual dividend rates fixed therefor, shall have been
paid upon or declared or set apart for all Class E Shares of all series
then issued and outstanding and entitled to receive such dividend and
(ii) the dividends payable for the dividend periods terminating on the
same or any earlier date (but, with respect to Noncumulative Shares,
only with respect to the then current dividend period), ratably in
proportion to the respective dividend rates fixed therefor, shall have
been paid upon or declared or set apart for all Class A Shares, Class B
Shares, Class C Shares, Class D Shares and Noncumulative Shares then
issued and outstanding and entitled to receive such dividends.
(b) So long as any Class E Shares shall be outstanding no
dividend, except a dividend payable in Common Shares or other shares
ranking junior to the Class E Shares, shall be paid or declared or any
distribution be made, except as aforesaid, in respect of the Common
Shares or any other shares ranking junior to the Class E Shares, nor
shall any Common Shares or any other shares ranking junior to the Class
E Shares be purchased, retired or otherwise acquired by the
Corporation, except out of the proceeds of the sale of Common Shares or
other shares of the Corporation ranking junior to the Class E Shares
received by the Corporation subsequent to the date of first issuance of
Class E Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A
Shares, Class B Shares, Class C Shares, Class D Shares and
Class E Shares, including the full dividends for all current
dividend periods, shall have been declared and paid or a sum
sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for
the then current dividend period shall have been declared and
paid or a sum sufficient for payment therefor set apart; and
(3) There shall be no arrearages with respect to the
redemption of Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares or Noncumulative Shares of any
series from any sinking fund provided for shares of such
series in accordance with the provisions of Section 1 of this
Item V.
(c) The foregoing restrictions on the payment of dividends or
other distributions on, or on the purchase, redemption retirement or
other acquisition of, Common Shares or any other shares ranking on a
parity with or junior to the Class E Shares shall be inapplicable to
(i) any payments in lieu of issuance of fractional shares thereof,
whether upon any merger, conversion, stock dividend or otherwise, (ii)
the conversion of Class A Shares, Class B Shares, Class C Shares, Class
D Shares, Class E Shares or Noncumulative Shares into Common Shares, or
(iii) the exercise by the Corporation of its rights pursuant to Item
VIII(d) of this Division A, Section 4(d) of
39
<PAGE> 40
Division B or any similar Section hereafter contained in these Amended
and Restated Articles of Incorporation, as amended, with respect to any
other class or series of capital stock hereafter created or authorized.
(d) If, for any taxable year, the Corporation elects to
designate as "capital gain dividends" (as defined in Section 857 of the
Code), any portion (the "Capital Gains Amount") of the dividends paid
or made available for the year to holders of all classes of stock (the
"Total Dividends"), then, to the extent permissible under the Code and
to the extent it does not cause any dividends to fail to qualify for
the dividends paid deduction under Section 561 of the Code, the portion
of the Capital Gains Amount that shall be allocable to holders of the
Class E Shares shall be the amount that the total dividends paid or
made available to the holders of the Class E Shares for the year bears
to the Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the
Corporation:
(1) May, from time to time at the option of the Board
of Directors, redeem all or any part of any redeemable series
of Class E Shares at the time outstanding at the applicable
redemption price for such series fixed in accordance with the
provisions of Section 1 of this Item V; and
(2) Shall, from time to time, make such redemptions
of each series of Class E Shares as may be required to fulfill
the requirements of any sinking fund provided for shares of
such series at the applicable sinking fund redemption price
fixed in accordance with the provisions of Section 1 of this
Item V; and shall in each case pay all accrued and unpaid
dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed,
postage prepaid, to the holders of record of the Class E Shares to be
redeemed at their respective addresses then appearing on the books of
the Corporation, not less than 30 days nor more than 60 days prior to
the date fixed for such redemption, or such other time prior thereto as
the Board of Directors shall fix for any series pursuant to Section 1
of this Item V prior to the issuance thereof. At any time after notice
as provided above has been deposited in the mail, the Corporation may
deposit the aggregate redemption price of Class E Shares to be
redeemed, together with accrued and unpaid dividends thereon to the
redemption date, with any bank or trust company in Cleveland, Ohio, or
New York, New York, having capital and surplus of not less than
$100,000,000, named in such notice and direct that there be paid to the
respective holders of the Class E Shares so to be redeemed amounts
equal to the redemption price of the Class E Shares so to be redeemed,
together with such accrued and unpaid dividends thereon, on surrender
of the share certificate or certificates held by such holders; and
40
<PAGE> 41
upon the deposit of such notice in the mail and the making of such
deposit of money with such bank or trust company, such holders shall
cease to be shareholders with respect to such shares; and from and
after the time such notice shall have been so deposited and such
deposit of money shall have been so made, such holders shall have no
rights or claim against the Corporation with respect to such shares,
except only the right to receive such money from such bank or trust
company without interest or to exercise before the redemption date any
unexpired privileges of conversion. In the event less than all of the
outstanding Class E Shares are to be redeemed, the Corporation shall
select by lot the shares so to be redeemed in such manner as shall be
prescribed by the Board of Directors.
(2) If the holders of Class E Shares which have been
called for redemption shall not within six years after such
deposit claim the amount deposited for the redemption thereof,
any such bank or trust company shall, upon demand, pay over to
the Corporation such unclaimed amounts and thereupon such bank
or trust company and the Corporation shall be relieved of all
responsibility in respect thereof and to such holders.
(c) Any Class E Shares which are (1) redeemed by the
Corporation pursuant to the provisions of this Section, (2) purchased
and delivered in satisfaction of any sinking fund requirements provided
for shares of such series, (3) converted in accordance with the express
terms thereof, or (4) otherwise acquired by the Corporation, shall
resume the status of authorized but unissued Class E Shares without
serial designation.
(d) Except in connection with the exercise of the
Corporation's rights pursuant to Section (d) of Item VIII of this
Division A, Section 4(d) of Division B or any similar Section hereafter
contained in these Amended and Restated Articles of Incorporation, as
amended, with respect to any other class or series of capital stock
hereafter created or authorized, the Corporation may not purchase or
redeem (for sinking fund purposes or otherwise) less than all of the
Class E Shares then outstanding except in accordance with a stock
purchase offer made to all holders of record of Class E Shares, unless
all dividends on all Class E Shares then outstanding for all previous
and current dividend periods shall have been declared and paid or funds
therefor set apart and all accrued sinking fund obligations applicable
thereto shall have been complied with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Class E Shares of any series shall be
entitled to receive in full out of the assets of the Corporation,
including its capital, before any amount shall be paid or distributed
among the holders of the Common Shares or any other shares ranking
junior to the Class E Shares, the
41
<PAGE> 42
amounts fixed with respect to shares of such series in accordance with
Section 1 of this Item V, plus an amount equal to all dividends accrued
and unpaid thereon to the date of payment of the amount due pursuant to
such liquidation, dissolution or winding up of the affairs of the
Corporation. In the event the net assets of the Corporation legally
available therefor are insufficient to permit the payment upon all
outstanding Class A Shares, Class B Shares, Class C Shares, Class D
Shares, Class E Shares and Noncumulative Shares of the full
preferential amount to which they are respectively entitled, then such
net assets shall be distributed ratably upon all outstanding Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares
and Noncumulative Shares in proportion to the full preferential amount
to which each such share is entitled.
(2) After payment to the holders of Class E Shares of
the full preferential amounts as aforesaid, the holders of
Class E Shares, as such, shall have no right or claim to any
of the remaining assets of the Corporation.
(b) The merger or consolidation of the Corporation into or
with any other Corporation, the merger of any other Corporation into
it, or the sale, lease or conveyance of all or substantially all the
assets of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for the purposes of this Section.
Section 5. Voting.
(a) The holders of Class E Shares shall have no voting rights,
except as provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall be in
default in the payment of dividends on any series of Class E Shares at
the time outstanding, whether or not earned or declared, for a number
of consecutive dividend payment periods which in the aggregate contain
at least 540 days, all holders of such Class E Shares, voting
separately as a class, together with all Class A Shares, Class B
Shares, Class C Shares, Class D Shares and Noncumulative Shares upon
which like voting rights have been conferred and are exercisable under
the circumstances described in Subsection 5(c), shall be entitled to
elect, as herein provided, a total of two members of the Board of
Directors of the Corporation; provided, however, that the holders of
such Class E Shares shall not exercise such special class voting rights
except at meetings of such shareholders for the election of directors
at which the holders of not less than 50% of such Class E Shares are
present in person or by proxy; and provided further, that the special
class voting rights provided for in this paragraph when the same shall
have become vested shall remain so vested until all accrued and unpaid
dividends on such Class E Shares then outstanding shall have been paid
or declared and a sum sufficient for the payment thereof set aside for
payment, whereupon the holders of such Class E Shares shall be divested
of their special class voting rights in respect of subsequent elections
of directors, subject to the revesting of such special class voting
42
<PAGE> 43
rights in the event above specified in this paragraph. All dividend
payments made on the Class E Shares, at any time during which the
Corporation is in default in the payment of dividends on such Class E
Shares for any dividend period, shall be deemed to be made in respect
of the earliest dividend period with respect to which the Corporation
is in default.
(2) In the event of default entitling holders of
Class E Shares to elect two directors as specified in
paragraph (1) of this Subsection, a special meeting of such
holders for the purpose of electing such directors shall be
called by the Secretary of the Corporation upon written
request of, or may be called by, the holders of record of at
least 10% of the Class E Shares upon which such default in the
payment of dividends exists and notice thereof shall be given
in the same manner as that required for the annual meeting of
shareholders; provided, however, that the Corporation shall
not be required to call such special meeting if the annual
meeting of shareholders shall be called to be held within 90
days after the date of receipt of the foregoing written
request from the holders of Class E Shares. At any meeting at
which such holders of Class E Shares shall be entitled to
elect directors, holders of 50% of such Class E Shares,
present in person or by proxy, shall be sufficient to
constitute a quorum, and the vote of the holders of a majority
of such shares so present at any such meeting at which there
shall be such a quorum shall be sufficient to elect the
members of the Board of Directors which such holders of Class
E Shares are entitled to elect as herein provided.
Notwithstanding any provision of these Amended and Restated
Articles of Incorporation, as amended, or the Code of
Regulations of the Corporation or any action taken by the
holders of any class of shares fixing the number of directors
of the Corporation, the two directors who may be elected by
such holders of Class E Shares pursuant to this Subsection
shall serve in addition to any other directors then in office
or proposed to be elected otherwise than pursuant to this
Subsection. Nothing in this Subsection shall prevent any
change otherwise permitted in the total number of or
classifications of directors of the Corporation or require the
resignation of any director elected otherwise than pursuant to
this Subsection. Notwithstanding any classification of the
other directors of the Corporation, the two directors elected
by such holders of Class E Shares shall be elected annually
for terms expiring at the next succeeding annual meeting of
shareholders.
(3) Upon any divesting of the special class voting
rights of the holders of the Class E Shares in respect of
elections of directors as provided in this Subsection, the
terms of office of all directors then in office elected by
such holders shall terminate immediately thereupon. If the
office of any director elected by such holders voting as a
class becomes vacant by reason of death, resignation, removal
from office or otherwise, the remaining director elected
43
<PAGE> 44
by such holders voting as a class may elect a successor who
shall hold office for the unexpired term in respect of which
such vacancy occurred.
(c) If at any time when the holders of Class E Shares are
entitled to elect directors pursuant to the foregoing provisions of
this Section the holders of any Class A Shares, Class B Shares, Class C
Shares, Class D Shares or Noncumulative Shares are entitled to elect
directors pursuant hereto by reason of any default in the payment of
dividends thereon, then the voting rights of the Class A Shares, the
Class B Shares, the Class C Shares, the Class D Shares, the Class E
Shares and the Noncumulative Shares then entitled to vote shall be
combined (with each class of shares having a number of votes
proportional to the aggregate liquidation preference of its outstanding
shares). In such case, the holders of Class E Shares and of all such
other shares then entitled so to vote, voting as a class, shall elect
such directors. If the holders of any such other shares have elected
such directors prior to the happening of the default or event
permitting the holders of Class E Shares to elect directors, or prior
to a written request for the holding of a special meeting being
received by the Secretary of the Corporation as required above, then a
new election shall be held with all such other shares and the Class E
Shares voting together as a single class for such directors, resulting
in the termination of the term of such previously elected directors
upon the election of such new directors.
(d) The affirmative vote of the holders of at least two-thirds
of the Class E Shares at the time outstanding, voting separately as a
class, given in person or by proxy either in writing or at a meeting
called for the purpose, shall be necessary to effect either of the
following:
(1) Any amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Amended and Restated Articles of Incorporation, as
amended, or of the Code of Regulations of the Corporation
which affects adversely and materially the preferences or
voting or other rights of the holders of Class E Shares which
are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of
Incorporation, as amended, so as to authorize, create or
change the authorized or outstanding number of Class E Shares
or of any shares ranking on a parity with or junior to the
Class E Shares nor the amendment of the provisions of the Code
of Regulations so as to change the number or classification of
directors of the Corporation shall be deemed to affect
adversely and materially preferences or voting or other rights
of the holders of Class E Shares; or
(2) The authorization, creation or increase in the
authorized number of any shares, or any security convertible
into shares, in either case ranking prior to such series of
Class E Shares.
44
<PAGE> 45
(e) In the event, and only to the extent, that (1) Class E
Shares are issued in more than one series and (2) Ohio law permits the
holders of a series of a class of capital stock to vote separately as a
class, the affirmative vote of the holders of at least two-thirds of
each series of Class E Shares at the time outstanding, voting
separately as a class, given in person or by proxy either in writing or
at a meeting called for the purpose of voting on such matters, shall be
required for any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of these Amended
and Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially
the preferences or voting or other rights of the holders of such series
which are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the amendment of
these Amended and Restated Articles of Incorporation, as amended, so as
to authorize, create or change the authorized or outstanding number of
Class E Shares or of any shares ranking on a parity with or junior to
the Class E Shares nor the Amendment of the provisions of the Code of
Regulations so as to change the number or classification of directors
of the Corporation shall be deemed to affect adversely and materially
the preferences or voting or other rights of the holders of such
series.
VI. The Noncumulative Preferred Shares. The Noncumulative
Preferred Shares shall have the following express terms:
Section 1. Series. The Noncumulative Shares may be issued from
time to time in one or more series. All Noncumulative Shares shall be
of equal rank and shall be identical, except in respect of the matters
that may be fixed by the Board of Directors as hereinafter provided,
and each share of a series shall be identical with all other shares of
such series, except as to the dates on which and the periods for which
dividends may be payable. All Noncumulative Shares shall rank on a
parity with the Class A Shares, the Class B Shares, the Class C Shares,
the Class D Shares and the Class E Shares, and shall be identical to
all Class A Shares, Class B Shares, Class C Shares, Class D Shares and
Class E Shares, except (1) in respect of the matters that may be fixed
by the Board of Directors as provided in clauses (a) through (i),
inclusive, of this Section 1 and (2) only dividends on the
Noncumulative Shares are noncumulative as set forth herein. Subject to
the provisions of Sections 2 through 5, inclusive, and Item VII of this
Division, which provisions shall apply to all Noncumulative Shares, the
Board of Directors hereby is authorized to cause such shares to be
issued in one or more series, and with respect to each such series, to
determine and fix prior to the issuance thereof (and thereafter, to the
extent provided in clause (b) of this Section) the following:
(a) The designation of the series, which may be by
distinguishing number, letter or title;
45
<PAGE> 46
(b) The authorized number of shares of the series,
which number the Board of Directors may (except where
otherwise provided in the creation of the series) increase or
decrease from time to time before or after the issuance
thereof (but not below the number of shares thereof then
outstanding);
(c) The dividend rate or rates of the series,
including the means by which such rates may be established;
(d) The dates on which and the period or periods for
which dividends, if declared, shall be payable, including the
means by which such dates and periods may be established;
(e) The redemption rights and price or prices, if
any, for shares of the series;
(f) The terms and amount of the sinking fund, if any,
for the purchase or redemption of shares of the series;
(g) The amounts payable on shares of the series in
the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation;
(h) Whether the shares of the series shall be
convertible into Common Shares or shares of any other class
and, if so, the conversion rate or rates or price or prices,
any adjustments thereof and all other terms and conditions
upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in
Subsection 5(d) or 5(e) of this Item VI) on the issuance of
shares of the same series or of any other class or series.
The Board of Directors is authorized to adopt from time to time
amendments to the Amended and Restated Articles of Incorporation, as amended,
fixing, with respect to each such series, the matters described in clauses (a)
through (i), both inclusive, of this Section and is authorized to take such
actions with respect thereto as may be required by law in order to effect such
amendments.
Section 2. Dividends.
(a) The holders of Noncumulative Shares of each series, in
preference to the holders of Common Shares and of any other class of
shares ranking junior to the Noncumulative Shares, shall be entitled to
receive out of any funds legally available therefor, if, when and as
declared by the Board of Directors, dividends in cash at the rate or
rates for such series fixed in accordance with the provisions of
Section 1
46
<PAGE> 47
above and no more, payable on the dates fixed for such series. Such
dividends shall accrue, in the case of shares of each particular
series, from and after the date or dates fixed with respect to such
series; provided, however, that if the Board of Directors fails to
declare a dividend payable on a dividend payment date on any
Noncumulative Shares, the holders of the Noncumulative Shares shall
have no right to receive a dividend in respect of the dividend period
ending on such dividend payment date, and the Corporation shall have no
obligation to pay the dividend accrued for such period, whether or not
dividends on such Noncumulative Shares are declared payable on any
future dividend payment date. No dividends shall be paid upon or
declared or set apart for any series of the Noncumulative Shares for
any dividend period unless at the same time (i) a like proportionate
dividend for the then current dividend period, ratably in proportion to
the respective annual dividend rates fixed therefor, shall have been
paid upon or declared or set apart for all Noncumulative Shares of all
series then issued and outstanding and entitled to receive such
dividend and (ii) the dividends payable for the dividend periods
terminating on the same or any earlier date, ratably in proportion to
the respective dividend rates fixed therefor, shall have been paid upon
or declared or set apart for all Class A Shares, Class B Shares, Class
C Shares, Class D Shares and Class E Shares then issued and outstanding
and entitled to receive such dividends.
(b) So long as any Noncumulative Shares shall be outstanding
no dividend, except a dividend payable in Common Shares or other shares
ranking junior to the Noncumulative Shares, shall be paid or declared
or any distribution be made, except as aforesaid, in respect of the
Common Shares or any other shares ranking junior to the Noncumulative
Shares, nor shall any Common Shares or any other shares ranking junior
to the Noncumulative Shares be purchased, retired or otherwise acquired
by the Corporation, except out of the proceeds of the sale of Common
Shares or other shares of the Corporation ranking junior to the
Noncumulative Shares received by the Corporation subsequent to the date
of first issuance of Noncumulative Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A
Shares, Class B Shares, Class C Shares, Class D Shares and
Class E Shares including the full dividends for all current
dividend periods, shall have been declared and paid or a sum
sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for
the then current dividend period shall have been declared and
paid or a sum sufficient for payment therefor set apart; and
(3) There shall be no arrearages with respect to the
redemption of Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares or Noncumulative Shares of any
series from any sinking fund provided
47
<PAGE> 48
for shares of such series in accordance with the provisions of
Section 1 of this Item VI.
(c) The foregoing restrictions on the payment of dividends or
other distributions on, or on the purchase, redemption retirement or
other acquisition of, Common Shares or any other shares ranking on a
parity with or junior to the Noncumulative Shares shall be inapplicable
to (i) any payments in lieu of issuance of fractional shares thereof,
whether upon any merger, conversion, stock dividend or otherwise, (ii)
the conversion of Class A Shares, Class B Shares, Class C Shares, Class
D Shares, Class E Shares or Noncumulative Shares into Common Shares or
(iii) the exercise by the Corporation of its rights pursuant to Item
VIII(d) of this Division A, Section 4(d) of Division B or any similar
Section hereafter contained in these Amended and Restated Articles of
Incorporation with respect to any other class or series of capital
stock hereafter created or authorized.
(d) If, for any taxable year, the Corporation elects to
designate as "capital gain dividends" (as defined in Section 857 of the
Code), any portion (the "Capital Gains Amount") of the dividends paid
or made available for the year to holders of all classes of stock (the
"Total Dividends"), then, to the extent permissible under the Code and
to the extent it does not cause any dividends to fail to qualify for
the dividends paid deduction under Section 561 of the Code, the portion
of the Capital Gains Amount that shall be allocable to holders of the
Noncumulative Shares shall be the amount that the total dividends paid
or made available to the holders of the Noncumulative Shares for the
year bears to the Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the
Corporation:
(1) May, from time to time at the option of the Board
of Directors, redeem all or any part of any redeemable series
of Noncumulative Shares at the time outstanding at the
applicable redemption price for such series fixed in
accordance with the provisions of Section 1 of this Item VI;
and
(2) Shall, from time to time, make such redemptions
of each series of Noncumulative Shares as may be required to
fulfill the requirements of any sinking fund provided for
shares of such series at the applicable sinking fund
redemption price fixed in accordance with the provisions of
Section 1 of this Item VI; and shall, in each case, pay all
unpaid dividends for the then current dividend period to the
redemption date.
(b) (1) Notice of every such redemption shall be mailed,
postage prepaid, to the holders of record of the Noncumulative Shares
to be redeemed at their respective addresses then appearing on the
books of the Corporation, not less than 30 days nor
48
<PAGE> 49
more than 60 days prior to the date fixed for such redemption, or such
other time prior thereto as the Board of Directors shall fix for any
series pursuant to Section 1 of this Item VI prior to the issuance
thereof. At any time after notice as provided above has been deposited
in the mail, the Corporation may deposit the aggregate redemption price
of Noncumulative Shares to be redeemed, together with accrued and
unpaid dividends thereon for the then current dividend period to the
redemption date, with any bank or trust company in Cleveland, Ohio, or
New York, New York, having capital and surplus of not less than
$100,000,000, named in such notice and direct that there be paid to the
respective holders of the Noncumulative Shares so to be redeemed
amounts equal to the redemption price of the Noncumulative Shares so to
be redeemed together with such accrued and unpaid dividends thereon for
the then current dividend period, on surrender of the share certificate
or certificates held by such holders; and upon the deposit of such
notice in the mail and the making of such deposit of money with such
bank or trust company, such holders shall cease to be shareholders with
respect to such shares; and from and after the time such notice shall
have been so deposited and such deposit of money shall have been so
made, such holders shall have no rights or claim against the
Corporation with respect to such shares, except only the right to
receive such money from such bank or trust company without interest or
to exercise before the redemption date any unexpired privileges of
conversion. In the event less than all of the outstanding Noncumulative
Shares are to be redeemed, the Corporation shall select by lot the
shares so to be redeemed in such manner as shall be prescribed by the
Board of Directors.
(2) If the holders of Noncumulative Shares which have
been called for redemption shall not within six years after
such deposit claim the amount deposited for the redemption
thereof, any such bank or trust company shall, upon demand,
pay over to the Corporation such unclaimed amounts and
thereupon such bank or trust company and the Corporation shall
be relieved of all responsibility in respect thereof and to
such holders.
(c) Any Noncumulative Shares which are (1) redeemed by the
Corporation pursuant to the provisions of this Section, (2) purchased
and delivered in satisfaction of any sinking fund requirements provided
for shares of such series, (3) converted in accordance with the express
terms thereof, or (4) otherwise acquired by the Corporation, shall
resume the status of authorized but unissued Noncumulative Shares
without serial designation.
(d) Except in connection with the exercise of the
Corporation's rights pursuant to Section (d) of Item VIII of this
Division A, Section 4(d) of Division B or any similar Section hereafter
contained in these Amended and Restated Articles of Incorporation, as
amended, with respect to any other class or series of capital stock
hereafter created or authorized, the Corporation may not purchase or
redeem (for sinking fund purposes or otherwise) of less than all of the
Noncumulative Shares then outstanding except in accordance with a stock
purchase offer made to all holders of
49
<PAGE> 50
record of Noncumulative Shares, unless all dividends on all
Noncumulative Shares then outstanding for the then current dividend
period shall have been declared and paid or funds therefor set apart
and all accrued sinking fund obligations applicable thereto shall have
been complied with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Noncumulative Shares of any series shall be
entitled to receive in full out of the assets of the Corporation,
including its capital, before any amount shall be paid or distributed
among the holders of the Common Shares or any other shares ranking
junior to the Noncumulative Shares, the amounts fixed with respect to
shares of such series in accordance with Section 1 of this Item VI,
plus an amount equal to all dividends accrued and unpaid thereon for
the then current dividend period to the date of payment of the amount
due pursuant to such liquidation, dissolution or winding up of the
affairs of the Corporation. In the event the net assets of the
Corporation legally available therefor are insufficient to permit the
payment upon all outstanding Class A Shares, Class B Shares, Class C
Shares, Class D Shares, Class E Shares and Noncumulative Shares of the
full preferential amount to which they are respectively entitled, then
such net assets shall be distributed ratably upon all outstanding
Noncumulative Shares in proportion to the full preferential amount to
which each such share is entitled.
(2) After payment to the holders of Noncumulative
Shares of the full preferential amounts as aforesaid, the
holders of Noncumulative Shares, as such, shall have no right
or claim to any of the remaining assets of the Corporation.
(b) The merger or consolidation of the Corporation into or
with any other Corporation, the merger of any other Corporation into
it, or the sale, lease or conveyance of all or substantially all the
assets of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for the purposes of this Section.
Section 5. Voting.
(a) The holders of Noncumulative Shares shall have no voting
rights, except as provided in this Section or required by law.
(b)(1) If, and so often as, the Corporation shall not have
fully paid, or shall not have declared and set aside a sum sufficient
for the payment of, dividends on any series of Noncumulative Shares at
the time outstanding, for a number of consecutive dividend payment
periods which in the aggregate contain at least 540 days, the holders
of such Noncumulative Shares, voting separately as a class, together
with all Class A Shares, Class B Shares, Class C Shares, Class D Shares
and Class E Shares
50
<PAGE> 51
upon which like voting rights have been conferred and are exercisable,
shall be entitled to elect, as herein provided, two members of the
Board of Directors of the Corporation; provided, however, that the
holders of such Noncumulative Shares shall not exercise such special
class voting rights except at meetings of such shareholders for the
election of directors at which the holders of not less than 50% of such
Noncumulative Shares are present in person or by proxy; and provided
further, that the special class voting rights provided for in this
paragraph when the same shall have become vested shall remain so vested
until the Corporation shall have fully paid, or shall have set aside a
sum sufficient for the payment of, dividends on such Noncumulative
Shares then outstanding for a number of consecutive dividend payment
periods which in the aggregate contain at least 360 days, whereupon the
holders of such Noncumulative Shares shall be divested of their special
class voting rights in respect of subsequent elections of directors,
subject to the revesting of such special class voting rights in the
event above specified in this paragraph.
(2) In the event of default entitling holders of
Noncumulative Shares to elect two directors as specified in
paragraph (1) of this Subsection, a special meeting of such
holders for the purpose of electing such directors shall be
called by the Secretary of the Corporation upon written
request of, or may be called by, the holders of record of at
least 10% of the Noncumulative Shares upon which such default
in the payment of dividends exists and notice thereof shall be
given in the same manner as that required for the annual
meeting of shareholders; provided, however, that the
Corporation shall not be required to call such special meeting
if the annual meeting of shareholders shall be called to be
held within 90 days after the date of receipt of the foregoing
written request from the holders of Noncumulative Shares. At
any meeting at which such holders of Noncumulative Shares
shall be entitled to elect directors, holders of 50% of such
Noncumulative Shares, present in person or by proxy, shall be
sufficient to constitute a quorum, and the vote of the holders
of a majority of such shares so present at any such meeting at
which there shall be such a quorum shall be sufficient to
elect the members of the Board of Directors which such holders
of Noncumulative Shares are entitled to elect as herein
provided. Notwithstanding any provision of these Amended and
Restated Articles of Incorporation, as amended, or the Code of
Regulations of the Corporation or any action taken by the
holders of any class of shares fixing the number of directors
of the Corporation, the two directors who may be elected by
such holders of Noncumulative Shares pursuant to this
Subsection shall serve in addition to any other directors then
in office or proposed to be elected otherwise than pursuant to
this Subsection. Nothing in this Subsection shall prevent any
change otherwise permitted in the total number of or
classifications of directors of the Corporation nor require
the resignation of any director elected otherwise than
pursuant to this Subsection. Notwithstanding any
classification of the other directors of the Corporation, the
two directors
51
<PAGE> 52
elected by such holders of Noncumulative Shares shall be
elected annually for terms expiring at the next succeeding
annual meeting of shareholders.
(3) Upon any divesting of the special class voting
rights of the holders of the Noncumulative Shares in respect
of elections of directors as provided in this Subsection, the
terms of office of all directors then in office elected by
such holders shall terminate immediately thereupon. If the
office of any director elected by such holders voting as a
class becomes vacant by reason of death, resignation, removal
from office or otherwise, the remaining director elected by
such holders voting as a class may elect a successor who shall
hold office for the unexpired term in respect of which such
vacancy occurred.
(c) If at any time when the holders of Noncumulative Shares
are entitled to elect directors pursuant to the foregoing provisions of
this Section the holders of any Class A Shares, Class B Shares, Class C
Shares, Class D Shares and Class E Shares, are entitled to elect
directors pursuant hereto by reason of any default in the payment of
dividends thereon, then the voting rights of the Class A Shares, the
Class B Shares, the Class C Shares, the Class D Shares, the Class E
Shares and Noncumulative Shares then entitled to vote shall be combined
(with class of shares having a number of votes proportional to the
aggregate liquidation preference of its outstanding shares). In such
case, the holders of Noncumulative Shares and of all such other shares
then entitled so to vote, voting as a class, shall elect such
directors. If the holders of any such other shares have elected such
directors prior to the happening of the default or event permitting the
holders of Noncumulative Shares to elect directors, or prior to a
written request for the holding of a special meeting being received by
the Secretary of the Corporation as required above, then a new election
shall be held with all such other shares and the Noncumulative Shares
voting together as a single class for such directors, resulting in the
termination of the term of such previously elected directors upon the
election of such new directors.
(d) The affirmative vote of the holders of at least two-thirds
of the Noncumulative Shares at the time outstanding, voting separately
as a class, given in person or by proxy either in writing or at a
meeting called for the purpose, shall be necessary to effect either of
the following:
(1) Any amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Amended and Restated Articles of Incorporation, as
amended, or of the Code of Regulations of the Corporation
which affects adversely and materially the preferences or
voting or other rights of the holders of Noncumulative Shares
which are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of
Incorporation, as amended, so as to authorize, create or
change the authorized or outstanding number of Noncumulative
Shares or of any shares
52
<PAGE> 53
ranking on a parity with or junior to the Noncumulative Shares
nor the amendment of the provisions of the Code of Regulations
so as to change the number or classification of directors of
the Corporation shall be deemed to affect adversely and
materially preferences or voting or other rights of the
holders of Noncumulative Shares; or
(2) The authorization, creation or increase in the
authorized number of any shares, or any security convertible
into shares, in either case ranking prior to such
Noncumulative Shares.
(e) In the event, and only to the extent, that (1)
Noncumulative Shares are issued in more than one series and (2) Ohio
law permits the holders of a series of a class of capital stock to vote
separately as a class, the affirmative vote of the holders of at least
two-thirds of each series of the Noncumulative Shares at the time
outstanding, voting separately as a class, given in person or by proxy
either in writing or at a meeting called for the purpose of voting on
such matters, shall be required for any amendment, alteration or
repeal, whether by merger, consolidation or otherwise, of any of the
provisions of these Amended and Restated Articles of Incorporation, as
amended, or of the Code of Regulations of the Corporation which affects
adversely and materially the preferences or voting or other rights of
the holders of such series which are set forth in these Amended and
Restated Articles of Incorporation, as amended; provided, however,
neither the amendment of these Amended and Restated Articles of
Incorporation, as amended, so as to authorize, create or change the
authorized or outstanding number of Noncumulative Shares or of any
shares remaining on a parity with or junior to the Noncumulative Shares
nor the amendment of the provisions of the Code of Regulations so as to
change the number or classification of directors of the Corporation
shall be deemed to affect adversely and materially preferences or
voting or other rights of the holder of such series.
VII. Definitions. For the purposes of this Division:
(a) Whenever reference is made to shares "ranking prior to"
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares, such reference shall mean and include
all shares of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to distributions
in the event of a voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation are given preference over
the rights of the holders of Class A Shares, Class B Shares, Class C
Shares, Class D Shares, Class E Shares or Noncumulative Shares, as the
case may be;
(b) Whenever reference is made to shares "on a parity with"
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares, such reference shall mean and include
all shares of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to
53
<PAGE> 54
distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation rank
equally (except as to the amounts fixed therefor) with the rights of
the holders of Class A Shares, Class B Shares, Class C Shares, Class D
Shares, Class E Shares or Noncumulative Shares, as the case may be; and
(c) Whenever reference is made to shares "ranking junior to"
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares, such reference shall mean and include
all shares of the Corporation other than those defined under
Subsections (a) and (b) of this Section as shares "ranking prior to" or
"on a parity with" Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares or Noncumulative Shares, as the case may
be.
VIII. Restrictions on Transfer to Preserve Tax Benefit; Shares Subject
to Redemption.
(a) Definitions. For the purposes of this Item VIII of this
Division A of this Article FOURTH, the following terms shall have the
following meanings:
"Beneficial Ownership" shall mean ownership of Preferred
Shares by a Person who would be treated as an owner of such Preferred
Shares either directly or constructively through the application of
Section 544 of the Code, as modified by Section 856(h) of the Code. The
terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned"
shall have the correlative meanings.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Constructive Ownership" shall mean ownership of Preferred
Shares by a Person who would be treated as an owner of such Preferred
Shares either directly or constructively through the application of
Section 318 of the Code, as modified by Section 856(d)(5) of the Code.
The terms "Constructive Owner," "Constructively Owns" and
"Constructively Owned" shall have the correlative meanings.
"Excess Preferred Shares" shall mean any Preferred Shares (i)
acquired or proposed to be acquired by any Person pursuant to a
Transfer to the extent that, if effective, such Transfer would result
in the transferee either Beneficially Owning Preferred Shares or
Constructively Owning Preferred Shares in excess of the Ownership
Limit, or (ii) which are the subject of a Transfer that, if effective,
which would result in the Corporation being "closely held" within the
meaning of Section 856(h) of the Code.
"Market Price" shall mean, with respect to any series of any
class of Preferred Shares, the last reported sales price of such series
reported on the New York Stock Exchange on the trading day immediately
preceding the relevant date or, if shares of
54
<PAGE> 55
such series are not then traded on the New York Stock Exchange, the
last reported sales price of shares of such series on the trading day
immediately preceding the relevant date as reported on any exchange or
quotation system over which the shares of such series may be traded, or
if shares of such series are not then traded over any exchange or
quotation system, then the market price of shares of such series on the
relevant date as determined in good faith by the Board of Directors of
the Corporation.
"Ownership Limit" shall mean, with respect to each series of
each class of Preferred Shares, 9.8% of the outstanding shares of such
series.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for
or to be used exclusively for the purposes described in Section 642(c)
of the Code, an association, a private foundation within the meaning of
Section 509(a) of the Code, a joint stock company, other entity or a
group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended; provided, however, that a
"person" does not mean an underwriter which participates in a public
offering of Preferred Shares, for a period of 35 days following the
purchase by such underwriter of such Preferred Shares.
"Preferred Shares" shall mean, collectively, Class A Shares,
Class B Shares, Class C Shares, Class D Shares, Class E Shares and
Noncumulative Shares.
"REIT" shall mean a Real Estate Investment Trust under Section
856 of the Code.
"Transfer" shall mean any sale, transfer, gift, assignment,
devise or other disposition of Preferred Shares (including, without
limitation, (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Preferred
Shares or (ii) the sale, transfer, assignment or other disposition of
any securities or rights convertible into or exchangeable for Preferred
Shares), whether voluntary or involuntary, whether of record or
beneficially and whether by operation of law or otherwise.
(b) Restrictions on Transfers.
(i) Except as provided in Section (i) of this Item
VIII of this Division A of this Article FOURTH, no Person
shall Beneficially Own or Constructively Own shares of any
series of any class of Preferred Shares in excess of the
Ownership Limit applicable to such series.
(ii) Except as provided in Section (i) of this Item
VIII of this Division A of this Article FOURTH, any Transfer
that, if effective, would result in any
55
<PAGE> 56
Person Beneficially Owning shares of any series of any class
of Preferred Shares in excess of the Ownership Limit
applicable to such series shall be void ab initio as to the
Transfer of such Preferred Shares which would be otherwise
Beneficially Owned by such Person in excess of such Ownership
Limit, and the intended transferee shall acquire no rights in
such Preferred Shares.
(iii) Except as provided in Section (i) of this Item
VIII of this Division A of this Article FOURTH, any Transfer
that, if effective, would result in any Person Constructively
Owning shares of any series of any class of Preferred Shares
in excess of the Ownership Limit applicable to such series
shall be void ab initio as to the Transfer of such Preferred
Shares which would be otherwise Constructively Owned by such
Person in excess of such amount, and the intended transferee
shall acquire no rights in such Preferred Shares.
(iv) Notwithstanding any other provisions contained
in this Item VIII, any Transfer (whether or not such Transfer
is the result of a transaction entered into through the
facilities of the New York Stock Exchange) or other event
that, if effective, would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to
qualify as a REIT (including, but not limited to, a Transfer
or other event that would result in the Corporation owning
(directly or Constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income
derived by the Corporation from such tenant would cause the
Corporation to fail to satisfy any of the gross income
requirement of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of the Preferred Shares or other
event which would cause the Corporation to be "closely held"
within the meaning of Section 856(h) of the Code or would
otherwise result in the Corporation failing to qualify as a
REIT; and the intended transferee or owner or Constructive or
Beneficial Owner shall acquire or retain no rights in such
Preferred Shares.
(v) For purposes of construing the foregoing
provisions, any attempt to transfer Preferred Shares in
violation of the Ownership Limit applicable to the series of
the class of such Preferred Shares (as such Ownership Limit
may be modified by the Board of Directors pursuant to Section
(h) of Item VIII) shall be construed as causing such Preferred
Shares to be transferred by operation of law to the
Corporation as trustee of a trust for the exclusive benefit of
the person or persons to whom such Preferred Shares can
ultimately be transferred without violating the Ownership
Limit and any Excess Preferred Shares while held in such trust
shall not have any voting rights, shall not be considered for
purposes of any shareholder vote or for determining a quorum
for such a vote, and shall not be entitled to any dividends or
other distributions.
56
<PAGE> 57
(c) Remedies for Breach. If the Board of Directors or its
designees shall at any time determine in good faith that a Transfer has
taken place in violation of Section (b) of Item VIII of this Division A
of this Article FOURTH or that a Person intends to acquire or has
attempted to acquire beneficial ownership (determined without reference
to any rules of attribution), Beneficial Ownership or Constructive
Ownership of any Preferred Shares of the Corporation in violation of
Section (b) of Item VIII of this Division A of this Article FOURTH, or
that any such Transfer, intended or attempted acquisition or
acquisition would jeopardize the status of the Corporation as a REIT
under the Code, the Board of Directors or its designees shall take such
actions as it deems advisable to refuse to give effect or to prevent
such Transfer, including, but not limited to, refusing to give effect
to such Transfer on the books of the Corporation or instituting
proceedings to enjoin such Transfer and, in addition, exercising its
rights under Section (d) of Item VIII of this Division A of Article
FOURTH.
(d) Purchase Right in Excess Preferred Shares. Beginning on
the date of the occurrence of a Transfer which, if consummated, in the
good faith judgment of the Board of Directors of the Corporation, could
result in Excess Preferred Shares the Excess Preferred Shares, subject
to such transfer shall be deemed to have been offered for sale to the
Corporation, or its designee, at a price per share equal to the lesser
of (i) the price per share in the transaction that created such Excess
Preferred Shares (or, in the case of a devise or gift, the Market Price
at the time of such devise or gift) and (ii) the Market Price on the
date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of
90 days after the later of (i) the date of such Transfer and (ii) if
the Corporation does not receive a notice of such Transfer pursuant to
Section (e) of Item VIII of this Division A of this Article FOURTH, the
date the Board of Directors determines in good faith that such Transfer
has occurred. Prompt payment of the purchase price shall be made in
such reasonable manner as may be determined by the Corporation. From
and after the date fixed for purchase by the Corporation, and so long
as payment of the purchase price for the Excess Preferred Shares to be
so purchased shall have been made or duly provided for, the holder of
any Excess Preferred Shares so called for purchase shall cease to be
entitled to dividends, distributions, voting rights and other benefits
with respect to such Excess Preferred Shares, excepting only the right
to payment of the purchase price fixed as aforesaid. Any dividend or
distribution paid to a proposed transferee of Excess Preferred Shares
prior to the discovery by the Corporation that the Excess Preferred
Shares have been transferred in violation of Section (b) of Item VIII
of this Division A of this Article FOURTH shall be repaid to the
Corporation upon demand. If the foregoing provisions are determined to
be void or invalid by virtue of any legal decision, statute, rule or
regulation, then the intended transferee of such Excess Preferred
Shares shall be deemed, at the option of the Corporation, to have acted
as agent on behalf of the Corporation in acquiring such Excess
Preferred Shares and to hold such Excess Preferred Shares on behalf of
the Corporation.
57
<PAGE> 58
(e) Notice of Restricted Transfer. Any Person who acquires or
attempts to acquire Preferred Shares or other securities in violation
of subparagraph (b) of this Item VIII, or any Person who owns or will
own Excess Preferred Shares as a result of an event under subparagraph
(b) of this Item VIII, shall immediately give written notice to the
Corporation of such event and shall provide to the Corporation such
other information as the Corporation may request in order to determine
the effect, if any, of such Transfer or attempted Transfer or other
event on the Corporation's status as a REIT.
(f) Owners Required to Provide Information. From and after the
date of the Initial Public Offering:
(i) every Beneficial Owner of more than 5.0% (or such
other percentage, between 0.5% and 5.0%, as provided in the
regulations promulgated pursuant to the Code) of the
outstanding Preferred Shares of the Corporation shall, within
30 days after January 1 of each year, give written notice to
the Corporation stating the name and address of such
Beneficial Owner, the number of shares Beneficially Owned, and
description of how such shares are held. Each such Beneficial
Owner shall provide to the Corporation such additional
information as the Corporation may request in order to
determine the effect, if any, of such Beneficial Ownership on
the Corporation's status as a REIT.
(ii) each Person who is a Beneficial Owner or
Constructive Owner of Preferred Shares and each Person
(including the shareholder of record) who is holding Preferred
Shares for a Beneficial Owner or Constructive Owner shall
provide to the Corporation such information that the
Corporation may request, in good faith, in order to determine
the Corporation's status as a REIT.
(g) Remedies Not Limited. Nothing contained in this Division A
of this Article FOURTH shall limit the authority of the Board of
Directors to take such other action as it deems necessary or advisable
to protect the Corporation and the interests of its shareholders by
preservation of the Corporation's status as a REIT.
(h) Ambiguity. In the case of an ambiguity in the application
of any of the provisions of Item VIII of this Division A of this
Article FOURTH, including any definition contained in Section (a) of
Item VIII, the Board of Directors shall have the power to determine the
application of the provisions of this Item VIII with respect to any
situation based on the facts known to it.
(i) Exceptions.
(i) Subject to Section (b)(iv) of this Item VIII of
this Division A, the Board of Directors may exempt a Person
from the Ownership Limit applicable
58
<PAGE> 59
to a series of a class of Preferred Shares if such Person is
not an individual (other than pension plans described in
Section 856(h)(3)) for purposes of Section 542(a)(2) of the
Code if the Board of Directors obtains such representations
and undertakings from such Person as are reasonably necessary
to ascertain that no individual's Beneficial Ownership of such
Preferred Shares will violate the Ownership Limit, and agrees
that any violation or attempted violation will result in such
Preferred Shares in excess of the Ownership Limit being
subject to repurchase by the Corporation as set forth in
Section (d) of Item VIII of this Division A of this Article
FOURTH.
(ii) The Board of Directors may exempt a Person from
the limitation on such Person Constructively Owning Preferred
Shares in excess of the Ownership Limit applicable to a series
of a class of such Preferred Shares if such Person does not
own and represents that it will not own, directly or
constructively (by virtue of the application of Section 318 of
the Code, as modified by Section 856(d)(5) of the Code), more
than a 9.8% interest (as set forth in Section 856(d)(2)(B)) in
a tenant of any real property owned or leased by the
Corporation, if the Board of Directors obtains such
representations and undertakings from such Person as are
reasonably necessary to ascertain this fact and agrees that
any violation or attempted violation will result in such
Preferred Shares in excess of the Ownership Limit being deemed
to be Excess Preferred Shares and subject to repurchase by the
Corporation as set forth in Section (d) of Item VIII of this
Division A of this Article FOURTH.
IX. Legend. Each certificate for Preferred Shares shall bear the
following legend:
"The Preferred Shares represented by this certificate are subject to
restrictions on transfer for the purpose of the corporation's maintenance of its
status as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended. Subject to certain provisions of the Corporation's Articles of
Incorporation, no Person may Beneficially Own or Constructively Own shares of
any series of any class of Preferred Shares in excess of 9.8% of the outstanding
Preferred Shares of such series. Any Person who attempts to Beneficially Own or
Constructively Own shares of any series of any class of Preferred Shares in
excess of the above limitations must immediately notify the Corporation. All
capitalized terms in this legend have the meanings defined in the Corporation's
Articles of Incorporation, a copy of which, including the restrictions on
transfer, will be sent without charge to each shareholder who so requests. If
the restrictions on transfer are violated, certain of the Preferred Shares
represented hereby may be subject to repurchase by the Corporation on the terms
and conditions set forth in the Corporation's Articles of Incorporation.
DIVISION B
59
<PAGE> 60
Subject to the terms of the Class A Cumulative Preferred Shares, the
Class B Cumulative Preferred Shares, the Class C Cumulative Preferred Shares,
the Class D Cumulative Preferred Shares, the Class E Cumulative Preferred Shares
and the Noncumulative Preferred Shares, the Common Shares shall have the
following express terms:
Section 1. Dividend Rights. The holders of Common Shares shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Corporation, out of the assets of the Corporation which are by law available
therefor, dividends or distributions payable in cash, in property or in
securities of the Corporation.
Section 2. Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of Common Shares shall be entitled
to receive, ratably with each other holder of Common Shares, that portion of the
assets of the Corporation available for distribution to its shareholders as the
number of Common Shares held by such holder bears to the total number of Common
Shares then outstanding.
Section 3. Voting Rights. The holders of Common Shares shall be
entitled to vote on all matters (for which holders of Common Shares shall be
entitled to vote thereon) at all meetings of the shareholders of the
Corporation, and shall be entitled to one vote for each Common Share entitled to
vote at such meeting.
Section 4. Restrictions on Transfer to Preserve Tax Benefit; Common
Shares Subject to Redemption.
(a) Definitions. For the purposes of this Section 4 of this
Division B of this Article FOURTH, the following terms shall have the
following meanings:
"Beneficial Ownership" shall mean ownership of Common Shares
by a Person who would be treated as an owner of such Common Shares
either directly or constructively through the application of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The
terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned"
shall have the correlative meanings.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Constructive Ownership" shall mean ownership of Common Shares
by a Person who would be treated as an owner of such Common Shares
either directly or Constructively through the application of Section
318 of the Code, as modified by Section 856(d)(5) of the Code. The
terms "Constructive Owner," "Constructively Owns" and "Constructively
Owned" shall have the correlative meanings.
60
<PAGE> 61
"Excess Shares" shall mean any Common Shares (i) acquired or
proposed to be acquired by any Person (other than an Existing Holder)
pursuant to a Transfer to the extent that, if effective, such Transfer
would result in the transferee either (A) Beneficially Owning Common
Shares in excess of the Ownership Limit or (B) Constructively Owning
Common Shares in excess of the Related Party Limit, (ii) acquired or
proposed to be acquired by an Existing Holder pursuant to a Transfer to
the extent that, if effective, such Transfer would result in such
Existing Holder Beneficially Owning Common Shares in excess of the
Existing Holder Limit for such Existing Holder, or (iii) which are the
subject of a Transfer that, if effective, which would result in (A) the
Common Shares being owned by fewer than 100 Persons (determined without
reference to any rules of attribution), or (B) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code.
"Existing Holder" shall mean (i) Bert L. Wolstein, (ii) Scott
A. Wolstein, (iii) James A. Schoff, and (iv) any Person to whom an
Existing Holder Transfers Beneficial Ownership of Common Shares causing
such transferee to Beneficially Own Common Shares in excess of the
Ownership Limit.
"Existing Holder Limit" (i) for any Existing Holder who is an
Existing Holder by virtue of clause (i), (ii) or (iii) of the
definition thereof, shall mean, initially, the percentage of the
outstanding Common Shares Beneficially Owned by such Existing Holder
upon the consummation of the Initial Public Offering, and after any
adjustment pursuant to Section (4)(i) of this Division B of this
Article FOURTH, shall mean such percentage of the outstanding Common
Shares as so adjusted; and (ii) for any Existing Holder who becomes an
Existing Holder by virtue of clause (iv) of the definition thereof,
shall mean, initially, the percentage of the outstanding Common Shares
Beneficially Owned by such Existing Holder at the time that such
Existing Holder becomes an Existing Holder, and after any adjustment
pursuant to Section 4(i) of this Division B of this Article FOURTH,
shall mean such percentage of the outstanding Common Shares as so
adjusted. From and after the date of the Initial Public Offering, the
secretary of the Corporation shall maintain and, upon request, make
available to each Existing Holder, a schedule which sets forth the then
current Existing Holder Limits for each Existing Holder.
"Initial Public Offering" means the sale of Common Shares
pursuant to the Corporation's first effective registration statement
for such Common Shares filed under the Securities Act of 1933, as
amended.
"Market Price" shall mean the last reported sales price of
Common Shares reported on the New York Stock Exchange on the trading
day immediately preceding the relevant date or, if the Common Shares
are not then traded on the New York Stock Exchange, the last reported
sales price of the Common Shares on the trading day immediately
preceding the relevant date as reported on any exchange or quotation
system over which the Common Shares may be traded, or if the Common
Shares are
61
<PAGE> 62
not then traded over any exchange or quotation system, then the market
price of the Common Shares on the relevant date as determined in good
faith by the Board of Directors of the Corporation.
"Ownership Limit" shall mean 5.0% of the outstanding Common
Shares of the Corporation.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for
or to be used exclusively for the purposes described in Section 642(c)
of the Code, an association, a private foundation within the meaning of
Section 509(a) of the Code, a joint stock company, other entity or a
group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended; provided, however, that a
"Person" does not mean an underwriter which participates in a public
offering of the Common Shares, for a period of 35 days following the
purchase by such underwriter of the Common Shares.
"REIT" shall mean a Real Estate Investment Trust under Section
856 of the Code.
"Related Party Limit" shall mean 9.8% of the outstanding
Common Shares of the Corporation.
"Transfer" shall mean any sale, transfer, gift, assignment,
devise or other disposition of Common Shares (including, without
limitation, (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Common Shares
or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Common
Shares), whether voluntary or involuntary, whether of record or
beneficially and whether by operation of law or otherwise.
(b) Restrictions on Transfers.
(i) Except as provided in Section 4(i) of this
Division B of this Article FOURTH, from and after the date of
the Initial Public Offering, no Person (other than an Existing
Holder) shall Beneficially Own Common Shares in excess of the
Ownership Limit and no Existing Holder shall Beneficially Own
Common Shares in excess of the Existing Holder Limit for such
Existing Holder.
(ii) Except as provided in Section 4(i) of this
Division B of this Article FOURTH, from and after the date of
the Initial Public Offering, any Transfer that, if effective,
would result in any Person (other than an Existing Holder)
Beneficially Owning Common Shares in excess of the Ownership
Limit shall
62
<PAGE> 63
be void ab initio as to the Transfer of such Common Shares
which would be otherwise Beneficially Owned by such Person in
excess of the Ownership Limit, and the intended transferee
shall acquire no rights in such Common Shares.
(iii) Except as provided in Section 4(i) of this
Division B of this Article FOURTH, from and after the date of
the Initial Public Offering, any Transfer that, if effective,
would result in any Existing Holder Beneficially Owning Common
Shares in excess of the applicable Existing Holder Limit shall
be void ab initio as to the Transfer of such Common Shares
which would be otherwise Beneficially Owned by such Existing
Holder in excess of the applicable Existing Holder Limit, and
such Existing Holder shall acquire no rights in such Common
Shares.
(iv) Except as provided in Section 4(i) of this
Division B of this Article FOURTH, from and after the date of
the Initial Public Offering, any Transfer that, if effective,
would result in any Person Constructively Owning Common Shares
in excess of the Related Party Limit shall be void ab initio
as to the Transfer of such Common Shares which would be
otherwise Constructively Owned by such Person in excess of
such amount, and the intended transferee shall acquire no
rights in such Common Shares.
(v) Except as provided in Section 4(i) of this
Division B of this Article FOURTH, from and after the date of
the Initial Public Offering, any Transfer that, if effective,
would result in the Common Shares being beneficially owned by
less than 100 Persons (determined without reference to any
rules of attribution) shall be void ab initio as to the
Transfer of such Common Shares which would be otherwise
beneficially owned by the transferee, and the intended
transferee shall acquire no rights in such Common Shares.
(vi) From and after the date of the Initial Public
Offering, any Transfer that, if effective, would result in the
Corporation being "closely held" within the meaning of Section
856(h) of the Code shall be void ab initio as to the Transfer
of the Common Shares which would cause the Corporation to be
"closely held" within the meaning of Section 856(h) of the
Code, and the intended transferee shall acquire no rights in
such Common Shares.
(c) Remedies for Breach. If the Board of Directors or its
designees shall at any time determine in good faith that a Transfer has
taken place in violation of Section 4(b) of this Division B of this
Article FOURTH or that a Person intends to acquire or has attempted to
acquire beneficial ownership (determined without reference to any rules
of attribution), Beneficial Ownership or Constructive Ownership of any
Common Shares of the Corporation in violation of Section 4(b) of this
Division B of this Article FOURTH, or that any such Transfer, intended
or attempted acquisition or
63
<PAGE> 64
acquisition would jeopardize the status of the Corporation as a REIT
under the Code, the Board of Directors or its designees shall take such
actions as it deems advisable to refuse to give effect or to prevent
such Transfer, including, but not limited to, refusing to give effect
to such Transfer on the books of the Corporation or instituting
proceedings to enjoin such Transfer and, in addition, exercising its
rights under Section 4(d) of this Division B of this Article FOURTH.
(d) Purchase Right in Excess Shares. Beginning on the date of
the occurrence of a Transfer which, if consummated, in the good faith
judgment of the Board of Directors of the Corporation, could result in
Excess Shares, such Excess Shares shall be deemed to have been offered
for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that
created such Excess Shares (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market
Price on the date the Corporation, or its designee, accepts such offer.
The Corporation shall have the right to accept such offer for a period
of ninety days after the later of (i) the date of such Transfer and
(ii) if the Corporation does not receive a notice of such Transfer
pursuant to Section 4(e) of this Division B of this Article FOURTH, the
date the Board of Directors determines in good faith that such Transfer
has occurred. Prompt payment of the purchase price shall be made in
such reasonable manner as may be determined by the Corporation. From
and after the date fixed for purchase by the Corporation, and so long
as payment of the purchase price for the Excess Shares to be so
purchased shall have been made or duly provided for, the holder of any
Excess Shares so called for purchase shall cease to be entitled to
dividends, distributions, voting rights and other benefits with respect
to such Excess Shares, excepting only the right to payment of the
purchase price fixed as aforesaid. Any dividend or distribution paid to
a proposed transferee of Excess Shares prior to the discovery by the
Corporation that the Excess Shares have been transferred in violation
of Section 4(b) of this Division B of this Article FOURTH shall be
repaid to the Corporation upon demand. If the foregoing provisions are
determined to be void or invalid by virtue of any legal decision,
statute, rule or regulation, then the intended transferee of such
Excess Shares shall be deemed, at the option of the Corporation, to
have acted as agent on behalf of the Corporation in acquiring such
Excess Shares and to hold such Excess Shares on behalf of the
Corporation.
(e) Notice of Restricted Transfer. Any Person who acquires or
intends to acquire shares in violation of Section 4(b) of this Division
B of this Article FOURTH or any Person who is a transferee of Excess
Shares shall immediately give written notice to the Corporation of such
event and shall provide to the Corporation such other information as
the Corporation may request in order to determine the effect, if any,
of such Transfer or intended Transfer on the Corporation's status as a
REIT.
(f) Owners Required to Provide Information. From and after the
date of the Initial Public Offering:
64
<PAGE> 65
(i) every Beneficial Owner of more than 5.0% (or such
other percentage, between 0.5% and 5.0%, as provided in the
regulations promulgated pursuant to the Code) of the
outstanding Common Shares of the Corporation shall, within 30
days after January 1 of each year, give written notice to the
Corporation stating the name and address of such Beneficial
Owner, the number of shares Beneficially Owned, and
description of how such shares are held. Each such Beneficial
Owner shall provide to the Corporation such additional
information as the Corporation may request in order to
determine the effect, if any, of such Beneficial Ownership on
the Corporation's status as a REIT.
(ii) each Person who is a Beneficial Owner or
Constructive Owner of Common Shares and each Person (including
the shareholder of record) who is holding Common Shares for a
Beneficial Owner or Constructive Owner shall provide to the
Corporation such information that the Corporation may request,
in good faith, in order to determine the Corporation's status
as a REIT.
(g) Remedies Not Limited. Nothing contained in this Division B
of this Article FOURTH shall limit the authority of the Board of
Directors to take such other action as it deems necessary or advisable
to protect the Corporation and the interests of its shareholders by
preservation of the Corporation's status as a REIT.
(h) Ambiguity. In the case of an ambiguity in the application
of any of the provisions of Section 4 of this Division B of this
Article FOURTH, including any definition contained in Section 4(a), the
Board of Directors shall have the power to determine the application of
the provisions of this Section 4 with respect to any situation based on
the facts known to it.
(i) Modification of Existing Holder Limits. Subject to the
provisions of Section 4(k) of this Division B, the Existing Holder
Limits may be modified as follows:
(i) Subject to the limitations provided in Section
4(k), any Existing Holder may Transfer Common Shares to a
Person who is already an Existing Holder up to the number of
Common Shares Beneficially Owned by such transferor Existing
Holder in excess of the Ownership Limit. Any such Transfer
will decrease the Existing Holder Limit for such transferor
Existing Holder and increase the Existing Holder Limit for
such transferee Existing Holder by the percentage of the
outstanding Common Shares so Transferred. The transferor
Existing Holder shall give the Board of Directors of the
Corporation prior written notice of any such Transfer.
(ii) Any grant of a stock option pursuant to a stock
option plan approved by the shareholders of the Corporation
shall increase the Existing Holder Limit for the affected
Existing Holder to the maximum extent possible
65
<PAGE> 66
under Section 4(k) to permit the Beneficial Ownership of the
Common Shares issuable upon the exercise of such stock option.
(iii) The Board of Directors may reduce the Existing
Holder Limit for any Existing Holder, with the written consent
of such Existing Holder, after any Transfer permitted in this
Section 4 by such Existing Holder to a Person other than an
Existing Holder or after the lapse (without exercise) of a
stock option described in Section 4(i)(ii).
(iv) Any Common Shares issued to an Existing Holder
pursuant to a dividend reinvestment plan adopted by the
Corporation shall increase the Existing Holder Limit for the
Existing Holder to the maximum extent possible under Section
4(k) to permit the Beneficial Ownership of such Common Shares.
(j) Modification of Ownership Limit. Subject to the
limitations provided in Section 4(k) of this Division B, the Board of
Directors may from time to time increase the Ownership Limit.
(k) Limitations on Modifications. Notwithstanding any other
provision of this Division B of this Article FOURTH:
(i) Neither the Ownership Limit nor any Existing
Holder Limit may be increased (nor may any additional Existing
Holder Limit be created) if, after giving effect to such
increase (or creation), five Beneficial Owners of Common
Shares (including all of the then Existing Holders) could
Beneficially Own, in the aggregate, more than 49.6% of the
outstanding Common Shares.
(ii) Prior to the modification of any Existing Holder
Limit or Ownership Limit pursuant to Section 4(i) or Section
4(j) of this Division B of this Article FOURTH, the Board of
Directors of the Corporation may require such opinions of
counsel, affidavits, undertakings or agreements as it may deem
necessary or advisable in order to determine or ensure the
Corporation's status as a REIT.
(iii) No Existing Holder Limit shall be reduced to a
percentage which is less than the Ownership Limit.
(iv) The Ownership Limit may not be increased to a
percentage which is greater than 9.8%.
(v) The Related Party Limit may not be increased to a
percentage which is greater than 9.8%.
66
<PAGE> 67
(l) Exceptions.
(i) The Board of Directors, with a ruling from the
Internal Revenue Service or an opinion of counsel, may exempt
a Person from the Ownership Limits or the Existing Holder
Limits, as the case may be, if such Person is not an
individual for purposes of Section 542(a)(2) of the Code and
the Board of Directors obtains such representations and
undertakings from such Person as are reasonably necessary to
ascertain that no individual's Beneficial Ownership of such
Common Shares will violate the Ownership Limit or the
applicable Existing Holder Limit, as the case may be, and
agrees that any violation or attempted violation will result
in such Common Shares in excess of 5.0% of the outstanding
Common Shares being deemed to be Excess Shares and subject to
repurchase by the Corporation as set forth in Section 4(d) of
this Division B of this Article FOURTH.
(ii) The Board of Directors, with a ruling from the
Internal Revenue Service or an opinion of counsel, may exempt
a Person from the limitation on such Person Constructively
Owning Common Shares in excess of the Related Party Limit if
such Person does not own and represents that it will not own,
directly or constructively (by virtue of the application of
Section 318 of the Code, as modified by Section 856(d)(5) of
the Code), more than a 9.9% interest (as set forth in Section
856(d)(2)(B) in a tenant of any real property owned or leased
by the Corporation, and the Corporation obtains such
representations and undertakings from such Person as are
reasonably necessary to ascertain this fact and agrees that
any violation or attempted violation will result in such
Common Shares in excess of 9.8% being deemed to be Excess
Shares and subject to repurchase by the Corporation as set
forth in Section 4(d) of this Division B of this Article
FOURTH.
Section 5. Legend. Each certificate for Common Shares shall bear the
following legend:
"The Common Shares represented by this certificate are subject to
restrictions on transfer for the purpose of the Corporation's maintenance of its
status as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended. Subject to certain provisions of the Corporation's Articles of
Incorporation, no Person may Beneficially Own Common Shares in excess of 5.0% of
the outstanding Common Shares of the Corporation (unless such Person is an
Existing Holder) and no Person (other than an Existing Holder who Constructively
Owns in excess of 9.8% of the Common Shares immediately following the
consummation of the Initial Public Offering) may Constructively Own Common
Shares in excess of 9.8% of the outstanding Common Shares of the Corporation.
Any Person who attempts to Beneficially Own or Constructively Own Common Shares
in excess of the above limitations must immediately notify the Corporation. All
capitalized items in this legend have the meanings defined in the Corporation's
Articles of Incorporation, a copy of which,
67
<PAGE> 68
including the restrictions on transfer, will be sent without charge to each
shareholder who so requests. If the restrictions on transfer are violated,
certain of the Common Shares represented may be subject to repurchase by the
Corporation on the terms and conditions set forth in the Corporation's Articles
of Incorporation."
FIFTH: At all times following the consummation of the Initial Public
Offering (as defined in Article FOURTH), at least a majority of the members of
the Board of Directors shall, except during the period of a vacancy or vacancies
therein, be Independent Directors. An "Independent Director" shall mean a person
who is not (i) employed by the Corporation or (ii) an "affiliate" (as defined in
Rule 405 under the Securities Act of 1933, as amended) of (A) any entity which
is part of the Developers Diversified Group, including, without limitation,
Developers Diversified Limited Partnership an Ohio limited partnership,
Developers Diversified, Ltd., an Ohio limited partnership, W & M Properties, an
Ohio general partnership, W & Z Properties, Ltd., an Ohio limited partnership,
and DE Properties Corporation, an Ohio corporation, or (B) any partnership which
is an affiliate (as defined above) of any entity listed in clause (A) of this
Article FIFTH.
SIXTH: No holder of shares of the Corporation of any class
shall be entitled as such, as a matter of right, to subscribe for or purchase
shares of any class, now or hereafter authorized, or to subscribe for or
purchase securities convertible into or exchangeable for shares of the
Corporation or to which shall be attached or appertain any warrants or rights
entitling the holder thereof to subscribe for or purchase shares, except such
rights of subscription or purchase, if any, for such considerations and upon
such terms and conditions as its Board of Directors from time to time may
determine.
SEVENTH: Notwithstanding any provision of Sections 1701.01 to
1701.98, inclusive, of the Ohio Revised Code, or any successor statutes now or
hereafter in force, requiring for the authorization or taking of any action the
vote or consent of the holders of shares entitling them to exercise two-thirds
or any other proportion of the voting power of the Corporation or of any class
or classes of shares thereof, such action, unless otherwise expressly required
by law or these Articles of Incorporation, may be authorized or taken by the
vote or consent of the holders of shares entitling them to exercise a majority
of the voting power of the Corporation or of such class or classes of shares
thereof.
EIGHTH: To the extent permitted by law, the Corporation, by
action of its Board of Directors, may purchase or otherwise acquire shares of
any class issued by it at such times, for such consideration and upon such terms
and conditions as its Board of Directors may determine.
NINTH: The provisions of Chapter 1701.831 of the Ohio Revised
Code shall not apply to the Corporation.
TENTH: The provisions of Chapter 1707.043 of the Ohio Revised
Code shall not apply to the Corporation.
68
<PAGE> 69
ELEVENTH: If any provision (or portion thereof) of these
Articles of Incorporation shall be found to be invalid, prohibited, or
unenforceable for any reason, the remaining provisions (or portions thereof) of
these Articles of Incorporation shall be deemed to remain in full force and
effect, and shall be construed as if such invalid, prohibited, or unenforceable
provision had been stricken herefrom or otherwise rendered inapplicable, it
being the intent of the Corporation and its shareholders that each such
remaining provision (or portion thereof) of these Articles of Incorporation
remain, to the fullest extent permitted by law, applicable and enforceable as to
all shareholders, notwithstanding any such finding.
TWELFTH: No shareholder of the Corporation may cumulate his
voting power in the election of directors.
THIRTEENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in these Articles of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon shareholders herein are granted subject to this
reservation.
FOURTEENTH: These Amended and Restated Articles of
Incorporation shall take the place of and supersede the Corporation's existing
Articles of Incorporation.
69
<PAGE> 1
Exhibit 4(f)
[FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.(1)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.(2)
<TABLE>
<S> <C> <C>
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FXR-
</TABLE>
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Fixed Rate Senior Security)
<TABLE>
<S> <C> <C> <C>
ORIGINAL ISSUE DATE: INTEREST RATE: % STATED MATURITY DATE:
INTEREST PAYMENT DATE(S) DEFAULT RATE: %
[ ] _______ and ______
[ ] Other:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE
REDUCTION: %
OPTIONAL REPAYMENT [ ] CHECK IF AN ORIGINAL
DATE(S): ISSUE DISCOUNT NOTE
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION: EXCHANGE RATE
[ ] United States dollars [ ] $1,000 and integral AGENT:
[ ] Other: multiples thereof
[ ] Other:
ADDENDUM ATTACHED OTHER/ADDITIONAL PROVISIONS:
[ ] Yes
[ ] No
- -----------------
<FN>
1 This paragraph applies to global Notes only.
2 This paragraph applies to global Notes only.
</TABLE>
<PAGE> 2
DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio corporation (the
"Company", which terms include any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of , on the
Stated Maturity Date specified above (or any Redemption Date or Repayment Date,
each as defined on the reverse hereof) (each such Stated Maturity Date,
Redemption Date or Repayment Date being hereinafter referred to as the "Maturity
Date" with respect to the principal repayable on such date) and to pay interest
thereon, at Interest Rate per annum specified above, until the principal hereof
is paid or duly made available for payment, and (to the extent that the payment
of such interest shall be legally enforceable) at the Default Rate per annum
specified above on any overdue principal, premium and/or interest. The Company
will pay interest in arrears on each Interest Payment Date, if any, specified
above (each, an "Interest Payment Date"), commencing with the first Interest
Payment Date next succeeding the Original Issue Date specified above, and on the
Maturity Date; PROVIDED, HOWEVER, that if the Original Issue Date occurs between
a Record Date (as defined below) and the next succeeding Interest Payment Date,
interest payments will commence on the second Interest Payment Date next
succeeding the Original Issue Date to the holder of this Note on the Record Date
with respect to such second Interest Payment Date. Interest on this Note will be
computed on the basis of a 360-day year of twelve 30-day months.
Notwithstanding the foregoing, if an Addendum is attached hereto or
"Other/Additional Provisions" apply to this Note as specified above, this Note
shall be subject to the terms set forth in such Addendum or such
"Other/Additional Provisions".
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for with respect to this Note) to, but excluding, the
applicable Interest Payment Date or the Maturity Date, as the case may be (each,
an "Interest Period"). The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined below) immediately
preceding such Interest Payment Date (the "Record Date"); PROVIDED, HOWEVER,
that interest payable on the Maturity Date will be payable to the person to whom
the principal hereof and premium, if any, hereon shall be payable. Any such
interest not so punctually paid or duly provided for ("Defaulted Interest") will
forthwith cease to be payable to the holder on any Record Date, and shall be
paid to the person in whose name this Note 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 hereinafter referred to,
notice whereof shall be given to the holder of this Note by the Trustee not less
than 10
2
<PAGE> 3
calendar days prior to such Special Record Date or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which this note may be listed, and upon such notice as may be
required by such exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date will be made in immediately available funds upon
presentation and surrender of this Note (and, with respect to any applicable
repayment of this Note, a duly completed election form as contemplated on the
reverse hereof) at the corporate trust office of the Trustee maintained for that
purpose in The Borough of Manhattan, The City of New York, currently located at
120 Broadway, 33rd Floor, New York, New York 10271, or at such other paying
agency in the Borough of Manhattan, The City of New York, as the Company may
determine; PROVIDED, HOWEVER, that if such payment is to be made in a Specified
Currency other than United States dollars as set forth below, such payment will
be made by wire transfer of immediately available funds to an account with a
bank designated by the holder hereof at least 15 calendar days prior to the
Maturity Date, provided that such bank has appropriate facilities therefor and
that this Note (and, if applicable, a duly completed election form) is presented
and surrendered at the aforementioned office of the Trustee in time for the
Trustee to make such payment in such funds in accordance with its normal
procedures. Payment of interest due on any Interest Payment Date other than the
Maturity Date will be made by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register maintained at the
aforementioned office of the Trustee; PROVIDED, HOWEVER, that a holder of
U.S.$10,000,000 (or, if the Specified Currency specified above is other than
United States dollars, the equivalent thereof in the Specified Currency) or more
in aggregate principal amount of Notes (whether having identical or different
terms and provisions) will be entitled to receive interest payments on such
Interest Payment Date by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received in writing by the
Trustee not less than 15 calendar days prior to such Interest Payment Date. Any
such wire transfer instructions received by the Trustee shall remain in effect
until revoked by such holder.
If any Interest Payment Date or the Maturity Date falls on a day that
is not a Business Day, the required payment of principal, premium, if any,
and/or interest shall be made on the next succeeding Business Day with the same
force and effect as if made on the date such payment was due, and no interest
shall accrue with respect to such payment for the period from and after such
Interest Payment Date or the Maturity Date, as the case may be, to the date of
such payment on the next succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or executive order to close in The City of New
York; PROVIDED,
3
<PAGE> 4
HOWEVER, that if the Specified Currency is other than United States dollars and
any payment is to be made in the Specified Currency in accordance with the
provisions hereof, such day is also not a day on which banking institutions are
authorized or required by law or executive order to close in the Principal
Financial Center (as defined below) of the country issuing the Specified
Currency (or, in the case of European Currency Units ("ECU"), is not a day that
appears as an ECU non-settlement day on the display designated as "ISDE" on the
Reuter Monitor Money Rates Service (or a day so designated by the ECU Banking
Association) or, if ECU nonsettlement days do not appear on that page (and are
not so designated), is not a day on which payments in ECU cannot be settled in
the international interbank market). "Principal Financial Center" means the
capital city of the country issuing the Specified Currency, except that with
respect to United States dollars, Australian dollars, Deutsche marks, Dutch
guilders, Italian lire, Swiss francs and ECU, the "Principal Financial Center"
shall be The City of New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and
Luxembourg, respectively.
The Company is obligated to make payment of principal, premium, if any,
and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is other
than United States dollars, any such amounts so payable by the Company will be
converted by the Exchange Rate Agent specified above into United States dollars
for payment to the holder of this Note; PROVIDED, HOWEVER, that the holder of
this Note may elect to receive such amounts in the Specified Currency pursuant
to the provisions set forth below.
If the Specified Currency is other than United States dollars and the
holder of this Note shall not have duly made an election to receive all or a
specified portion of any payment of principal, premium, if any, and/or interest
in respect of this Note in the Specified Currency, any United States dollar
amount to be received by the holder of this Note will be based on the highest
bid quotation in The City of New York received by the Exchange Rate Agent at
approximately 11:00 A.M., New York City time, on the second Business Day
preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange
Rate Agent and approved by the Company for the purchase by the quoting dealer of
the Specified Currency for United States dollars for settlement on such payment
date in the aggregate amount of the Specified Currency payable to all holders of
Notes scheduled to receive United States dollar payments and at which the
applicable dealer commits to execute a contract. All currency exchange costs
will be borne by the holder of this Note by deductions from such payments. If
three such bid quotations are not available, payments on this Note will be made
in the Specified Currency.
4
<PAGE> 5
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of any
payment of principal, premium, if any, and/or interest in respect of this Note
in the Specified Currency by submitting a written request for such payment to
the Trustee at its corporate trust office in The City of New York on or prior to
the applicable Record Date or at least 15 calendar days prior to the Maturity
Date, as the case may be. Such written request may be mailed or hand delivered
or sent by cable, telex or other form of facsimile transmission. The holder of
this Note may elect to receive all or a specified portion of all future payments
in the Specified Currency in respect of such principal, premium, if any, and/or
interest and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Trustee, but
written notice of any such revocation must be received by the Trustee on or
prior to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if
the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the holder of this Note by making
such payment in United States dollars on the basis of the Market Exchange Rate
(as defined below) on the second Business Day prior to such payment date or, if
such Market Exchange Rate is not then available, on the basis of the most
recently available Market Exchange Rate or as otherwise specified on the face
hereof. The "Market Exchange Rate" for the Specified Currency means the noon
dollar buying rate in The City of New York for cable transfers for the Specified
Currency as certified for customs purposes by (or if not so certified, as
otherwise determined by) the Federal Reserve Bank of New York. Any payment made
under such circumstances in United States dollars will not constitute an Event
of Default (as defined in the Indenture).
If the Specified Currency is a composite currency and the holder of
this Note shall have duly made an election to receive all or a specified portion
of any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency and if such composite currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the control
of the Company, then the Company will be entitled to satisfy its obligations to
the holder of this Note by making such payment in United States dollars. The
amount of each payment in United States dollars shall be computed by the
Exchange Rate Agent on the basis of the equivalent of the composite currency in
United States dollars. The component currencies of the composite currency for
this purpose (collectively, the "Component Currencies" and each, a "Component
Currency") shall be the currency amounts that were components of the composite
currency as of the last day on
5
<PAGE> 6
which the composite currency was used. The equivalent of the composite currency
in United States dollars shall be calculated by aggregating the United States
dollar equivalents of the Component Currencies. The United States dollar
equivalent of each of the Component Currencies shall be determined by the
Exchange Rate Agent on the basis of the most recently available Market Exchange
Rate for each such Component Currency, or as otherwise specified on the face
hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above, in the Addendum hereto,
which further provisions shall have the same force and effect as if set forth on
the face hereof.
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
6
<PAGE> 7
IN WITNESS WHEREOF, Developers Diversified Realty Corporation has
caused this Note to be executed.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By________________________________
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Debt Securities of the series designated therein referred to
in the within-mentioned Indenture.
NATIONAL CITY BANK,
as Trustee
By____________________________
Authorized Signatory
7
<PAGE> 8
[REVERSE OF NOTE]
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Fixed Rate Senior Security)
This Note is one of a duly authorized series of Senior Debt Securities
(the "Debt Securities") of the Company issued and to be issued under an
Indenture, dated as of May 1, 1994, as amended, modified or supplemented from
time to time (the "Indenture"), between the Company and NATIONAL CITY BANK, as
Trustee (the "Trustee", which term includes any successor trustee under the
Indenture), to which the Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
holders of the Debt Securities, and of the terms upon which the Debt Securities
are, and are to be, authenticated and delivered. This Note is one of the series
of Debt Securities designated as "Medium-Term Notes Due Nine Months or More from
Date of Issue" (the "Notes"). All terms used but not defined in this Note
specified on the face hereof or in an Addendum hereto shall have the meanings
assigned to such terms in the Indenture.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S.$1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or repayable prior to the Stated Maturity
Date.
This Note will be subject to redemption at the option of the Company on
any date on and after the Initial Redemption Date, if any, specified on the face
hereof, in whole or from time to time in part in increments of U.S.$1,000 or the
minimum Authorized Denomination (provided that any remaining principal amount
hereof shall be at least U.S.$1,000 or such minimum Authorized Denomination), at
the Redemption Price (as defined below), together with unpaid interest accrued
thereon to the date fixed for redemption (each, a "Redemption Date"), on notice
given no more than 60 nor less than 30 calendar days prior to the Redemption
Date and in accordance with the provisions of the Indenture. The "Redemption
Price" shall initially be the Initial Redemption Percentage specified on the
face hereof multiplied by the unpaid principal amount of this Note to be
redeemed. The Initial Redemption Percentage, if any, shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of unpaid principal amount to be redeemed. In the event of redemption of
this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having
8
<PAGE> 9
the same terms as this Note shall be issued in the name of the holder hereof
upon the presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S.$1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S.$1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form hereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not more than 60
nor less than 30 calendar days prior to the Repayment Date. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity will be equal to the sum of
(i) the Issue Price specified on the face hereof (increased by any accruals of
the Discount, as defined below) and, in the event redemption of this Note (if
applicable), multiplied by the Initial Redemption Percentage (as adjusted by the
Annual Redemption Percentage Reduction, if applicable) and (ii) any unpaid
interest accrued thereon, from the Original Issue Date to the date of
redemption, repayment or acceleration of maturity. The difference between the
Issue Price and 100% of the principal amount of this Note is referred to herein
as the "Discount", and the Discount will be ratably accrued over the term of
this Note for purposes of determining the amount payable upon redemption,
repayment or acceleration of maturity of this Note.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Debt Securities at any time by the
Company and the Trustee with the consent of the holders of not less than a
majority of the aggregate principal amount of all Debt Securities at the time
outstanding and
9
<PAGE> 10
affected thereby. The Indenture also contains provisions permitting the holders
of not less than a majority of the aggregate principal amount of the outstanding
Debt Securities of any series, on behalf of the holders of all such Debt
Securities, to waive compliance by the Company with certain provisions of the
Indenture. Furthermore, provisions in the Indenture permit the holders of not
less than a majority of the aggregate principal amount of the outstanding Debt
Securities of any series, in certain instances, to waive, on behalf of all of
the holders of Debt Securities of such series, certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the holder of
this Note shall be conclusive and binding upon such holder and upon all future
holders of this Note and other Notes issued upon the registration of transfer
hereof or in exchange heretofore or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the Security
Register of the Company upon surrender of this Note for registration of transfer
at the office or agency of the Company in any place where the principal hereof
and any premium or interest hereon are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the holder hereof or by his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the holder hereof surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
10
<PAGE> 11
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of Ohio applicable to agreements made and
to be performed entirely in such State.
11
<PAGE> 12
-------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____
TENENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
Additional abbreviations may also be used though not in the above list.
----------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------
| |
|------------------------------|----------------------------------------------
- ------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
- ------------------------------------------------------------------------------
this Note and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________ Attorney
to transfer this Note on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
---------------------------------------
Notice: The signature(s) on this
assignment must correspond with the name
(s) as written upon the face of this Note
in every particular, without alteration
or enlargement or any change whatsoever.
12
<PAGE> 13
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at___________
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate
trust office, not more than 60 nor less than 30 calendar days prior to the
Repayment Date, this Note with this "Option to Elect Repayment" form duly
completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S.$1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion
of this Note not being repaid (in the absence of any such specification, one
such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $_____________ __________________________________
Notice: The signature(s) on this
Date: Option to Elect Repayment must
---------------------- correspond with the name(s) as
written upon the face of this
Note in every particular, without
alteration or enlargement or any
change whatsoever.
13
<PAGE> 1
Exhibit 4(g)
[FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.1
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.2
<TABLE>
<S> <C> <C>
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FLR-____ ________________ ________________
</TABLE>
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Floating Rate Senior Security)
<TABLE>
<S> <C> <C>
INTEREST RATE BASIS ORIGINAL ISSUE DATE: STATED MATURITY DATE:
OR BASES:
IF LIBOR: IF CMT RATE:
[ ] LIBOR Reuters Designated CMT Telerate Page:
[ ] LIBOR Telerate Designated CMT Maturity Index:
INDEX CURRENCY:
INDEX MATURITY: INITIAL INTEREST RATE: % INITIAL INTEREST RESET
DATE:
SPREAD (PLUS OR MINIMUM INTEREST RATE: % INTEREST PAYMENT DATE(S):
MINUS):
<FN>
- --------
1 This paragraph applies to global Notes only.
2 This paragraph applies to global Notes only.
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: % INTEREST RESET DATE(S):
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE REDUCTION:
%
OPTIONAL REPAYMENT CALCULATION AGENT:
DATE(S):
</TABLE>
INTEREST CATEGORY: DAY COUNT CONVENTION:
[ ] Regular Floating Rate Note [ ] 30/360 for the period
[ ] Floating Rate/Fixed Rate Note from to .
Fixed Rate Commencement Date: [ ] Actual/360 for the period
Fixed Interest Rate: % from to .
[ ] Inverse Floating Rate Note [ ] Actual/Actual for the period
Fixed Interest Rate: % from to .
[ ] Original Issue Discount Note Applicable Interest Rate Basis:
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION:
[ ] United States dollars [ ] $1,000 and integral multiples
thereof
[ ] Other: [ ] Other:
EXCHANGE RATE AGENT:
DEFAULT RATE: %
ADDENDUM ATTACHED
[ ] Yes
[ ] No
OTHER/ADDITIONAL PROVISIONS:
2
<PAGE> 3
DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio corporation (the
"Company", which terms include any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of , on the Stated
Maturity Date specified above (or any Redemption Date or Repayment Date, each as
defined on the reverse hereof) (each such Stated Maturity Date, Redemption Date
or Repayment Date being hereinafter referred to as the "Maturity Date" with
respect to the principal repayable on such date) and to pay interest thereon, at
a rate per annum equal to the Initial Interest Rate specified above until the
Initial Interest Reset Date specified above and thereafter at a rate determined
in accordance with the provisions specified above and on the reverse hereof with
respect to one or more Interest Rate Bases specified above until the principal
hereof is paid or duly made available for payment, and (to the extent that the
payment of such interest shall be legally enforceable) at the Default Rate per
annum specified above on any overdue principal, premium and/or interest. The
Company will pay interest in arrears on each Interest Payment Date, if any,
specified above (each, an "Interest Payment Date"), commencing with the first
Interest Payment Date next succeeding the Original Issue Date specified above,
and on the Maturity Date; PROVIDED, HOWEVER, that if the Original Issue Date
occurs between a Record Date (as defined below) and the next succeeding Interest
Payment Date, interest payments will commence on the second Interest Payment
Date next succeeding the Original Issue Date to the holder of this Note on the
Record Date with respect to such second Interest Payment Date.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for with respect to this Note) to, but excluding, the
applicable Interest Payment Date or the Maturity Date, as the case may be (each,
an "Interest Period"). The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined on the reverse hereof)
immediately preceding such Interest Payment Date (the "Record Date"); PROVIDED,
HOWEVER, that interest payable on the Maturity Date will be payable to the
person to whom the principal hereof and premium, if any, hereon shall be
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") will forthwith cease to be payable to the holder on any
Record Date, and shall be paid to the person in whose name this Note 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 hereinafter referred to, notice whereof shall be given to the holder of
this Note by the Trustee not less than 10 calendar days
3
<PAGE> 4
prior to such Special Record Date or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which this note may be listed, and upon such notice as may be required by such
exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date will be made in immediately available funds upon
presentation and surrender of this Note (and, with respect to any applicable
repayment of this Note, a duly completed election form as contemplated on the
reverse hereof) at the corporate trust office of the Trustee maintained for that
purpose in The Borough of Manhattan, The City of New York, currently located at
120 Broadway, 33rd Floor, New York, New York 10271, or at such other paying
agency in The Borough of Manhattan, The City of New York, as the Company may
determine; PROVIDED, HOWEVER, that if such payment is to be made in a Specified
Currency other than United States dollars as set forth below, such payment will
be made by wire transfer of immediately available funds to an account with a
bank designated by the holder hereof at least 15 calendar days prior to the
Maturity Date, provided that such bank has appropriate facilities therefor and
that this Note (and, if applicable, a duly completed election form) is presented
and surrendered at the aforementioned office of the Trustee in time for the
Trustee to make such payment in such funds in accordance with its normal
procedures. Payment of interest due on any Interest Payment Date other than the
Maturity Date will be made by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register maintained at the
aforementioned office of the Trustee; PROVIDED, HOWEVER, that a holder of
U.S.$10,000,000 (or, if the Specified Currency specified above is other than
United States dollars, the equivalent thereof in the Specified Currency) or more
in aggregate principal amount of Notes (whether having identical or different
terms and provisions) will be entitled to receive interest payments on such
Interest Payment Date by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received in writing by the
Trustee not less than 15 calendar days prior to such Interest Payment Date. Any
such wire transfer instructions received by the Trustee shall remain in effect
until revoked by such holder.
If any Interest Payment Date other than the Maturity Date would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day. If the Maturity Date falls on a day that is not a
Business Day, the required payment of principal, premium, if any, and interest
shall be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due, and no interest shall accrue with
respect to such payment for the period from and after the
4
<PAGE> 5
Maturity Date to the date of such payment on the next succeeding Business Day.
The Company is obligated to make payment of principal, premium, if any,
and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is other
than United States dollars, any such amounts so payable by the Company will be
converted by the Exchange Rate Agent specified above into United States dollars
for payment to the holder of this Note; PROVIDED, HOWEVER, that the holder of
this Note may elect to receive such amounts in the Specified Currency pursuant
to the provisions set forth below.
If the Specified Currency is other than United States dollars and the
holder of this Note shall not have duly made an election to receive all or a
specified portion of any payment of principal, premium, if any, and/or interest
in respect of this Note in the Specified Currency, any United States dollar
amount to be received by the holder of this Note will be based on the highest
bid quotation in The City of New York received by the Exchange Rate Agent at
approximately 11:00 A.M., New York City time, on the second Business Day
preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange
Rate Agent and approved by the Company for the purchase by the quoting dealer of
the Specified Currency for United States dollars for settlement on such payment
date in the aggregate amount of the Specified Currency payable to all holders of
Notes scheduled to receive United States dollar payments and at which the
applicable dealer commits to execute a contract. All currency exchange costs
will be borne by the holder of this Note by deductions from such payments. If
three such bid quotations are not available, payments on this Note will be made
in the Specified Currency.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of any
payment of principal, premium, if any, and/or interest in respect of this Note
in the Specified Currency by submitting a written request for such payment to
the Trustee at its corporate trust office in The City of New York on or prior to
the applicable Record Date or at least 15 calendar days prior to the Maturity
Date, as the case may be. Such written request may be mailed or hand delivered
or sent by cable, telex or other form of facsimile transmission. The holder of
this Note may elect to receive all or a specified portion of all future payments
in the Specified Currency in respect of such principal, premium, if any, and/or
interest and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Trustee, but
written notice of any such revocation must be received by the Trustee on
5
<PAGE> 6
or prior to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if
the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the holder of this Note by making
such payment in United States dollars on the basis of the Market Exchange Rate
(as defined below) on the second Business Day prior to such payment date or, if
such Market Exchange Rate is not then available, on the basis of the most
recently available Market Exchange Rate or as otherwise specified on the face
hereof. The "Market Exchange Rate" for the Specified Currency means the noon
dollar buying rate in The City of New York for cable transfers for the Specified
Currency as certified for customs purposes by (or if not so certified, as
otherwise determined by) the Federal Reserve Bank of New York. Any payment made
under such circumstances in United States dollars will not constitute an Event
of Default (as defined in the Indenture).
If the Specified Currency is a composite currency and the holder of
this Note shall have duly made an election to receive all or a specified portion
of any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency and if such composite currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the control
of the Company, then the Company will be entitled to satisfy its obligations to
the holder of this Note by making such payment in United States dollars. The
amount of each payment in United States dollars shall be computed by the
Exchange Rate Agent on the basis of the equivalent of the composite currency in
United States dollars. The component currencies of the composite currency for
this purpose (collectively, the "Component Currencies" and each, a "Component
Currency") shall be the currency amounts that were components of the composite
currency as of the last day on which the composite currency was used. The
equivalent of the composite currency in United States dollars shall be
calculated by aggregating the United States dollar equivalents of the Component
Currencies. The United States dollar equivalent of each of the Component
Currencies shall be determined by the Exchange Rate Agent on the basis of the
most recently available Market Exchange Rate for each such Component Currency,
or as otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount
6
<PAGE> 7
in such single currency equal to the sum of the amounts of the consolidated
Component Currencies expressed in such single currency. If any Component
Currency is divided into two or more currencies, the amount of the original
Component Currency shall be replaced by the amounts of such two or more
currencies, the sum of which shall be equal to the amount of the original
Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above, in the Addendum hereto,
which further provisions shall have the same force and effect as if set forth on
the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the
face of this Note specifies that an Addendum is attached hereto or that
"Other/Additional Provisions" apply, this Note shall be subject to the terms set
forth in such Addendum or such "Other/Additional Provisions".
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
7
<PAGE> 8
IN WITNESS WHEREOF, Developers Diversified Realty Corporation has
caused this Note to be executed.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By________________________________
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Debt Securities of the series designated therein referred to
in the within-mentioned Indenture.
NATIONAL CITY BANK,
as Trustee
By____________________________
Authorized Signatory
8
<PAGE> 9
[REVERSE OF NOTE]
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Fixed Rate Senior Security)
This Note is one of a duly authorized series of Senior Debt Securities
(the "Debt Securities") of the Company issued and to be issued under an
Indenture, dated as of May 1, 1994, as amended, modified or supplemented from
time to time (the "Indenture"), between the Company and NATIONAL CITY BANK, as
Senior Trustee (the "Trustee", which term includes any successor trustee under
the Indenture), to which the Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
holders of the Debt Securities, and of the terms upon which the Debt Securities
are, and are to be, authenticated and delivered. This Note is one of the series
of Debt Securities designated as "Medium-Term Notes Due Nine Months or More From
Date of Issue" (the "Notes"). All terms used but not defined in this Note
specified on the face hereof or in an Addendum hereto shall have the meanings
assigned to such terms in the Indenture.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S.$1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or repayable prior to the Stated Maturity
Date.
This Note will be subject to redemption at the option of the Company on
any date on and after the Initial Redemption Date, if any, specified on the face
hereof, in whole or from time to time in part in increments of U.S.$1,000 or the
minimum Authorized Denomination (provided that any remaining principal amount
hereof shall be at least U.S.$1,000 or such minimum Authorized Denomination), at
the Redemption Price (as defined below), together with unpaid interest accrued
thereon to the date fixed for redemption (each, a "Redemption Date"), on notice
given no more than 60 nor less than 30 calendar days prior to the Redemption
Date and in accordance with the provisions of the Indenture. The "Redemption
Price" shall initially be the Initial Redemption Percentage specified on the
face hereof multiplied by the unpaid principal amount of this Note to be
redeemed. The Initial Redemption Percentage, if any, shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of unpaid principal amount to be redeemed. In the event of redemption of
this Note in part only, a new Note of like tenor for the unredeemed portion
9
<PAGE> 10
hereof and otherwise having the same terms as this Note shall be issued in the
name of the holder hereof upon the presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S.$1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S.$1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form hereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not more than 60
nor less than 30 calendar days prior to the Repayment Date. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If the Interest Category of this Note is specified on the face hereof
as an Original Issue Discount Note, the amount payable to the holder of this
Note in the event of redemption, repayment or acceleration of maturity of this
Note will be equal to the sum of (1) the Issue Price specified on the face
hereof (increased by any accruals of Discount, as defined below) and, in the
event of any redemption of this Note (if applicable), multiplied by the Initial
Redemption Percentage specified in the applicable Pricing Supplement (as
adjusted by the Annual Redemption Percentage Reduction, if applicable) and (2)
any accrued and unpaid interest on this Note from the Original Issue Date to the
Redemption Date, Repayment Date or date of acceleration of maturity, as the case
may be. As used herein, the "Discount" shall mean the difference between the
Issue Price of an Original Issue Discount Note and par.
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Repayment Date or date of acceleration of maturity of
this Note, such Discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year convention,
a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between Interest Payment Dates (with ratable
accruals within a compounding period), a coupon rate equal to the initial
interest rate applicable to this Note and an assumption that the maturity of
this Note will not be accelerated. If the period from the Original Issue Date to
the initial Interest Payment Date (the "Initial Period") is shorter than the
compounding period for this Note, a proportionate amount of the yield for an
entire compounding period will be accrued. If the Initial Period is
10
<PAGE> 11
longer than the compounding period, then such period will be divided into a
regular compounding period and a short period, with the short period being
treated as provided in the preceding sentence.
The interest rate borne by this Note will be determined as follows:
(i) Unless the Interest Category of this Note is specified on
the face hereof as a "Floating Rate/Fixed Rate Note" or an "Inverse
Floating Rate Note", this Note shall be designated as a "Regular
Floating Rate Note" and, except as set forth below or on the face
hereof, shall bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the Spread,
if any, and/or (b) multiplied by the Spread Multiplier, if any, in each
case as specified on the face hereof. Commencing on the Initial
Interest Reset Date, the rate at which interest on this Note shall be
payable shall be reset as of each Interest Reset Date specified on the
face hereof; PROVIDED, HOWEVER, that the interest rate in effect for
the period, if any, from the Original Issue Date to the Initial
Interest Reset Date shall be the Initial Interest Rate.
(ii) If the Interest Category of this Note is specified on the
face hereof as a "Floating Rate/Fixed Rate Note", then, except as set
forth below or on the face hereof, this Note shall bear interest at the
rate determined by reference to the applicable Interest Rate Basis or
Bases (a) plus or minus the Spread, if any, and/or (b) multiplied by
the Spread Multiplier, if any. Commencing on the Initial Interest Reset
Date, the rate at which interest on this Note shall be payable shall be
reset as of each Interest Reset Date; PROVIDED, HOWEVER, that (y) the
interest rate in effect for the period, if any, from the Original Issue
Date to the Initial Interest Reset Date shall be the Initial Interest
Rate and (z) the interest rate in effect for the period commencing on
the Fixed Rate Commencement Date specified on the face hereof to the
Maturity Date shall be the Fixed Interest Rate specified on the face
hereof or, if no such Fixed Interest Rate is specified, the interest
rate in effect hereon on the day immediately preceding the Fixed Rate
Commencement Date.
(iii) If the Interest Category of this Note is specified on
the face hereof as an "Inverse Floating Rate Note", then, except as set
forth below or on the face hereof, this Note shall bear interest at the
Fixed Interest Rate minus the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the Spread,
if any, and/or (b) multiplied by the Spread Multiplier, if any;
PROVIDED, HOWEVER, that, unless otherwise specified on the face hereof,
the interest rate hereon shall not be less than zero. Commencing on the
Initial Interest Reset Date, the rate at which interest on
11
<PAGE> 12
this Note shall be payable shall be reset as of each Interest Reset
Date; PROVIDED, HOWEVER, that the interest rate in effect for the
period, if any, from the Original Issue Date to the Initial Interest
Reset Date shall be the Initial Interest Rate.
Unless otherwise specified on the face hereof, the rate with respect to
each Interest Rate Basis will be determined in accordance with the applicable
provisions below. Except as set forth above or on the face hereof, the interest
rate in effect on each day shall be (i) if such day is an Interest Reset Date,
the interest rate determined as of the Interest Determination Date (as
hereinafter defined) immediately preceding such Interest Reset Date or (ii) if
such day is not an Interest Reset Date, the interest rate determined as of the
Interest Determination Date immediately preceding the most recent Interest Reset
Date. If any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding Business
Day, except that if LIBOR is an applicable Interest Rate Basis and such Business
Day falls in the next succeeding calendar month, such Interest Reset Date shall
be the immediately preceding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or executive order to close in The City of New
York; PROVIDED, HOWEVER, that if the Specified Currency is other than United
States dollars and any payment is to be made in the Specified Currency in
accordance with the provisions hereof, such day is also not a day on which
banking institutions are authorized or required by law or executive order to
close in the Principal Financial Center (as defined below) of the country
issuing the Specified Currency (or, in the case of European Currency Units
("ECU"), is not a day that appears as an ECU non-settlement day on the display
designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day so
designated by the ECU Banking Association) or, if ECU non-settlement days do not
appear on that page (and are not so designated), is not a day on which payments
in ECU cannot be settled in the international interbank market); PROVIDED,
FURTHER, that if LIBOR is an applicable Interest Rate Basis, such day is also a
London Business Day (as defined below). "London Business Day" means any day (i)
if the Index Currency (as defined below) is other than ECU, on which dealings in
such Index Currency are transacted in the London interbank market or (ii) if the
Index Currency is ECU, that is not designated as an ECU nonsettlement day on the
display designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day
so designated by the ECU Banking Association) or, if ECU non-settlement days do
not appear on that page (and are not so designated), is not a day on which
payments in ECU cannot be settled in the international interbank market.
"Principal Financial Center" means the capital city of the country issuing the
Specified Currency, or solely with respect to the calculation of LIBOR, the
Index Currency, except that with respect to United States dollars, Australian
dollars,
12
<PAGE> 13
Deutsche marks, Dutch guilders, Italian lire, Swiss francs and ECU, the
"Principal Financial Center" shall be The City of New York, Sydney, Frankfurt,
Amsterdam, Milan, Zurich and Luxembourg, respectively.
The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate will
be the second Business Day immediately preceding the applicable Interest Reset
Date; the "Interest Determination Date" with respect to the Eleventh District
Cost of Funds Rate shall be the last working day of the month immediately
preceding the applicable Interest Reset Date on which the Federal Home Loan Bank
of San Francisco (the "FHLB of San Francisco") publishes the Index (as defined
below); and the "Interest Determination Date" with respect to LIBOR shall be the
second London Business Day immediately preceding the applicable Interest Reset
Date, unless the Index Currency is British pounds sterling, in which case the
"Interest Determination Date" will be the applicable Interest Reset Date. The
"Interest Determination Date" with respect to the Treasury Rate shall be the day
in the week in which the applicable Interest Reset Date falls on which day
Treasury Bills (as defined below) are normally auctioned (Treasury Bills are
normally sold at an auction held on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday);
PROVIDED, HOWEVER, that if an auction is held on the Friday of the week
preceding the applicable Interest Reset Date, the "Interest Determination Date"
shall be such preceding Friday; and PROVIDED, FURTHER, that if an auction shall
fall on any Interest Reset Date then the Interest Reset Date shall instead be
the first Business Day following such auction. If the interest rate of this Note
is determined with reference to two or more Interest Rate Bases specified on the
face hereof, the "Interest Determination Date" pertaining to this Note shall be
the most recent Business Day which is at least two Business Days prior to the
applicable Interest Reset Date on which each Interest Rate Basis is
determinable. Each Interest Rate Basis shall be determined as of such date, and
the applicable interest rate shall take effect on the related Interest Reset
Date.
CD RATE. If an Interest Rate Basis for this Note is specified on the
face hereof as the CD Rate, the CD Rate shall be determined as of the applicable
Interest Determination Date (a "CD Rate Interest Determination Date") as the
rate on such date for negotiable United States dollar certificates of deposit
having the Index Maturity specified on the face hereof as published by the Board
of Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)", or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date (as defined below), the rate on such
CD Rate Interest Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity as published by the Federal
Reserve Bank of New
13
<PAGE> 14
York in its daily statistical release "Composite 3:30 P.M. Quotations for United
States Government Securities" or any successor publication ("Composite
Quotations") under the heading "Certificates of Deposit". If such rate is not
yet published in either H.15(519) or Composite Quotations by 3:00 P.M., New York
City time, on the related Calculation Date, then the CD Rate on such CD Rate
Interest Determination Date will be calculated by the Calculation Agent
specified on the face hereof and will be the arithmetic mean of the secondary
market offered rates as of 10:00 A.M., New York City time, on such CD Rate
Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in The City of New York selected by
the Calculation Agent for negotiable certificates of deposit of major United
States money market banks for negotiable United States dollar certificates of
deposit with a remaining maturity closest to the Index Maturity in an amount
that is representative for a single transaction in that market at that time;
PROVIDED, HOWEVER, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate determined as of such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
CMT RATE. If an Interest Rate Basis for this Note is specified on the
face hereof as the CMT rate, the CMT Rate shall be determined as of the
applicable Interest Determination Date (a "CMT Rate Interest Determination
Date") as the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption "...Treasury Constant Maturities...Federal Reserve
Board Release H.15...Mondays Approximately 3:45 P.M.", under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date and
(ii) if the Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the related CMT Rate
Interest Determination Date occurs. If such rate is no longer displayed on the
relevant page or is not displayed by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published or is not published by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate on such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate on the CMT Rate
Interest Determination Date will be
14
<PAGE> 15
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a "Reference
Dealer") in The City of New York selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent is
unable to obtain three such Treasury Note quotations, the CMT Rate on such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 P.M., New York City time, on such CMT
Rate Interest Determination Date of three Reference Dealers in The City of New
York (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least U.S.$100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
mentioned herein, the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as described
in the second preceding sentence have remaining terms to maturity equally close
to the Designated CMT Maturity Index, the quotes for the Treasury Note with the
shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page specified on the face hereof (or any other page as
may replace such page on that service for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519)) for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519). If no such page is
specified on the face hereof, the Designated CMT Telerate Page shall be 7052,
for the most recent week.
15
<PAGE> 16
"Designated CMT Maturity Index" means the original period to maturity
of the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the Designated
CMT Maturity Index shall be 2 years.
COMMERCIAL PAPER RATE. If an Interest Rate Basis for this Note is
specified on the face hereof as the Commercial Paper Rate, the Commercial Paper
Rate shall be determined as of the applicable Interest Determination Date (a
"Commercial Paper Rate Interest Determination Date") as the Money Market Yield
(as defined below) on such date of the rate for commercial paper having the
Index Maturity as published in H.15(519) under the heading "Commercial Paper".
In the event that such rate is not published by 3:00 P.M., New York City time,
on such Calculation Date, then the Commercial Paper Rate on such Commercial
Paper Rate Interest Determination Date will be the Money Market Yield of the
rate for commercial paper having the Index Maturity as published in Composite
Quotations under the heading "Commercial Paper" (with an Index Maturity of one
month or three months being deemed to be equivalent to an Index Maturity of 30
days or 90 days, respectively). If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on such
Calculation Date, then the Commercial Paper Rate on such Commercial Paper Rate
Interest Determination Date will be calculated by the Calculation Agent and
shall be the Money Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 A.M., New York City time, on such Commercial Paper Rate
Interest Determination Date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for commercial paper having
the Index Maturity placed for an industrial issuer whose bond rating is "AA", or
the equivalent from a nationally recognized statistical rating organization;
PROVIDED, HOWEVER, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the Commercial Paper Rate determined
as of such Commercial Paper Rate Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
D X 360
Money Market Yield = -------------------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
ELEVENTH DISTRICT COST OF FUNDS RATE. If an Interest Rate Basis for
this Note is specified on the face hereof as the Eleventh District Cost of Funds
Rate, the Eleventh District Cost
16
<PAGE> 17
of Funds Rate shall be determined as of the applicable Interest Determination
Date (an "Eleventh District Cost of Funds Rate Interest Determination Date") as
the rate equal to the monthly weighted average cost of funds for the calendar
month immediately preceding the month in which such Eleventh District Cost of
Funds Rate Interest Determination Date falls, as set forth under the caption
"11th District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on
such Eleventh District Cost of Funds Rate Interest Determination Date. If such
rate does not appear on Telerate Page 7058 on such Eleventh District Cost of
Funds Rate Interest Determination Date, then the Eleventh District Cost of Funds
Rate on such Eleventh District Cost of Funds Rate Interest Determination Date
shall be the monthly weighted average cost of funds paid by member institutions
of the Eleventh Federal Home Loan Bank District that was most recently announced
(the "Index") by the FHLB of San Francisco as such cost of funds for the
calendar month immediately preceding such Eleventh District Cost of Funds Rate
Interest Determination Date. If the FHLB of San Francisco fails to announce the
Index on or prior to such Eleventh District Cost of Funds Rate Interest
Determination Date for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date, the Eleventh District
Cost of Funds Rate determined as of such Eleventh District Cost of Funds Rate
Interest Determination Date will be the Eleventh District Cost of Funds Rate in
effect on such Eleventh District Cost of Funds Rate Interest Determination Date.
FEDERAL FUNDS RATE. If an Interest Rate Basis for this Note is
specified on the face hereof as the Federal Funds Rate, the Federal Funds Rate
shall be determined as of the applicable Interest Determination Date (a "Federal
Funds Rate Interest Determination Date") as the rate on such date for United
States dollar federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not published by 3:00 P.M., New York City time, on the
Calculation Date, the rate on such Federal Funds Rate Interest Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate". If such rate is not published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on the related
Calculation Date, then the Federal Funds Rate on such Federal Funds Interest
Determination Date shall be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight United States
dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York selected by the Calculation Agent, prior to
9:00 A.M., New York City time, on such Federal Funds Rate Interest Determination
Date; PROVIDED, HOWEVER, that if the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate
determined as of such Federal Funds Rate Interest Determination Date will be the
Federal Funds Rate in effect on such Federal Funds Rate Interest Determination
Date.
17
<PAGE> 18
LIBOR. If an Interest Rate Basis for this Note is specified on the face
hereof as LIBOR, LIBOR shall be determined by the Calculation Agent as of the
applicable Interest Determination Date (a "LIBOR Interest Determination Date")
in accordance with the following provisions:
(i) if (a) "LIBOR Reuters" is specified on the face hereof, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page (as
defined below) by its terms provides only for a single rate, in which case such
single rate will be used) for deposits in the Index Currency having the Index
Maturity, commencing on the applicable Interest Reset Date, that appear (or, if
only a single rate is required as aforesaid, appears) on the Designated LIBOR
Page (as defined below) as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date, or (b) "LIBOR Telerate" is specified on the face hereof, or
if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on the face hereof
as the method for calculating LIBOR, the rate for deposits in the Index Currency
having the Index Maturity, commencing on such Interest Reset Date, that appears
on the Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR
Interest Determination Date. If fewer than two such offered rates appear, or if
no such rate appears, as applicable, LIBOR on such LIBOR Interest Determination
Date shall be determined in accordance with the provisions described in clause
(ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on the
Designated LIBOR Page as specified in clause (i) above, the Calculation Agent
shall request the principal London offices of each of four major reference banks
in the London interbank market, as selected by the Calculation Agent, to provide
the Calculation Agent with its offered quotation for deposits in the Index
Currency for the period of the Index Maturity, commencing on the applicable
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date
and in a principal amount that is representative for a single transaction in
such Index Currency in such market at such time. If at least two such quotations
are so provided, then LIBOR on such LIBOR Interest Determination Date will be
the arithmetic mean of such quotations. If fewer than two such quotations are so
provided, then LIBOR on such LIBOR Interest Determination Date will be the
arithmetic mean of the rates quoted at approximately 11:00 A.M., in the
applicable Principal Financial Center, on such LIBOR Interest Determination Date
by three major banks in such Principal Financial Center selected by the
Calculation Agent for loans in the Index Currency to leading European banks,
having the Index Maturity and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time; PROVIDED,
HOWEVER, that if the banks so selected by the Calculation Agent are not quoting
as mentioned in this sentence, LIBOR determined as of such LIBOR Interest
Determination Date shall be LIBOR in effect on such LIBOR Interest Determination
Date.
18
<PAGE> 19
"Index Currency" means the currency or composite currency specified on
the face hereof as to which LIBOR shall be calculated. If no such currency or
composite currency is specified on the face hereof, the Index Currency shall be
United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on
the face hereof, the display on the Reuter Monitor Money Rates Service (or any
successor service) for the purpose of displaying the London interbank rates of
major banks for the Index Currency, or (b) if "LIBOR Telerate" is specified on
the face hereof or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on
the face hereof as the method for calculating LIBOR, the display on the Dow
Jones Telerate Service (or any successor service) for the purpose of displaying
the London interbank rates of major banks for the Index Currency.
PRIME RATE. If an Interest Rate Basis for this Note is specified on the
face hereto as the Prime Rate, the Prime Rate shall be determined as of the
applicable Interest Determination Date (a "Prime Rate Interest Determination
Date") as the rate on such date as such rate is published in H.15(519) under the
heading "Bank Prime Loan." If such rate is not published prior to 3:00 P.M., New
York City time, on the related Calculation Date, then the Prime Rate shall be
the arithmetic mean of the rates of interest publicly announced by each bank
that appears on the Reuters Screen NYMF Page (as defined below) as such bank's
prime rate or base lending rate as in effect for such Prime Rate Interest
Determination Date. If fewer than four such rates appear on the Reuters Screen
NYMF Page for such Prime Rate Interest Determination Date, the Prime Rate shall
be the arithmetic mean of the prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of business
on such Prime Rate Interest Determination Date by four major money center banks
in The City of New York selected by the Calculation Agent. If fewer than four
such quotations are so provided, the Prime Rate shall be the arithmetic mean of
four prime rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date as furnished in The City of New York by the major
money center banks, if any, that have provided such quotations and by as many
substitute banks or trust companies as necessary to obtain such four prime rate
quotations, provided such substitute banks or trust companies are organized and
doing business under the laws of the United States, or any State thereof, each
having total equity capital of at least U.S.$500 million and being subject to
supervision or examination by Federal or State authority, selected by the
Calculation Agent to provide such rate or rates; PROVIDED, HOWEVER, that if the
banks or trust companies so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
19
<PAGE> 20
"Reuters Screen NYMF Page" means the display designated as page "NYMF"
on the Reuter Monitor Money Rates Service (or such other page as may replace the
NYMF page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
TREASURY RATE. If an Interest Rate Basis for this Note is specified on
the face hereof as the Treasury Rate, the Treasury Rate shall be determined as
of the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity, as such rate is published
in H.15(519) under the heading "Treasury bills-auction average (investment)" or,
if not published by 3:00 P.M., New York City time, on the related Calculation
Date, the auction average rate of such Treasury Bills (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the results of the Auction of Treasury Bills having
the Index Maturity are not reported as provided above by 3:00 P.M., New York
City time, on such Calculation Date, or if no such Auction is held, then the
Treasury Rate shall be calculated by the Calculation Agent and shall be a yield
to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent,
for the issue of Treasury Bills with a remaining maturity closest to the Index
Maturity; PROVIDED, HOWEVER, that if the dealers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate
determined as of such Treasury Rate Interest Determination Date will be the
Treasury Rate in effect on such Treasury Rate Interest Determination Date.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, in each case as specified on the face hereof. The
interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
The Calculation Agent shall calculate the interest rate hereon on or
before each Calculation Date. The "Calculation Date", if applicable, pertaining
to any Interest Determination Date shall be the earlier of (i) the tenth
calendar day after such Interest Determination Date or, if such day is not a
Business Day, the next succeeding Business Day or (ii) the Business Day
immediately preceding the applicable Interest Payment Date or the Maturity Date,
as the case may be. At the
20
<PAGE> 21
request of the Holder hereof, the Calculation Agent will provide to the Holder
hereof the interest rate hereon then in effect and, if determined, the interest
rate that will become effective as a result of a determination made for the next
succeeding Interest Reset Date.
Accrued interest hereon shall be an amount calculated by multiplying
the principal amount hereof by an accrued interest factor. Such accrued interest
factor shall be computed by adding the interest factor calculated for each day
in the applicable Interest Period. Unless otherwise specified as the Day Count
Convention on the face hereof, the interest factor for each such date shall be
computed by dividing the interest rate applicable to such day by 360 if the CD
Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Rate, LIBOR or the Prime Rate is an applicable Interest Rate Basis
or by the actual number of days in the year if the CMT Rate or the Treasury Rate
is an applicable Interest Rate Basis. Unless otherwise specified as the Day
Count Convention on the face hereof, the interest factor for this Note, if the
interest rate is calculated with reference to two or more Interest Rate Bases,
shall be calculated in each period in the same manner as if only the Applicable
Interest Rate Basis specified on the face hereof applied.
All percentages resulting from any calculation on this Note shall be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards, and all amounts used in or
resulting from such calculation on this Note shall be rounded, in the case of
United States dollars, to the nearest cent or, in the case of a Specified
Currency other than United States dollars, to the nearest unit (with one-half
cent or unit being rounded upwards).
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Debt Securities at any time by the
Company and the Trustee with the consent of the holders of not less than a
majority of the aggregate principal amount of all Debt Securities at the time
outstanding and affected thereby. The Indenture also contains provisions
permitting the holders of not less than a majority of the aggregate principal
amount of the outstanding Debt Securities of any series, on behalf of the
holders of all
21
<PAGE> 22
such Debt Securities, to waive compliance by the Company with certain provisions
of the Indenture. Furthermore, provisions in the Indenture permit the holders of
not less than a majority of the aggregate principal amount of the outstanding
Debt Securities of any series, in certain instances, to waive, on behalf of all
of the holders of Debt Securities of such series, certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the holder
of this Note shall be conclusive and binding upon such holder and upon all
future holders of this Note and other Notes issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the Security
Register of the Company upon surrender of this Note for registration of transfer
at the office or agency of the Company in any place where the principal hereof
and any premium or interest hereon are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the holder hereof or by his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the holder hereof surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of Ohio
22
<PAGE> 23
applicable to agreements made and to be performed entirely in such State.
23
<PAGE> 24
-------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____ TEN
ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
Additional abbreviations may also be used though not in the above list.
----------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------
| |
|------------------------------|----------------------------------------------
- ------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
- ------------------------------------------------------------------------------
this Note and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________ Attorney
to transfer this Note on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
---------------------------------------
Notice: The signature(s) on this
assignment must correspond with the name
(s) as written upon the face of this Note
in every particular, without alteration or
enlargement or any change whatsoever.
24
<PAGE> 25
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at ___________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate
trust office, currently located at __________________________________________,
not more than 60 nor less than 30 calendar days prior to the Repayment Date,
this Note with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S.$1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion
of this Note not being repaid (in the absence of any such specification, one
such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $_____________ _______________________________
Notice: The signature(s) on
Date: this Option to Elect Repayment
---------------------- must correspond with the
name(s) as written upon the
face of this Note in every
particular, without alteration
or enlargement or any change
whatsoever.
25
<PAGE> 1
Exhibit 4(h)
[FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.1
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.2
<TABLE>
<S> <C> <C>
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FXR-___ ___________________ ________________
</TABLE>
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Fixed Rate Subordinated Security)
<TABLE>
<S> <C> <C>
ORIGINAL ISSUE DATE: INTEREST RATE: % STATED MATURITY DATE:
INTEREST PAYMENT DATE(S) DEFAULT RATE: %
[ ] _______ and ______
[ ] Other:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE
REDUCTION: %
OPTIONAL REPAYMENT [ ] CHECK IF AN ORIGINAL
DATE(S): ISSUE DISCOUNT NOTE
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION: EXCHANGE RATE
[ ] United States dollars [ ] $1,000 and integral AGENT:
[ ] Other: multiples thereof
[ ] Other:
ADDENDUM ATTACHED OTHER/ADDITIONAL PROVISIONS:
[ ] Yes
[ ] No
<FN>
- ---------------
1 This paragraph applies to global Notes only.
2 This paragraph applies to global Notes only.
</TABLE>
<PAGE> 2
DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio corporation (the
"Company", which terms include any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of , on the
Stated Maturity Date specified above (or any Redemption Date or Repayment Date,
each as defined on the reverse hereof) (each such Stated Maturity Date,
Redemption Date or Repayment Date being hereinafter referred to as the "Maturity
Date" with respect to the principal repayable on such date) and to pay interest
thereon, at Interest Rate per annum specified above, until the principal hereof
is paid or duly made available for payment, and (to the extent that the payment
of such interest shall be legally enforceable) at the Default Rate per annum
specified above on any overdue principal, premium and/or interest. The Company
will pay interest in arrears on each Interest Payment Date, if any, specified
above (each, an "Interest Payment Date"), commencing with the first Interest
Payment Date next succeeding the Original Issue Date specified above, and on the
Maturity Date; PROVIDED, HOWEVER, that if the Original Issue Date occurs between
a Record Date (as defined below) and the next succeeding Interest Payment Date,
interest payments will commence on the second Interest Payment Date next
succeeding the Original Issue Date to the holder of this Note on the Record Date
with respect to such second Interest Payment Date. Interest on this Note will be
computed on the basis of a 360-day year of twelve 30-day months.
Notwithstanding the foregoing, if an Addendum is attached hereto or
"Other/Additional Provisions" apply to this Note as specified above, this Note
shall be subject to the terms set forth in such Addendum or such
"Other/Additional Provisions".
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for with respect to this Note) to, but excluding, the
applicable Interest Payment Date or the Maturity Date, as the case may be (each,
an "Interest Period"). The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined below) immediately
preceding such Interest Payment Date (the "Record Date"); PROVIDED, HOWEVER,
that interest payable on the Maturity Date will be payable to the person to whom
the principal hereof and premium, if any, hereon shall be payable. Any such
interest not so punctually paid or duly provided for ("Defaulted Interest") will
forthwith cease to be payable to the holder on any Record Date, and shall be
paid to the person in whose name this Note 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 hereinafter referred to,
notice whereof shall be given to the holder of this Note by the Trustee not less
than 10
2
<PAGE> 3
calendar days prior to such Special Record Date or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which this note may be listed, and upon such notice as may be
required by such exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date will be made in immediately available funds upon
presentation and surrender of this Note (and, with respect to any applicable
repayment of this Note, a duly completed election form as contemplated on the
reverse hereof) at the corporate trust office of the Trustee maintained for that
purpose in The Borough of Manhattan, The City of New York, currently located at
450 West 33rd Street, New York, New York 10001, or at such other paying agency
in the Borough of Manhattan, The City of New York, as the Company may determine;
PROVIDED, HOWEVER, that if such payment is to be made in a Specified Currency
other than United States dollars as set forth below, such payment will be made
by wire transfer of immediately available funds to an account with a bank
designated by the holder hereof at least 15 calendar days prior to the Maturity
Date, provided that such bank has appropriate facilities therefor and that this
Note (and, if applicable, a duly completed election form) is presented and
surrendered at the aforementioned office of the Trustee in time for the Trustee
to make such payment in such funds in accordance with its normal procedures.
Payment of interest due on any Interest Payment Date other than the Maturity
Date will be made by check mailed to the address of the person entitled thereto
as such address shall appear in the Security Register maintained at the
aforementioned office of the Trustee; PROVIDED, HOWEVER, that a holder of
U.S.$10,000,000 (or, if the Specified Currency specified above is other than
United States dollars, the equivalent thereof in the Specified Currency) or more
in aggregate principal amount of Notes (whether having identical or different
terms and provisions) will be entitled to receive interest payments on such
Interest Payment Date by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received in writing by the
Trustee not less than 15 calendar days prior to such Interest Payment Date. Any
such wire transfer instructions received by the Trustee shall remain in effect
until revoked by such holder.
If any Interest Payment Date or the Maturity Date falls on a day that
is not a Business Day, the required payment of principal, premium, if any,
and/or interest shall be made on the next succeeding Business Day with the same
force and effect as if made on the date such payment was due, and no interest
shall accrue with respect to such payment for the period from and after such
Interest Payment Date or the Maturity Date, as the case may be, to the date of
such payment on the next succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or executive order to close in The City of New
York; PROVIDED,
3
<PAGE> 4
HOWEVER, that if the Specified Currency is other than United States dollars and
any payment is to be made in the Specified Currency in accordance with the
provisions hereof, such day is also not a day on which banking institutions are
authorized or required by law or executive order to close in the Principal
Financial Center (as defined below) of the country issuing the Specified
Currency (or, in the case of European Currency Units ("ECU"), is not a day that
appears as an ECU non-settlement day on the display designated as "ISDE" on the
Reuter Monitor Money Rates Service (or a day so designated by the ECU Banking
Association) or, if ECU nonsettlement days do not appear on that page (and are
not so designated), is not a day on which payments in ECU cannot be settled in
the international interbank market). "Principal Financial Center" means the
capital city of the country issuing the Specified Currency, except that with
respect to United States dollars, Australian dollars, Deutsche marks, Dutch
guilders, Italian lire, Swiss francs and ECU, the "Principal Financial Center"
shall be The City of New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and
Luxembourg, respectively.
The Company is obligated to make payment of principal, premium, if any,
and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is other
than United States dollars, any such amounts so payable by the Company will be
converted by the Exchange Rate Agent specified above into United States dollars
for payment to the holder of this Note; PROVIDED, HOWEVER, that the holder of
this Note may elect to receive such amounts in the Specified Currency pursuant
to the provisions set forth below.
If the Specified Currency is other than United States dollars and the
holder of this Note shall not have duly made an election to receive all or a
specified portion of any payment of principal, premium, if any, and/or interest
in respect of this Note in the Specified Currency, any United States dollar
amount to be received by the holder of this Note will be based on the highest
bid quotation in The City of New York received by the Exchange Rate Agent at
approximately 11:00 A.M., New York City time, on the second Business Day
preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange
Rate Agent and approved by the Company for the purchase by the quoting dealer of
the Specified Currency for United States dollars for settlement on such payment
date in the aggregate amount of the Specified Currency payable to all holders of
Notes scheduled to receive United States dollar payments and at which the
applicable dealer commits to execute a contract. All currency exchange costs
will be borne by the holder of this Note by deductions from such payments. If
three such bid quotations are not available, payments on this Note will be made
in the Specified Currency.
4
<PAGE> 5
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of any
payment of principal, premium, if any, and/or interest in respect of this Note
in the Specified Currency by submitting a written request for such payment to
the Trustee at its corporate trust office in The City of New York on or prior to
the applicable Record Date or at least 15 calendar days prior to the Maturity
Date, as the case may be. Such written request may be mailed or hand delivered
or sent by cable, telex or other form of facsimile transmission. The holder of
this Note may elect to receive all or a specified portion of all future payments
in the Specified Currency in respect of such principal, premium, if any, and/or
interest and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Trustee, but
written notice of any such revocation must be received by the Trustee on or
prior to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if
the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the holder of this Note by making
such payment in United States dollars on the basis of the Market Exchange Rate
(as defined below) on the second Business Day prior to such payment date or, if
such Market Exchange Rate is not then available, on the basis of the most
recently available Market Exchange Rate or as otherwise specified on the face
hereof. The "Market Exchange Rate" for the Specified Currency means the noon
dollar buying rate in The City of New York for cable transfers for the Specified
Currency as certified for customs purposes by (or if not so certified, as
otherwise determined by) the Federal Reserve Bank of New York. Any payment made
under such circumstances in United States dollars will not constitute an Event
of Default (as defined in the Indenture).
If the Specified Currency is a composite currency and the holder of
this Note shall have duly made an election to receive all or a specified portion
of any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency and if such composite currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the control
of the Company, then the Company will be entitled to satisfy its obligations to
the holder of this Note by making such payment in United States dollars. The
amount of each payment in United States dollars shall be computed by the
Exchange Rate Agent on the basis of the equivalent of the composite currency in
United States dollars. The component currencies of the composite currency for
this purpose (collectively, the "Component Currencies" and each, a "Component
Currency") shall be the currency amounts that were components of the composite
currency as of the last day on
5
<PAGE> 6
which the composite currency was used. The equivalent of the composite currency
in United States dollars shall be calculated by aggregating the United States
dollar equivalents of the Component Currencies. The United States dollar
equivalent of each of the Component Currencies shall be determined by the
Exchange Rate Agent on the basis of the most recently available Market Exchange
Rate for each such Component Currency, or as otherwise specified on the face
hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above, in the Addendum hereto,
which further provisions shall have the same force and effect as if set forth on
the face hereof.
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
6
<PAGE> 7
IN WITNESS WHEREOF, Developers Diversified Realty Corporation has
caused this Note to be executed.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
By________________________________
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Debt Securities of
the series designated therein referred
to in the within-mentioned Indenture.
CHEMICAL BANK,
as Trustee
By____________________________
Authorized Signatory
7
<PAGE> 8
[REVERSE OF NOTE]
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Fixed Rate Subordinated Security)
This Note is one of a duly authorized series of Subordinated Debt
Securities (the "Debt Securities") of the Company issued and to be issued under
an Indenture, dated as of May 1, 1994, as amended, modified or supplemented from
time to time (the "Indenture"), between the Company and CHEMICAL BANK, as
Trustee (the "Trustee", which term includes any successor trustee under the
Indenture), to which the Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
holders of the Debt Securities, and of the terms upon which the Debt Securities
are, and are to be, authenticated and delivered. This Note is one of the series
of Debt Securities designated as "Medium-Term Notes Due Nine Months or More from
Date of Issue" (the "Notes"). All terms used but not defined in this Note
specified on the face hereof or in an Addendum hereto shall have the meanings
assigned to such terms in the Indenture.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S.$1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or repayable prior to the Stated Maturity
Date.
This Note will be subject to redemption at the option of the Company on
any date on and after the Initial Redemption Date, if any, specified on the face
hereof, in whole or from time to time in part in increments of U.S.$1,000 or the
minimum Authorized Denomination (provided that any remaining principal amount
hereof shall be at least U.S.$1,000 or such minimum Authorized Denomination), at
the Redemption Price (as defined below), together with unpaid interest accrued
thereon to the date fixed for redemption (each, a "Redemption Date"), on notice
given no more than 60 nor less than 30 calendar days prior to the Redemption
Date and in accordance with the provisions of the Indenture. The "Redemption
Price" shall initially be the Initial Redemption Percentage specified on the
face hereof multiplied by the unpaid principal amount of this Note to be
redeemed. The Initial Redemption Percentage, if any, shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of unpaid principal amount to be redeemed. In the event of redemption of
this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having
8
<PAGE> 9
the same terms as this Note shall be issued in the name of the holder hereof
upon the presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S.$1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S.$1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form hereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not more than 60
nor less than 30 calendar days prior to the Repayment Date. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity will be equal to the sum of
(i) the Issue Price specified on the face hereof (increased by any accruals of
the Discount, as defined below) and, in the event redemption of this Note (if
applicable), multiplied by the Initial Redemption Percentage (as adjusted by the
Annual Redemption Percentage Reduction, if applicable) and (ii) any unpaid
interest accrued thereon, from the Original Issue Date to the date of
redemption, repayment or acceleration of maturity. The difference between the
Issue Price and 100% of the principal amount of this Note is referred to herein
as the "Discount", and the Discount will be ratably accrued over the term of
this Note for purposes of determining the amount payable upon redemption,
repayment or acceleration of maturity of this Note.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Debt Securities at any time by the
Company and the Trustee with the consent of the holders of not less than a
majority of the aggregate principal amount of all Debt Securities at the time
outstanding and
9
<PAGE> 10
affected thereby. The Indenture also contains provisions permitting the holders
of not less than a majority of the aggregate principal amount of the outstanding
Debt Securities of any series, on behalf of the holders of all such Debt
Securities, to waive compliance by the Company with certain provisions of the
Indenture. Furthermore, provisions in the Indenture permit the holders of not
less than a majority of the aggregate principal amount of the outstanding Debt
Securities of any series, in certain instances, to waive, on behalf of all of
the holders of Debt Securities of such series, certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the holder of
this Note shall be conclusive and binding upon such holder and upon all future
holders of this Note and other Notes issued upon the registration of transfer
hereof or in exchange heretofore or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Note.
The Debt Securities evidenced by this Note are, to the extent and in
the manner set forth in the Indenture, expressly subordinated and subject in
right of payment to the prior payment in full of all Senior Indebtedness. Each
Holder of this Note, by accepting the same, agrees to and shall be bound by such
provisions of the Indenture and authorizes and directs the Trustee on its behalf
to take such action as may be necessary or appropriate to effectuate such
subordination as provided in the Indenture and appoints the Trustee its
attorney-in-fact for any and all such purposes.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the Security
Register of the Company upon surrender of this Note for registration of transfer
at the office or agency of the Company in any place where the principal hereof
and any premium or interest hereon are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the holder hereof or by his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the holder hereof surrendering the
same.
10
<PAGE> 11
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely in such State.
11
<PAGE> 12
-------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____ TEN
ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
Additional abbreviations may also be used though not in the above list.
----------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------
| |
|------------------------------|----------------------------------------------
- ------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
- ------------------------------------------------------------------------------
this Note and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________ Attorney
to transfer this Note on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
---------------------------------------
Notice: The signature(s) on this
assignment must correspond with the
name(s) as written upon the face of this
Note in every particular, without
alteration or enlargement or any change
whatsoever.
12
<PAGE> 13
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at ___________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate
trust office, not more than 60 nor less than 30 calendar days prior to the
Repayment Date, this Note with this "Option to Elect Repayment" form duly
completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S.$1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion
of this Note not being repaid (in the absence of any such specification, one
such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $_____________ _________________________________
Notice: The signature(s) on this
Date: Option to Elect Repayment must
---------------------- correspond with the name(s) as
written upon the face of this
Note in every particular, without
alteration or enlargement or any
change whatsoever.
13
<PAGE> 1
Exhibit 4(i)
[FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.1
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.2
<TABLE>
<S> <C> <C>
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FLR-____ _________________ ________________
</TABLE>
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Floating Rate Subordinated Security)
<TABLE>
<S> <C> <C>
INTEREST RATE BASIS ORIGINAL ISSUE DATE: STATED MATURITY DATE:
OR BASES:
IF LIBOR: IF CMT RATE:
[ ] LIBOR Reuters Designated CMT Telerate Page:
[ ] LIBOR Telerate Designated CMT Maturity Index:
INDEX CURRENCY:
INDEX MATURITY: INITIAL INTEREST RATE: % INITIAL INTEREST RESET
DATE:
SPREAD (PLUS OR MINIMUM INTEREST RATE: % INTEREST PAYMENT DATE(S):
MINUS):
<FN>
- --------
1 This paragraph applies to global Notes only.
2 This paragraph applies to global Notes only.
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: % INTEREST RESET DATE(S):
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE REDUCTION:
%
OPTIONAL REPAYMENT CALCULATION AGENT:
DATE(S):
</TABLE>
INTEREST CATEGORY: DAY COUNT CONVENTION:
[ ] Regular Floating Rate Note [ ] 30/360 for the period
[ ] Floating Rate/Fixed Rate Note from to .
Fixed Rate Commencement Date: [ ] Actual/360 for the period
Fixed Interest Rate: % from to .
[ ] Inverse Floating Rate Note [ ] Actual/Actual for the period
Fixed Interest Rate: % from to .
[ ] Original Issue Discount Note Applicable Interest Rate Basis:
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION:
[ ] United States dollars [ ] $1,000 and integral multiples
thereof
[ ] Other: [ ] Other:
EXCHANGE RATE AGENT:
DEFAULT RATE: %
ADDENDUM ATTACHED
[ ] Yes
[ ] No
OTHER/ADDITIONAL PROVISIONS:
2
<PAGE> 3
DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio corporation (the
"Company", which terms include any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of , on
the Stated Maturity Date specified above (or any Redemption Date or Repayment
Date, each as defined on the reverse hereof) (each such Stated Maturity Date,
Redemption Date or Repayment Date being hereinafter referred to as the "Maturity
Date" with respect to the principal repayable on such date) and to pay interest
thereon, at a rate per annum equal to the Initial Interest Rate specified above
until the Initial Interest Reset Date specified above and thereafter at a rate
determined in accordance with the provisions specified above and on the reverse
hereof with respect to one or more Interest Rate Bases specified above until the
principal hereof is paid or duly made available for payment, and (to the extent
that the payment of such interest shall be legally enforceable) at the Default
Rate per annum specified above on any overdue principal, premium and/or
interest. The Company will pay interest in arrears on each Interest Payment
Date, if any, specified above (each, an "Interest Payment Date"), commencing
with the first Interest Payment Date next succeeding the Original Issue Date
specified above, and on the Maturity Date; PROVIDED, HOWEVER, that if the
Original Issue Date occurs between a Record Date (as defined below) and the next
succeeding Interest Payment Date, interest payments will commence on the second
Interest Payment Date next succeeding the Original Issue Date to the holder of
this Note on the Record Date with respect to such second Interest Payment Date.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for with respect to this Note) to, but excluding, the
applicable Interest Payment Date or the Maturity Date, as the case may be (each,
an "Interest Period"). The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined on the reverse hereof)
immediately preceding such Interest Payment Date (the "Record Date"); PROVIDED,
HOWEVER, that interest payable on the Maturity Date will be payable to the
person to whom the principal hereof and premium, if any, hereon shall be
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") will forthwith cease to be payable to the holder on any
Record Date, and shall be paid to the person in whose name this Note 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 hereinafter referred to, notice whereof shall be given to the holder of
this Note by the Trustee not less than 10 calendar days
3
<PAGE> 4
prior to such Special Record Date or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which this note may be listed, and upon such notice as may be required by such
exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date will be made in immediately available funds upon
presentation and surrender of this Note (and, with respect to any applicable
repayment of this Note, a duly completed election form as contemplated on the
reverse hereof) at the corporate trust office of the Trustee maintained for that
purpose in The Borough of Manhattan, The City of New York, currently located at
450 West 33rd Street, New York, New York 10001, or at such other paying agency
in The Borough of Manhattan, The City of New York, as the Company may determine;
PROVIDED, HOWEVER, that if such payment is to be made in a Specified Currency
other than United States dollars as set forth below, such payment will be made
by wire transfer of immediately available funds to an account with a bank
designated by the holder hereof at least 15 calendar days prior to the Maturity
Date, provided that such bank has appropriate facilities therefor and that this
Note (and, if applicable, a duly completed election form) is presented and
surrendered at the aforementioned office of the Trustee in time for the Trustee
to make such payment in such funds in accordance with its normal procedures.
Payment of interest due on any Interest Payment Date other than the Maturity
Date will be made by check mailed to the address of the person entitled thereto
as such address shall appear in the Security Register maintained at the
aforementioned office of the Trustee; PROVIDED, HOWEVER, that a holder of
U.S.$10,000,000 (or, if the Specified Currency specified above is other than
United States dollars, the equivalent thereof in the Specified Currency) or more
in aggregate principal amount of Notes (whether having identical or different
terms and provisions) will be entitled to receive interest payments on such
Interest Payment Date by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received in writing by the
Trustee not less than 15 calendar days prior to such Interest Payment Date. Any
such wire transfer instructions received by the Trustee shall remain in effect
until revoked by such holder.
If any Interest Payment Date other than the Maturity Date would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day. If the Maturity Date falls on a day that is not a
Business Day, the required payment of principal, premium, if any, and interest
shall be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due, and no interest shall accrue with
respect to such payment for the period from and after the
4
<PAGE> 5
Maturity Date to the date of such payment on the next succeeding Business Day.
The Company is obligated to make payment of principal, premium, if any,
and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is other
than United States dollars, any such amounts so payable by the Company will be
converted by the Exchange Rate Agent specified above into United States dollars
for payment to the holder of this Note; PROVIDED, HOWEVER, that the holder of
this Note may elect to receive such amounts in the Specified Currency pursuant
to the provisions set forth below.
If the Specified Currency is other than United States dollars and the
holder of this Note shall not have duly made an election to receive all or a
specified portion of any payment of principal, premium, if any, and/or interest
in respect of this Note in the Specified Currency, any United States dollar
amount to be received by the holder of this Note will be based on the highest
bid quotation in The City of New York received by the Exchange Rate Agent at
approximately 11:00 A.M., New York City time, on the second Business Day
preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange
Rate Agent and approved by the Company for the purchase by the quoting dealer of
the Specified Currency for United States dollars for settlement on such payment
date in the aggregate amount of the Specified Currency payable to all holders of
Notes scheduled to receive United States dollar payments and at which the
applicable dealer commits to execute a contract. All currency exchange costs
will be borne by the holder of this Note by deductions from such payments. If
three such bid quotations are not available, payments on this Note will be made
in the Specified Currency.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of any
payment of principal, premium, if any, and/or interest in respect of this Note
in the Specified Currency by submitting a written request for such payment to
the Trustee at its corporate trust office in The City of New York on or prior to
the applicable Record Date or at least 15 calendar days prior to the Maturity
Date, as the case may be. Such written request may be mailed or hand delivered
or sent by cable, telex or other form of facsimile transmission. The holder of
this Note may elect to receive all or a specified portion of all future payments
in the Specified Currency in respect of such principal, premium, if any, and/or
interest and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Trustee, but
written notice of any such revocation must be received by the Trustee on
5
<PAGE> 6
or prior to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if
the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the holder of this Note by making
such payment in United States dollars on the basis of the Market Exchange Rate
(as defined below) on the second Business Day prior to such payment date or, if
such Market Exchange Rate is not then available, on the basis of the most
recently available Market Exchange Rate or as otherwise specified on the face
hereof. The "Market Exchange Rate" for the Specified Currency means the noon
dollar buying rate in The City of New York for cable transfers for the Specified
Currency as certified for customs purposes by (or if not so certified, as
otherwise determined by) the Federal Reserve Bank of New York. Any payment made
under such circumstances in United States dollars will not constitute an Event
of Default (as defined in the Indenture).
If the Specified Currency is a composite currency and the holder of
this Note shall have duly made an election to receive all or a specified portion
of any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency and if such composite currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the control
of the Company, then the Company will be entitled to satisfy its obligations to
the holder of this Note by making such payment in United States dollars. The
amount of each payment in United States dollars shall be computed by the
Exchange Rate Agent on the basis of the equivalent of the composite currency in
United States dollars. The component currencies of the composite currency for
this purpose (collectively, the "Component Currencies" and each, a "Component
Currency") shall be the currency amounts that were components of the composite
currency as of the last day on which the composite currency was used. The
equivalent of the composite currency in United States dollars shall be
calculated by aggregating the United States dollar equivalents of the Component
Currencies. The United States dollar equivalent of each of the Component
Currencies shall be determined by the Exchange Rate Agent on the basis of the
most recently available Market Exchange Rate for each such Component Currency,
or as otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount
6
<PAGE> 7
in such single currency equal to the sum of the amounts of the consolidated
Component Currencies expressed in such single currency. If any Component
Currency is divided into two or more currencies, the amount of the original
Component Currency shall be replaced by the amounts of such two or more
currencies, the sum of which shall be equal to the amount of the original
Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above, in the Addendum hereto,
which further provisions shall have the same force and effect as if set forth on
the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the
face of this Note specifies that an Addendum is attached hereto or that
"Other/Additional Provisions" apply, this Note shall be subject to the terms set
forth in such Addendum or such "Other/Additional Provisions".
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
7
<PAGE> 8
IN WITNESS WHEREOF, Developers Diversified Realty Corporation has
caused this Note to be executed.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By________________________________
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Debt Securities of the series designated therein referred to
in the within-mentioned Indenture.
CHEMICAL BANK,
as Trustee
By____________________________
Authorized Signatory
8
<PAGE> 9
[REVERSE OF NOTE]
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Fixed Rate Subordinated Security)
This Note is one of a duly authorized series of Subordinated Debt
Securities (the "Debt Securities") of the Company issued and to be issued under
an Indenture, dated as of May 1, 1994, as amended, modified or supplemented from
time to time (the "Indenture"), between the Company and CHEMICAL BANK, as
Trustee (the "Trustee", which term includes any successor trustee under the
Indenture), to which the Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
holders of the Debt Securities, and of the terms upon which the Debt Securities
are, and are to be, authenticated and delivered. This Note is one of the series
of Debt Securities designated as "Medium-Term Notes Due Nine Months or More From
Date of Issue" (the "Notes"). All terms used but not defined in this Note
specified on the face hereof or in an Addendum hereto shall have the meanings
assigned to such terms in the Indenture.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S.$1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or repayable prior to the Stated Maturity
Date.
This Note will be subject to redemption at the option of the Company on
any date on and after the Initial Redemption Date, if any, specified on the face
hereof, in whole or from time to time in part in increments of U.S.$1,000 or the
minimum Authorized Denomination (provided that any remaining principal amount
hereof shall be at least U.S.$1,000 or such minimum Authorized Denomination), at
the Redemption Price (as defined below), together with unpaid interest accrued
thereon to the date fixed for redemption (each, a "Redemption Date"), on notice
given no more than 60 nor less than 30 calendar days prior to the Redemption
Date and in accordance with the provisions of the Indenture. The "Redemption
Price" shall initially be the Initial Redemption Percentage specified on the
face hereof multiplied by the unpaid principal amount of this Note to be
redeemed. The Initial Redemption Percentage, if any, shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of unpaid principal amount to be redeemed. In the event of redemption of
this Note in part only, a new Note of like tenor for the unredeemed portion
9
<PAGE> 10
hereof and otherwise having the same terms as this Note shall be issued in the
name of the holder hereof upon the presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S.$1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S.$1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form hereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not more than 60
nor less than 30 calendar days prior to the Repayment Date. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If the Interest Category of this Note is specified on the face hereof
as an Original Issue Discount Note, the amount payable to the holder of this
Note in the event of redemption, repayment or acceleration of maturity of this
Note will be equal to the sum of (1) the Issue Price specified on the face
hereof (increased by any accruals of Discount, as defined below) and, in the
event of any redemption of this Note (if applicable), multiplied by the Initial
Redemption Percentage specified in the applicable Pricing Supplement (as
adjusted by the Annual Redemption Percentage Reduction, if applicable) and (2)
any accrued and unpaid interest on this Note from the Original Issue Date to the
Redemption Date, Repayment Date or date of acceleration of maturity, as the case
may be. As used herein, the "Discount" shall mean the difference between the
Issue Price of an Original Issue Discount Note and par.
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Repayment Date or date of acceleration of maturity of
this Note, such Discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year convention,
a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between Interest Payment Dates (with ratable
accruals within a compounding period), a coupon rate equal to the initial
interest rate applicable to this Note and an assumption that the maturity of
this Note will not be accelerated. If the period from the Original Issue Date to
the initial Interest Payment Date (the "Initial Period") is shorter than the
compounding period for this Note, a proportionate amount of the yield for an
entire compounding period will be accrued. If the Initial Period is
10
<PAGE> 11
longer than the compounding period, then such period will be divided into a
regular compounding period and a short period, with the short period being
treated as provided in the preceding sentence.
The interest rate borne by this Note will be determined as follows:
(i) Unless the Interest Category of this Note is specified on
the face hereof as a "Floating Rate/Fixed Rate Note" or an "Inverse
Floating Rate Note", this Note shall be designated as a "Regular
Floating Rate Note" and, except as set forth below or on the face
hereof, shall bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the Spread,
if any, and/or (b) multiplied by the Spread Multiplier, if any, in each
case as specified on the face hereof. Commencing on the Initial
Interest Reset Date, the rate at which interest on this Note shall be
payable shall be reset as of each Interest Reset Date specified on the
face hereof; PROVIDED, HOWEVER, that the interest rate in effect for
the period, if any, from the Original Issue Date to the Initial
Interest Reset Date shall be the Initial Interest Rate.
(ii) If the Interest Category of this Note is specified on the
face hereof as a "Floating Rate/Fixed Rate Note", then, except as set
forth below or on the face hereof, this Note shall bear interest at the
rate determined by reference to the applicable Interest Rate Basis or
Bases (a) plus or minus the Spread, if any, and/or (b) multiplied by
the Spread Multiplier, if any. Commencing on the Initial Interest Reset
Date, the rate at which interest on this Note shall be payable shall be
reset as of each Interest Reset Date; PROVIDED, HOWEVER, that (y) the
interest rate in effect for the period, if any, from the Original Issue
Date to the Initial Interest Reset Date shall be the Initial Interest
Rate and (z) the interest rate in effect for the period commencing on
the Fixed Rate Commencement Date specified on the face hereof to the
Maturity Date shall be the Fixed Interest Rate specified on the face
hereof or, if no such Fixed Interest Rate is specified, the interest
rate in effect hereon on the day immediately preceding the Fixed Rate
Commencement Date.
(iii) If the Interest Category of this Note is specified on
the face hereof as an "Inverse Floating Rate Note", then, except as set
forth below or on the face hereof, this Note shall bear interest at the
Fixed Interest Rate minus the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the Spread,
if any, and/or (b) multiplied by the Spread Multiplier, if any;
PROVIDED, HOWEVER, that, unless otherwise specified on the face hereof,
the interest rate hereon shall not be less than zero. Commencing on the
Initial Interest Reset Date, the rate at which interest on
11
<PAGE> 12
this Note shall be payable shall be reset as of each Interest Reset
Date; PROVIDED, HOWEVER, that the interest rate in effect for the
period, if any, from the Original Issue Date to the Initial Interest
Reset Date shall be the Initial Interest Rate.
Unless otherwise specified on the face hereof, the rate with respect to
each Interest Rate Basis will be determined in accordance with the applicable
provisions below. Except as set forth above or on the face hereof, the interest
rate in effect on each day shall be (i) if such day is an Interest Reset Date,
the interest rate determined as of the Interest Determination Date (as
hereinafter defined) immediately preceding such Interest Reset Date or (ii) if
such day is not an Interest Reset Date, the interest rate determined as of the
Interest Determination Date immediately preceding the most recent Interest Reset
Date. If any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding Business
Day, except that if LIBOR is an applicable Interest Rate Basis and such Business
Day falls in the next succeeding calendar month, such Interest Reset Date shall
be the immediately preceding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or executive order to close in The City of New
York; PROVIDED, HOWEVER, that if the Specified Currency is other than United
States dollars and any payment is to be made in the Specified Currency in
accordance with the provisions hereof, such day is also not a day on which
banking institutions are authorized or required by law or executive order to
close in the Principal Financial Center (as defined below) of the country
issuing the Specified Currency (or, in the case of European Currency Units
("ECU"), is not a day that appears as an ECU non-settlement day on the display
designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day so
designated by the ECU Banking Association) or, if ECU non-settlement days do not
appear on that page (and are not so designated), is not a day on which payments
in ECU cannot be settled in the international interbank market); PROVIDED,
FURTHER, that if LIBOR is an applicable Interest Rate Basis, such day is also a
London Business Day (as defined below). "London Business Day" means any day (i)
if the Index Currency (as defined below) is other than ECU, on which dealings in
such Index Currency are transacted in the London interbank market or (ii) if the
Index Currency is ECU, that is not designated as an ECU nonsettlement day on the
display designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day
so designated by the ECU Banking Association) or, if ECU non-settlement days do
not appear on that page (and are not so designated), is not a day on which
payments in ECU cannot be settled in the international interbank market.
"Principal Financial Center" means the capital city of the country issuing the
Specified Currency, or solely with respect to the calculation of LIBOR, the
Index Currency, except that with respect to United States dollars, Australian
dollars,
12
<PAGE> 13
Deutsche marks, Dutch guilders, Italian lire, Swiss francs and ECU, the
"Principal Financial Center" shall be The City of New York, Sydney, Frankfurt,
Amsterdam, Milan, Zurich and Luxembourg, respectively.
The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate will
be the second Business Day immediately preceding the applicable Interest Reset
Date; the "Interest Determination Date" with respect to the Eleventh District
Cost of Funds Rate shall be the last working day of the month immediately
preceding the applicable Interest Reset Date on which the Federal Home Loan Bank
of San Francisco (the "FHLB of San Francisco") publishes the Index (as defined
below); and the "Interest Determination Date" with respect to LIBOR shall be the
second London Business Day immediately preceding the applicable Interest Reset
Date, unless the Index Currency is British pounds sterling, in which case the
"Interest Determination Date" will be the applicable Interest Reset Date. The
"Interest Determination Date" with respect to the Treasury Rate shall be the day
in the week in which the applicable Interest Reset Date falls on which day
Treasury Bills (as defined below) are normally auctioned (Treasury Bills are
normally sold at an auction held on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday);
PROVIDED, HOWEVER, that if an auction is held on the Friday of the week
preceding the applicable Interest Reset Date, the "Interest Determination Date"
shall be such preceding Friday; and PROVIDED, FURTHER, that if an auction shall
fall on any Interest Reset Date then the Interest Reset Date shall instead be
the first Business Day following such auction. If the interest rate of this Note
is determined with reference to two or more Interest Rate Bases specified on the
face hereof, the "Interest Determination Date" pertaining to this Note shall be
the most recent Business Day which is at least two Business Days prior to the
applicable Interest Reset Date on which each Interest Rate Basis is
determinable. Each Interest Rate Basis shall be determined as of such date, and
the applicable interest rate shall take effect on the related Interest Reset
Date.
CD RATE. If an Interest Rate Basis for this Note is specified on the
face hereof as the CD Rate, the CD Rate shall be determined as of the applicable
Interest Determination Date (a "CD Rate Interest Determination Date") as the
rate on such date for negotiable United States dollar certificates of deposit
having the Index Maturity specified on the face hereof as published by the Board
of Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)", or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date (as defined below), the rate on such
CD Rate Interest Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity as published by the Federal
Reserve Bank of New
13
<PAGE> 14
York in its daily statistical release "Composite 3:30 P.M. Quotations for United
States Government Securities" or any successor publication ("Composite
Quotations") under the heading "Certificates of Deposit". If such rate is not
yet published in either H.15(519) or Composite Quotations by 3:00 P.M., New York
City time, on the related Calculation Date, then the CD Rate on such CD Rate
Interest Determination Date will be calculated by the Calculation Agent
specified on the face hereof and will be the arithmetic mean of the secondary
market offered rates as of 10:00 A.M., New York City time, on such CD Rate
Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in The City of New York selected by
the Calculation Agent for negotiable certificates of deposit of major United
States money market banks for negotiable United States dollar certificates of
deposit with a remaining maturity closest to the Index Maturity in an amount
that is representative for a single transaction in that market at that time;
PROVIDED, HOWEVER, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate determined as of such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
CMT RATE. If an Interest Rate Basis for this Note is specified on the
face hereof as the CMT rate, the CMT Rate shall be determined as of the
applicable Interest Determination Date (a "CMT Rate Interest Determination
Date") as the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption "...Treasury Constant Maturities...Federal Reserve
Board Release H.15...Mondays Approximately 3:45 P.M.", under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date and
(ii) if the Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the related CMT Rate
Interest Determination Date occurs. If such rate is no longer displayed on the
relevant page or is not displayed by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published or is not published by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate on such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate on the CMT Rate
Interest Determination Date will be
14
<PAGE> 15
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a "Reference
Dealer") in The City of New York selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent is
unable to obtain three such Treasury Note quotations, the CMT Rate on such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 P.M., New York City time, on such CMT
Rate Interest Determination Date of three Reference Dealers in The City of New
York (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least U.S.$100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
mentioned herein, the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as described
in the second preceding sentence have remaining terms to maturity equally close
to the Designated CMT Maturity Index, the quotes for the Treasury Note with the
shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page specified on the face hereof (or any other page as
may replace such page on that service for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519)) for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519). If no such page is
specified on the face hereof, the Designated CMT Telerate Page shall be 7052,
for the most recent week.
15
<PAGE> 16
"Designated CMT Maturity Index" means the original period to maturity
of the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the Designated
CMT Maturity Index shall be 2 years.
COMMERCIAL PAPER RATE. If an Interest Rate Basis for this Note is
specified on the face hereof as the Commercial Paper Rate, the Commercial Paper
Rate shall be determined as of the applicable Interest Determination Date (a
"Commercial Paper Rate Interest Determination Date") as the Money Market Yield
(as defined below) on such date of the rate for commercial paper having the
Index Maturity as published in H.15(519) under the heading "Commercial Paper".
In the event that such rate is not published by 3:00 P.M., New York City time,
on such Calculation Date, then the Commercial Paper Rate on such Commercial
Paper Rate Interest Determination Date will be the Money Market Yield of the
rate for commercial paper having the Index Maturity as published in Composite
Quotations under the heading "Commercial Paper" (with an Index Maturity of one
month or three months being deemed to be equivalent to an Index Maturity of 30
days or 90 days, respectively). If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on such
Calculation Date, then the Commercial Paper Rate on such Commercial Paper Rate
Interest Determination Date will be calculated by the Calculation Agent and
shall be the Money Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 A.M., New York City time, on such Commercial Paper Rate
Interest Determination Date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for commercial paper having
the Index Maturity placed for an industrial issuer whose bond rating is "AA", or
the equivalent from a nationally recognized statistical rating organization;
PROVIDED, HOWEVER, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the Commercial Paper Rate determined
as of such Commercial Paper Rate Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
D X 360
Money Market Yield = ----------------------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
ELEVENTH DISTRICT COST OF FUNDS RATE. If an Interest Rate
Basis for this Note is specified on the face hereof as the
Eleventh District Cost of Funds Rate, the Eleventh District Cost
16
<PAGE> 17
of Funds Rate shall be determined as of the applicable Interest Determination
Date (an "Eleventh District Cost of Funds Rate Interest Determination Date") as
the rate equal to the monthly weighted average cost of funds for the calendar
month immediately preceding the month in which such Eleventh District Cost of
Funds Rate Interest Determination Date falls, as set forth under the caption
"11th District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on
such Eleventh District Cost of Funds Rate Interest Determination Date. If such
rate does not appear on Telerate Page 7058 on such Eleventh District Cost of
Funds Rate Interest Determination Date, then the Eleventh District Cost of Funds
Rate on such Eleventh District Cost of Funds Rate Interest Determination Date
shall be the monthly weighted average cost of funds paid by member institutions
of the Eleventh Federal Home Loan Bank District that was most recently announced
(the "Index") by the FHLB of San Francisco as such cost of funds for the
calendar month immediately preceding such Eleventh District Cost of Funds Rate
Interest Determination Date. If the FHLB of San Francisco fails to announce the
Index on or prior to such Eleventh District Cost of Funds Rate Interest
Determination Date for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date, the Eleventh District
Cost of Funds Rate determined as of such Eleventh District Cost of Funds Rate
Interest Determination Date will be the Eleventh District Cost of Funds Rate in
effect on such Eleventh District Cost of Funds Rate Interest Determination Date.
FEDERAL FUNDS RATE. If an Interest Rate Basis for this Note is
specified on the face hereof as the Federal Funds Rate, the Federal Funds Rate
shall be determined as of the applicable Interest Determination Date (a "Federal
Funds Rate Interest Determination Date") as the rate on such date for United
States dollar federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not published by 3:00 P.M., New York City time, on the
Calculation Date, the rate on such Federal Funds Rate Interest Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate". If such rate is not published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on the related
Calculation Date, then the Federal Funds Rate on such Federal Funds Interest
Determination Date shall be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight United States
dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York selected by the Calculation Agent, prior to
9:00 A.M., New York City time, on such Federal Funds Rate Interest Determination
Date; PROVIDED, HOWEVER, that if the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate
determined as of such Federal Funds Rate Interest Determination Date will be the
Federal Funds Rate in effect on such Federal Funds Rate Interest Determination
Date.
17
<PAGE> 18
LIBOR. If an Interest Rate Basis for this Note is specified on the face
hereof as LIBOR, LIBOR shall be determined by the Calculation Agent as of the
applicable Interest Determination Date (a "LIBOR Interest Determination Date")
in accordance with the following provisions:
(i) if (a) "LIBOR Reuters" is specified on the face hereof, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page (as
defined below) by its terms provides only for a single rate, in which case such
single rate will be used) for deposits in the Index Currency having the Index
Maturity, commencing on the applicable Interest Reset Date, that appear (or, if
only a single rate is required as aforesaid, appears) on the Designated LIBOR
Page (as defined below) as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date, or (b) "LIBOR Telerate" is specified on the face hereof, or
if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on the face hereof
as the method for calculating LIBOR, the rate for deposits in the Index Currency
having the Index Maturity, commencing on such Interest Reset Date, that appears
on the Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR
Interest Determination Date. If fewer than two such offered rates appear, or if
no such rate appears, as applicable, LIBOR on such LIBOR Interest Determination
Date shall be determined in accordance with the provisions described in clause
(ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on the
Designated LIBOR Page as specified in clause (i) above, the Calculation Agent
shall request the principal London offices of each of four major reference banks
in the London interbank market, as selected by the Calculation Agent, to provide
the Calculation Agent with its offered quotation for deposits in the Index
Currency for the period of the Index Maturity, commencing on the applicable
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date
and in a principal amount that is representative for a single transaction in
such Index Currency in such market at such time. If at least two such quotations
are so provided, then LIBOR on such LIBOR Interest Determination Date will be
the arithmetic mean of such quotations. If fewer than two such quotations are so
provided, then LIBOR on such LIBOR Interest Determination Date will be the
arithmetic mean of the rates quoted at approximately 11:00 A.M., in the
applicable Principal Financial Center, on such LIBOR Interest Determination Date
by three major banks in such Principal Financial Center selected by the
Calculation Agent for loans in the Index Currency to leading European banks,
having the Index Maturity and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time; PROVIDED,
HOWEVER, that if the banks so selected by the Calculation Agent are not quoting
as mentioned in this sentence, LIBOR determined as of such LIBOR Interest
Determination Date shall be LIBOR in effect on such LIBOR Interest Determination
Date.
18
<PAGE> 19
"Index Currency" means the currency or composite currency specified on
the face hereof as to which LIBOR shall be calculated. If no such currency or
composite currency is specified on the face hereof, the Index Currency shall be
United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on
the face hereof, the display on the Reuter Monitor Money Rates Service (or any
successor service) for the purpose of displaying the London interbank rates of
major banks for the Index Currency, or (b) if "LIBOR Telerate" is specified on
the face hereof or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on
the face hereof as the method for calculating LIBOR, the display on the Dow
Jones Telerate Service (or any successor service) for the purpose of displaying
the London interbank rates of major banks for the Index Currency.
PRIME RATE. If an Interest Rate Basis for this Note is specified on the
face hereto as the Prime Rate, the Prime Rate shall be determined as of the
applicable Interest Determination Date (a "Prime Rate Interest Determination
Date") as the rate on such date as such rate is published in H.15(519) under the
heading "Bank Prime Loan". If such rate is not published prior to 3:00 P.M., New
York City time, on the related Calculation Date, then the Prime Rate shall be
the arithmetic mean of the rates of interest publicly announced by each bank
that appears on the Reuters Screen NYMF Page (as defined below) as such bank's
prime rate or base lending rate as in effect for such Prime Rate Interest
Determination Date. If fewer than four such rates appear on the Reuters Screen
NYMF Page for such Prime Rate Interest Determination Date, the Prime Rate shall
be the arithmetic mean of the prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of business
on such Prime Rate Interest Determination Date by four major money center banks
in The City of New York selected by the Calculation Agent. If fewer than four
such quotations are so provided, the Prime Rate shall be the arithmetic mean of
four prime rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date as furnished in The City of New York by the major
money center banks, if any, that have provided such quotations and by as many
substitute banks or trust companies as necessary to obtain such four prime rate
quotations, provided such substitute banks or trust companies are organized and
doing business under the laws of the United States, or any State thereof, each
having total equity capital of at least U.S.$500 million and being subject to
supervision or examination by Federal or State authority, selected by the
Calculation Agent to provide such rate or rates; PROVIDED, HOWEVER, that if the
banks or trust companies so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
19
<PAGE> 20
"Reuters Screen NYMF Page" means the display designated as page "NYMF"
on the Reuter Monitor Money Rates Service (or such other page as may replace the
NYMF page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
TREASURY RATE. If an Interest Rate Basis for this Note is specified on
the face hereof as the Treasury Rate, the Treasury Rate shall be determined as
of the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity, as such rate is published
in H.15(519) under the heading "Treasury bills-auction average (investment)" or,
if not published by 3:00 P.M., New York City time, on the related Calculation
Date, the auction average rate of such Treasury Bills (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the results of the Auction of Treasury Bills having
the Index Maturity are not reported as provided above by 3:00 P.M., New York
City time, on such Calculation Date, or if no such Auction is held, then the
Treasury Rate shall be calculated by the Calculation Agent and shall be a yield
to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent,
for the issue of Treasury Bills with a remaining maturity closest to the Index
Maturity; PROVIDED, HOWEVER, that if the dealers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate
determined as of such Treasury Rate Interest Determination Date will be the
Treasury Rate in effect on such Treasury Rate Interest Determination Date.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, in each case as specified on the face hereof. The
interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
The Calculation Agent shall calculate the interest rate hereon on or
before each Calculation Date. The "Calculation Date", if applicable, pertaining
to any Interest Determination Date shall be the earlier of (i) the tenth
calendar day after such Interest Determination Date or, if such day is not a
Business Day, the next succeeding Business Day or (ii) the Business Day
immediately preceding the applicable Interest Payment Date or the Maturity Date,
as the case may be. At the
20
<PAGE> 21
request of the Holder hereof, the Calculation Agent will provide to the Holder
hereof the interest rate hereon then in effect and, if determined, the interest
rate that will become effective as a result of a determination made for the next
succeeding Interest Reset Date.
Accrued interest hereon shall be an amount calculated by multiplying
the principal amount hereof by an accrued interest factor. Such accrued interest
factor shall be computed by adding the interest factor calculated for each day
in the applicable Interest Period. Unless otherwise specified as the Day Count
Convention on the face hereof, the interest factor for each such date shall be
computed by dividing the interest rate applicable to such day by 360 if the CD
Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Rate, LIBOR or the Prime Rate is an applicable Interest Rate Basis
or by the actual number of days in the year if the CMT Rate or the Treasury Rate
is an applicable Interest Rate Basis. Unless otherwise specified as the Day
Count Convention on the face hereof, the interest factor for this Note, if the
interest rate is calculated with reference to two or more Interest Rate Bases,
shall be calculated in each period in the same manner as if only the Applicable
Interest Rate Basis specified on the face hereof applied.
All percentages resulting from any calculation on this Note shall be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards, and all amounts used in or
resulting from such calculation on this Note shall be rounded, in the case of
United States dollars, to the nearest cent or, in the case of a Specified
Currency other than United States dollars, to the nearest unit (with one-half
cent or unit being rounded upwards).
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Debt Securities at any time by the
Company and the Trustee with the consent of the holders of not less than a
majority of the aggregate principal amount of all Debt Securities at the time
outstanding and affected thereby. The Indenture also contains provisions
permitting the holders of not less than a majority of the aggregate principal
amount of the outstanding Debt Securities of any series, on behalf of the
holders of all
21
<PAGE> 22
such Debt Securities, to waive compliance by the Company with certain provisions
of the Indenture. Furthermore, provisions in the Indenture permit the holders of
not less than a majority of the aggregate principal amount of the outstanding
Debt Securities of any series, in certain instances, to waive, on behalf of all
of the holders of Debt Securities of such series, certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the holder
of this Note shall be conclusive and binding upon such holder and upon all
future holders of this Note and other Notes issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
The Debt Securities evidenced by this Note are, to the extent and in
the manner set forth in the Indenture, expressly subordinated and subject in
right of payment to the prior payment in full of all Senior Indebtedness. Each
Holder of this Note, by accepting the same, agrees to and shall be bound by such
provisions of the Indenture and authorizes and directs the Trustee on its behalf
to take such action as may be necessary or appropriate to effectuate such
subordination as provided in the Indenture and appoints the Trustee its
attorney-in-fact for any and all such purposes.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the Security
Register of the Company upon surrender of this Note for registration of transfer
at the office or agency of the Company in any place where the principal hereof
and any premium or interest hereon are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the holder hereof or by his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the holder hereof surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
22
<PAGE> 23
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely in such State.
23
<PAGE> 24
-------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____ TEN
ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
Additional abbreviations may also be used though not in the above list.
----------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------
| |
|------------------------------|----------------------------------------------
- ------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
- ------------------------------------------------------------------------------
this Note and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________ Attorney
to transfer this Note on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
---------------------------------------
Notice: The signature(s) on this
assignment must correspond with the
name(s) as written upon the face of this
Note in every particular, without
alteration or enlargement or any change
whatsoever.
24
<PAGE> 25
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at ___________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate
trust office, currently located at __________________________________________,
not more than 60 nor less than 30 calendar days prior to the Repayment Date,
this Note with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S.$1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion
of this Note not being repaid (in the absence of any such specification, one
such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $_____________ _____________________________
Notice: The signature(s) on
Date: this Option to Elect Repayment
---------------------- must correspond with the
name(s) as written upon the
face of this Note in every
particular, without alteration
or enlargement or any change
whatsoever.
25
<PAGE> 1
Exhibit 5
BAKER & HOSTETLER
1900 EAST NINTH STREET
CLEVELAND, OHIO 44114-3485
June 7, 1996
Developers Diversified
Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Gentlemen:
As counsel for Developers Diversified Realty Corporation, an Ohio
corporation (the "Company"), we are familiar with the Company's Registration
Statement on Form S-3 (the "Registration Statement") being filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
on or about the date hereof, with respect to the offering from time to time by
the Company of an aggregate of up to $314,384,175 of the following: (i) one or
more series of senior debt securities ("Senior Securities") to be issued under
an Indenture dated as of May 1, 1994 between the Company and National City Bank,
as trustee (the "Senior Indenture"), (ii) one or more series of subordinated
debt securities ("Subordinated Securities") to be issued under an Indenture
dated as of May 1, 1994 between the Company and Chemical Bank, as trustee (the
"Subordinated Indenture") (the Senior Securities and the Subordinated Securities
collectively, the "Debt Securities," and the Senior Indenture and the
Subordinated Indenture collectively, the "Indentures"), (iii) Common Shares,
without par value (the "Common Shares"), (iv) Warrants to purchase Common Shares
(the "Common Share Warrants"), (v) one or more series of Class A Cumulative
Preferred Shares, without par value (the "Class A Shares"), (vi) one or more
series of Class B Cumulative Preferred Shares, without par value (the "Class B
Shares"), (vii) one or more series of Class C Cumulative Preferred Shares,
without par value (the "Class C Shares"), (viii) one or more series of Class D
Cumulative Preferred Shares, without par value (the "Class D Shares"), (ix) one
or more series of Class E Cumulative Preferred Shares, without par value (the
"Class E Shares"), (x) one or more series of Noncumulative Preferred Shares,
without par value (the "Noncumulative Preferred Shares," and collectively with
the Class A Shares, the Class B Shares, the Class C Shares, the Class D Shares,
and the Class E Shares, the "Preferred Shares"), and (xi) Depositary Shares
representing whole or fractional parts of one
<PAGE> 2
Developers Diversified
June 7, 1996
Page 2
or more series of the Preferred Shares (the "Depositary Shares"). The Debt
Securities, the Common Shares, the Common Share Warrants, the Preferred Shares
and the Depositary Shares are collectively referred to herein as the
"Securities." All capitalized terms which are not defined herein shall have the
meanings ascribed to them in the Registration Statement.
In connection with the foregoing, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of those documents and
instruments filed as exhibits to the Registration Statement, the Code of
Regulations of the Company, as amended, and such records of the corporate
proceedings of the Company and such other documents as we deemed necessary to
render this opinion.
Based on the foregoing and subject to the qualifications and limitations
set forth below, we are of the opinion that:
1. When (a) Senior Securities in substantially the form filed as an exhibit
to the Registration Statement shall have been duly executed and
authenticated in accordance with the terms of the Senior Indenture, (b) the
Senior Indenture shall have been qualified under the Trust Indenture Act of
1939 and (c) those Senior Securities shall have been issued and sold as
described in the Registration Statement, and if in an underwritten
offering, in accordance with the terms and conditions of the applicable
Underwriting Agreement, substantially in the form filed as an exhibit to
the Registration Statement with the blanks therein and in any related Terms
Agreement appropriately filled in, and in a manner contemplated in the
Registration Statement, including the Prospectus Supplement relating to
those Senior Securities, those Senior Securities will be legally issued,
and will be valid and binding obligations of the Company, except as may be
limited by bankruptcy, insolvency, reorganization or other laws relating to
the enforcement of creditors' rights generally or by general principles of
equity.
2. When (a) Subordinated Securities in substantially the form filed as an
exhibit to the Registration Statement shall have been duly executed and
authenticated in accordance with the terms of the Subordinated Indenture,
(b) the Subordinated Indenture shall have been qualified under the Trust
Indenture Act of 1939 and (c) those Subordinated Securities shall have been
issued and sold as described in the
<PAGE> 3
Developers Diversified
June 7, 1996
Page 3
Registration Statement, and if in an underwritten offering, in accordance
with the terms and conditions of the applicable Underwriting Agreement,
substantially in the form filed as an exhibit to the Registration Statement
with the blanks therein and any related Terms Agreement appropriately
filled in, and in a manner contemplated in the Registration Statement,
including the Prospectus Supplement relating to those Subordinated
Securities, those Subordinated Securities will be legally issued and will
be valid and binding obligations of the Company, except as may be limited
by bankruptcy, insolvency, reorganization or other laws relating to the
enforcement of creditors' rights generally or by general principles of
equity.
3. When Common Shares shall have been issued and sold as described in the
Registration Statement, and if in an underwritten offering, in accordance
with the terms and conditions of the applicable Underwriting Agreement,
substantially in the form filed as an exhibit to the Registration Statement
with the blanks therein and in any related Terms Agreement appropriately
filled in, and in a manner contemplated in the Registration Statement,
including the Prospectus Supplement relating to those Common Shares, those
Common Shares will be validly issued, fully paid and nonassessable.
4. When Common Share Warrants shall have been issued and sold as described
in the Registration Statement, and if in an underwritten offering, in
accordance with the terms and conditions of the applicable Underwriting
Agreement, substantially in the form filed as an exhibit to the
Registration Statement with the blanks therein and in any related Terms
Agreement appropriately filled in, and in a manner contemplated in the
Registration Statement, including the Prospectus Supplement relating to
those Common Share Warrants, those Common Share Warrants will be legally
issued, and will be valid and binding obligations of the Company, except as
may be limited by bankruptcy, insolvency, reorganization or other laws
relating to the enforcement of creditors' rights generally or by general
principles of equity.
5. When Preferred Shares shall have been issued and sold as described in
the Registration Statement, and if in an underwritten offering, in
accordance with the terms and conditions of the applicable Underwriting
<PAGE> 4
Developers Diversified
June 7, 1996
Page 4
Agreement, substantially in the form filed as an exhibit to the
Registration Statement with the blanks therein and in any related Terms
Agreement appropriately filled in, and in a manner contemplated in the
Registration Statement, including the Prospectus Supplement relating to
those Preferred Shares, those Preferred Shares will be validly issued,
fully paid and nonassessable.
6. When Depositary Shares shall have been issued and sold as described in
the Registration Statement, and if in an underwritten offering, in
accordance with the terms and conditions of the applicable Underwriting
Agreement, substantially in the form filed as an exhibit to the
Registration Statement with the blanks therein and in any related Terms
Agreement appropriately filled in, and in a manner contemplated in the
Registration Statement, including the Prospectus Supplement relating to
those Depositary Shares, those Depositary Shares will be validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and the reference to us under the caption "Legal Matters"
in the Prospectus that is a part of the Registration Statement.
Very truly yours,
/s/ Baker & Hostetler
<PAGE> 1
Exhibit 8
BAKER & HOSTETLER
1900 EAST NINTH STREET
CLEVELAND, OHIO 44114-3485
June 7, 1996
Developers Diversified
Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Re: $314,384,175 Aggregate Offering Price
of Securities of Developers Diversified
Realty Corporation (the "Company")
----------------------------------
Ladies and Gentlemen:
In connection with the registration statement on Form S-3 being filed by
you on June 7, 1996, with the Securities and Exchange Commission (the
"Registration Statement"), you have requested our opinion regarding whether the
Company has been organized in conformity with the requirements for qualification
as a real estate investment trust ("REIT"), and whether its method of operation
has enabled the Company to meet, and will enable it to continue to meet, the
requirements for qualification and taxation as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"). This opinion is based on various
assumptions and is conditioned upon certain representations made by the Company
as to factual matters as set forth in the Registration Statement and the
registration statements on Forms S-3 and S-11 previously filed with the
Securities and Exchange Commission (the "Prior Registrations"). In addition, the
Company has provided a representation letter certifying, among other items, that
it has made a timely election to be taxed as a REIT under the Code commencing
with its initial taxable year ended December 31, 1993, and that commencing with
the first taxable year that the Company has elected to be taxed as a REIT, the
Company has operated and will continue to operate in accordance with the method
of operation described in the Registration Statement and the Prior
Registrations.
Based on such assumptions and representations, it is our opinion that the
Company has qualified as a REIT for its taxable years ended December 31, 1993,
and December 31, 1994, and the Company is organized and operates in a manner
that will enable it to qualify to be taxed as a REIT under the Code for 1995
and thereafter provided the Company continues to meet
<PAGE> 2
the asset composition, source of income, shareholder diversification,
distributions, recordkeeping, and other requirements of the Code necessary for
the Company to qualify as a REIT. No opinion is expressed as to any matter not
discussed herein.
This opinion is based on various statutory provisions and regulations
promulgated thereunder, in effect on the date hereof, and the interpretations of
such provisions and regulations by the Internal Revenue Service and the courts
having jurisdiction over such matters, all of which are subject to change either
prospectively or retroactively. Also, any variation from the factual statements
set forth in the Registration Statement, the Prior Registrations or the written
representations made by the Company in connection with this opinion may affect
the conclusions stated herein. Moreover, the Company's qualification and
taxation as a REIT depends upon the Company's ability to meet, through actual
annual operating results, distribution levels and diversity of stock ownership,
the various qualification tests imposed under the Code, the results of which
will not be reviewed by Baker & Hostetler. Accordingly, no assurance can be
given that the actual results of the Company's operations for any one taxable
year will satisfy such requirements. We wish to point out that our opinion is
not binding on the Internal Revenue Service and, without limiting our opinion,
we note that there can be no assurance that all of the requirements for
qualification as a REIT for any particular taxable year have in fact been met
until the return for such taxable year has been reviewed by the Internal Revenue
Service or the period for such review has expired.
This opinion is furnished to you solely for use in connection with the
Registration Statement. We hereby consent to the filing of this opinion as an
Exhibit to the Registration Statement.
Very truly yours,
/s/ Baker & Hostetler
<PAGE> 1
Exhibit 12(a)
<TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS)
<CAPTION>
QUARTER
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------- ---------
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS $(6,208) $(3,284) $ 9,349 $21,352 $25,505 $11,216
------- ------- ------- ------- ------- -------
FIXED CHARGES:
INTEREST EXPENSE INCLUDING AMORTIZATION OF DEFERRED COSTS
AND CAPITALIZED INTEREST $26,449 $25,509 $15,100 $22,496 $32,107 $ 7,828
GROUND RENT 33% $44 $44 $44 $44 $44 $11
PROPORTIONATE SHARE OF FIXED CHARGES OF 50% OWNED JOINT
VENTURE ACCOUNTED FOR USING EQUITY METHOD OF ACCOUNTING $ 1,197 $ 1,165 $ 1,073 $ 1,063 $ 2,361 $ 2,795
------- ------- ------- ------- ------- -------
TOTAL FIXED COSTS $27,690 $26,718 $16,217 $23,603 $34,512 $10,634
------- ------- ------- ------- ------- -------
CAPITALIZED INTEREST DURING THE PERIOD $0 $0 $(40) $(1,073) $(2,748) $ (937)
AMORTIZATION OF CAPITALIZED INTEREST DURING THE PERIOD $ 134 $ 134 $ 134 $ 135 $ 171 $ 64
------- ------- ------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES AND FIXED CHARGES $21,616 $23,568 $25,660(1) $44,017 $57,440 $20,977
======= ======= ======= ======= ======= =======
RATIO OF EARNINGS TO FIXED CHARGES 0.78 0.88 1.58(1) 1.86 1.66 1.97
======= ======= ======= ======= ======= =======
FIXED CHARGES IN EXCESS OF EARNINGS $ 6,074 $ 3,150
======= =======
<FN>
(1) INCLUDED IN EARNINGS FOR 1993 WAS A NONRECURRING CHARGE OF $2,641 BEFORE
INCOME TAXES RELATING TO TRANSFER TAXES, TITLE COSTS AND LENDER CONSENT FEES
ASSOCIATED WITH THE TRANSFER OF THE INITIAL PORTFOLIO OF PROPERTIES TO THE
COMPANY. IF SUCH CHARGES HAD NOT OCCURRED THE RATIO OF EARNINGS TO FIXED CHARGES
WOULD HAVE BEEN 1.75.
</TABLE>
<PAGE> 1
<TABLE>
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS
(AMOUNTS IN THOUSANDS)
EXHIBIT 12(b)
-------
<CAPTION>
QUARTER
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- ---------
1991 1992 1993 1994 1995 1996
-------------------------------------------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS ($6,208) ($3,284) $9,349 $21,352 $25,505 $11,216
-------------------------------------------------------- ---------
------------------------------------------------------------------
FIXED CHARGES:
INTEREST EXPENSE INCLUDING AMORTIZATION OF DEFERRED
COST AND CAPITALIZED INTEREST $26,449 $25,509 $15,100 $22,496 $32,107 $7,828
GROUND RENT 33% $44 $44 $44 $44 $44 $11
PREFERRED DIVIDENDS $1,255 $3,550
PROPORTIONATE SHARE OF FIXED CHARGES OF 50% OWNED JOINT
VENTURE ACCOUNTED FOR USING EQUITY METHOD OF ACCOUNTING $1,197 $1,165 $1,073 $1,063 $2,361 $2,795
-------------------------------------------------------- --------
TOTAL FIXED COSTS $27,690 $26,718 $16,217 $23,603 $35,767 $14,184
-------------------------------------------------------- --------
CAPITALIZED INTEREST DURING THE PERIOD $0 $0 ($40) ($1,073) ($2,748) ($937)
PREFERRED DIVIDENDS ($1,255) ($3,550)
AMORTIZATION OF CAPITALIZED INTEREST DURING THE PERIOD $134 $134 $134 $135 $171 $64
-------------------------------------------------------- --------
EARNINGS BEFORE INCOME TAXES AND FIXED CHARGES $21,616 $23,568 $25,660 (1) $44,017 $57,440 $20,977
==================================================================
RATIO OF EARNINGS TO FIXED CHARGES 0.78 0.88 1.58 (1) 1.86 1.61 1.48
==================================================================
FIXED CHARGES IN EXCESS OF EARNINGS $6,074 $3,150
==================
</TABLE>
(1) INCLLUDED IN EARNINGS FOR 1993 WAS A NONRECURRING CHARGE OF $2,641 BEFORE
INCOME TAXES RELATING TO TRANSFER TAXES, TITLE COSTS AND LENDER CONSENT FEES
ASSOCIATED WITH THE TRANSFER OF THE INITIAL PORTFOLIO OF PROPERTIES TO THE
COMPANY. IF SUCH CHARGES HAD NOT OCCURRED THE RATIO OF EARNINGS TO FIXED
CHARGES WOULD HAVE BEEN 1.75.
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 20, 1996 appearing on page F-2 of Developers Diversified Realty
Corporation's Annual Report on Form 10-K for the year ended December 31, 1995.
We also consent to the incorporation by reference of our reports dated (i)
January 31, 1995 relating to the statement of revenue and certain expenses for
the year ended December 31, 1994 of Airport Square, March 31, 1995 relating to
the statement of revenue and certain expenses for the year ended December 31,
1994 of Wando Crossing and April 14, 1995 relating to the statement of revenue
and certain expenses for the year ended December 31, 1994 of The Shoppes of Boot
Ranch, appearing on pages F-2, F-5 and F-8, respectively, of the Current Report
on Form 8-K dated May 8, 1995, and (ii) October 17, 1995 relating to the
statement of revenue and certain expenses for the year ended December 31, 1994
of the Selected Homart Community Center Properties and October 12, 1995
relating to the statement of revenue and certain expenses for the year ended
November 30, 1995 of Eastwood Festival Centre, appearing on pages F-2 and F-6,
respectively, of the Current Report on Form 8-K dated November 3, 1995. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
PRICE WATERHOUSE LLP
Cleveland, Ohio
June 7, 1996
<PAGE> 1
Exhibit 25(a)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee pursuant to
section 305(b)(2)
NATIONAL CITY BANK
(Exact name of Trustee as specified in its charter)
34-0420310
(I.R.S. Employer Identification No.)
1900 East Ninth Street
Cleveland, Ohio 44114
(Address of principal executive (zip code)
offices)
David L. Zoeller
Senior Vice President and General Counsel
National City Corporation
1900 East Ninth Street
Cleveland, Ohio 44114
(216) 575-9313
(Name, address and telephone number of agent for service)
---------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(Exact name of obligor as specified in its charter)
OHIO 34-1723097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
(Address of principal (zip code)
executive offices)
Senior Debt Securities
(Title of Indenture securities)
<PAGE> 2
GENERAL
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency, Washington, D.C. The Federal Reserve
Bank of Cleveland, Cleveland, Ohio Federal Deposit Insurance
Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
National City Bank is authorized to exercise corporate trust powers.
2. Affiliations with obligor. If the obligor is an affiliate of the trustee,
describe such affiliation.
NONE
16. List of exhibits
(1) A copy of the Articles of Association of the Trustee. Incorporated
herein by reference is Charter No.786 Merger No.1043 the Articles of
Association of National City Bank, which Articles of Association were
included as a part of Exhibit 1 to Form T-1 filing made by said
National City Bank with the Securities and Exchange Commission in
November 1973 (File No. 2-49786).
Incorporated herein by reference is an amendment to the Articles of
Association, which were included as Exhibit 1 to Form T-1 filing made
by said National City Bank with the Securities and Exchange Commission
on April 23,1996 (File No. 333-02761).
(2) A copy of the certificate of authority of the Trustee to commence
business:
(a) a copy of the certificate of NCB National Bank to commence
business.
<PAGE> 3
Incorporated herein by reference is a true and correct copy of the
certificate issued by the Comptroller of the Currency under date of
April 26, 1973, whereby NCB National Bank was authorized to commence
the business of banking as a national banking association, which true
copy of said Certificate was included as Exhibit 2(a) to Form T-1
filing made by said National City Bank with the Securities and
Exchange Commission in November 1973 (File 2-49786)
(b) a copy of the approval of the merger of The National City Bank of
Cleveland into NCB National Bank under the charter of NCBNational
Bank and under the title "National City Bank."
Incorporated herein by reference is a true and corrected copy of the
certificate issued by the Comptroller of the Currency under date of
April 27, 1973, whereby The National City Bank of Cleveland was merged
into NCB National Bank, which true copy of said certificate was
included as Exhibit 2(b) to Form T-1 filing made by said National City
Bank with the Securities and Exchange Commission in November 1973
(File 2-49786).
(3) A copy of the authorization of the Trustee to exercise corporate trust
powers.
Incorporated herein by reference is a true and correct copy of the
certificate dated April 13, 1973 issued by the Comptroller of the
Currency whereby said National City Bank has been granted the right to
exercise certain trust powers, which true copy of said certificate was
included as Exhibit 3 to Form T-1 filing made by said National City
Bank with the Securities and Exchange Commission in November 1973
(File 2-49786).
(4) A copy of existing By-Laws of the Trustee.
Incorporated herein by reference is a true and correct copy of the
National City Bank By-Laws as amended through January 1, 1993. This
true copy of said By-Laws was included as Exhibit 4 to For T-1 filing
made by National City Bank with the Securities and Exchange Commission
in March, 1995 (File 22-26594).
(5) Not applicable.
<PAGE> 4
(6) Consent of the United States Institutional Trustee required by Section
321(b) of the Act.
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, and to the extent required thereby to enable it to act as an indenture
trustee, National City Bank hereby consents as of the date hereof that reports
of examinations of it by the Treasury Department, the Comptroller of the
Currency, the Board of Governors of the Federal Reserve Banks, the Federal
Deposit Insurance Corporation or of any other Federal or State authority having
the right to examine National City Bank, may be furnished by similar authorities
to the Securities and Exchange Commission upon request thereon.
NATIONAL CITY BANK
By /s/Janet A. Schwartz
----------------------
Janet A. Schwartz
Vice President
(7) A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
Attached hereto as Exhibit 7 is the latest report of condition of
National City Bank.
(8) Not applicable.
(9) Not applicable.
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, National City Bank, a national banking association organized and
existing under the laws of the United State of America, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Cleveland, and State of Ohio, on
the 20th day of May, 1996.
NATIONAL CITY BANK
By /s/Janet A. Schwartz
----------------------
Janet A. Schwartz
Vice President
<PAGE> 6
<TABLE>
REPORT OF CONDITION EXHIBIT 7
NATIONAL CITY BANK -------
(Including Domestic and Foreign Subsidiaries)
Of Cleveland, In the State of Ohio, at the close of business on March 31, 1996,
published in response to call made by Comptroller of the Currency,
under Title 12, United States Code, Section 161.
ASSETS
<CAPTION>
(In Thousands)
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.................................................. $ 510,965
Interest-bearing balances........................................................................... 1,620
Securities:
Held-to-maturity securities......................................................................... 0
Available-for-sale securities....................................................................... 1,608,534
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and of its Edge
and Agreement subsidiaries, and in IBFs:
Federal funds sold.................................................................................. 969,335
Securities purchased under agreements to resell..................................................... 0
Loans and lease financing receivables:
Loans and leases, net of unearned income................................................ $6,572,236
Less: Allowance for loan and lease losses.............................................. 108,643
Loans and leases, net of unearned income and allowance.............................................. 6,463,593
Assets held in trading accounts........................................................................ 398
Premises and fixed assets (including capitalized leases)............................................... 94,935
Other real estate owned................................................................................ 1,576
Customers' liability to this bank on acceptances outstanding........................................... 36,555
Intangible assets...................................................................................... 1,202
Other assets........................................................................................... 421,154
-----------
TOTAL ASSETS........................................................................................ $10,109,867
===========
LIABILITIES
Deposits:
In domestic offices $ 5,426,864
Non-interest bearing................................................................. $1,394,349
Interest-bearing..................................................................... 4,032,515
In foreign offices, Edge and Agreement subsidiaries, and IBFs....................................... 423,401
Interest-bearing..................................................................... 423,401
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal Funds Purchased............................................................................. 1,186,454
Securities sold under agreements to repurchase...................................................... 762,059
Demand notes issued to the U.S. Treasury............................................................... 20,990
Trading Liabilities.................................................................................... 0
Other borrowed money:
With a remaining maturity of one year or less....................................................... 626,336
With a remaining maturity of more than one year..................................................... 524,663
Bank's liability on acceptances executed and outstanding............................................... 36,555
Subordinated notes and debentures...................................................................... 174,147
Other liabilities...................................................................................... 290,045
-----------
TOTAL LIABILITIES................................................................................... 9,471,514
-----------
EQUITY CAPITAL
Common Stock........................................................................................... 7,436
Surplus................................................................................................ 55,822
Undivided profits and capital reserves................................................................. 576,470
Net unrealized holding gains (losses) on available-for-sale securities................................. (1375)
-----------
TOTAL EQUITY CAPITAL................................................................................ 638,353
-----------
TOTAL LIABILITIES AND EQUITY CAPITAL................................................................ $10,109,867
===========
</TABLE>
I, Gary M. Small, Vice President and Comptroller of the above named bank do
hereby declare that this Report of Condition is true and correct to the best of
my knowledge and belief.
Gary M. Small
We, the undersigned directors attest to the correctness of this Report of
Condition. We declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions and
is true and correct.
William E. MacDonald, III
William R. Robertson
<PAGE> 1
Exhibit 25(b)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
CHEMICAL BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(Exact name of obligor as specified in its charter)
OHIO 34-1723097
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
34555 CHAGRIN BOULEVARD
MORELAND HILLS, OHIO 44022
(Address of principal executive offices) (Zip Code)
------------------------------------------
SUBORDINATED DEBT SECURITIES
(Title of the indenture securities)
-----------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject. New York State Banking Department, State House,
Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551 and Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in
connection with Registration Statement No. 33-50010, which is incorporated by
reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 33-84460, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Chemical Bank, a corporation organized and existing under the laws of
the State of New York, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of New York and State of New York, on the 15TH day of MAY, 1996.
CHEMICAL BANK
By /S/ Davis Safer
------------------------------
David Safer
Senior Trust Officer
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1995, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................. $ 6,390
Interest-bearing balances ......................... 2,544
Securities: ..........................................
Held to maturity securities............................ 3,807
Available for sale securities.......................... 26,522
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ................................ 750
Securities purchased under agreements to resell ... 259
Loans and lease financing receivables:
Loans and leases, net of unearned income $72,938
Less: Allowance for loan and lease losses 1,917
Less: Allocated transfer risk reserve ... 104
Loans and leases, net of unearned income,
allowance, and reserve ............................ 70,917
Trading Assets ....................................... 27,963
Premises and fixed assets (including capitalized
leases)............................................ 1,355
Other real estate owned ............................... 21
Investments in unconsolidated subsidiaries and
associated companies............................... 171
Customer's liability to this bank on acceptances
outstanding ....................................... 1,166
Intangible assets ..................................... 433
Other assets .......................................... 4,822
---------
TOTAL ASSETS .......................................... $147,120
=========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<CAPTION>
<S> <C>
Deposits
In domestic offices ................................ $47,524
Noninterest-bearing .........................$17,041
Interest-bearing ............................ 30,483
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's .......................................... 37,690
Noninterest-bearing .........................$ 147
Interest-bearing ............................ 37,543
-------
Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ............................ 9,384
Securities sold under agreements to repurchase ..... 2,166
Demand notes issued to the U.S. Treasury .............. 741
Trading liabilities ................................... 21,847
Other Borrowed money:
With original maturity of one year or less ......... 9,669
With original maturity of more than one year ....... 146
Mortgage indebtedness and obligations under capitalized
leases ............................................. 14
Bank's liability on acceptances executed and outstanding 1,180
Subordinated notes and debentures ..................... 3,411
Other liabilities ..................................... 5,290
TOTAL LIABILITIES ..................................... 139,062
--------
EQUITY CAPITAL
Common stock .......................................... 620
Surplus ............................................... 4,665
Undivided profits and capital reserves ................ 3,055
Net unrealized holding gains (Losses)
on available-for-sale securities ...................... (290)
Cumulative foreign currency translation adjustments ... 8
TOTAL EQUITY CAPITAL .................................. 8,058
----------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .......................... $147,120
==========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true to the best of my knowledge and
belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
WILLIAM B. HARRISON )
- 5 -
