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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K
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(Mark One)
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER 1-11690
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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OHIO 34-1723097
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
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3300 ENTERPRISE PARKWAY, BEACHWOOD, OHIO 44122
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(Address of principal executive offices -- zip code)
(216) 755-5500
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(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Shares, Without Par Value............................ New York Stock Exchange
Depositary Shares Representing Class A Cumulative Redeemable
Preferred Shares.......................................... New York Stock Exchange
Depositary Shares Representing Class B Cumulative Redeemable
Preferred Shares.......................................... New York Stock Exchange
Depositary Shares Representing Class C Cumulative Redeemable
Preferred Shares.......................................... New York Stock Exchange
Depositary Shares Representing Class D Cumulative Redeemable
Preferred Shares.......................................... New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant at March 15, 2000 was $712.7 million.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
58,355,946 common shares outstanding as of March 15, 2000
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DOCUMENTS INCORPORATED BY REFERENCE.
The registrant incorporates by reference in Part III hereof portions of its
definitive Proxy Statement for its 2000 Annual Meeting of Shareholders.
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TABLE OF CONTENTS
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REPORT
ITEM NO. PAGE
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PART I
1. Business.................................................... 3
2. Properties.................................................. 8
3. Legal Proceedings........................................... 26
4. Submission of Matters to a Vote of Security Holders......... 26
PART II
5. Market for the Registrant's Common Equity and Related
Shareholder Matters....................................... 28
6. Selected Financial Data..................................... 29
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 31
7a. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 45
8. Financial Statements and Supplementary Data................. 45
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 45
PART III
10. Directors and Executive Officers of the Registrant.......... 46
11. Executive Compensation...................................... 46
12. Security Ownership of Certain Beneficial Owners and
Management................................................ 46
13. Certain Relationships and Related Transactions.............. 46
PART IV
14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K.................................................. 46
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PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Developers Diversified Realty Corporation, an Ohio Corporation (the
"Company" or "DDR"), a self-administered and self-managed real estate investment
trust (a "REIT"), is in the business of acquiring, developing, redeveloping,
owning, leasing and managing shopping centers and business centers. Unless
otherwise provided, references herein to the Company or DDR includes Developers
Diversified Realty Corporation, its wholly owned and majority owned subsidiaries
and its joint ventures.
From January 1, 1997 to March 15, 2000, the Company has acquired 54
shopping center properties, including those owned through joint ventures, five
of which were acquired in 1999, 41 of which were acquired in 1998 and eight of
which were acquired in 1997. In February 2000, the Company sold one property.
The Company also contributed one property to a 50% joint venture and entered
into an agreement to sell 60% of its 50% joint venture interest in a joint
venture which owns 10 shopping centers.
The Company's executive offices are located at 3300 Enterprise Parkway,
Beachwood, Ohio 44122, and its telephone number is (216) 755-5500.
SHARE SPLIT
Effective August 3, 1998, the Company effected a two for one share split to
shareholders of record on July 27, 1998 in the form of a stock dividend. All per
share amounts and the number of common shares outstanding reflect this split,
unless indicated otherwise.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company is in the business of managing, operating, leasing, acquiring,
developing and investing in shopping centers and business centers. See the
consolidated financial statements and notes thereto included in Item 8 of this
Annual Report on Form 10-K for certain information required by Item 1.
NARRATIVE DESCRIPTION OF BUSINESS
Since 1965, the Company and Developers Diversified Group ("DDG"), its
predecessor, have owned and managed approximately 342 shopping centers and
business centers. The Company's portfolio as of March 15, 2000, not including
those properties owned through the Company's minority equity investment,
consisted of 184 shopping centers and one business center (including 44
properties which are owned through joint ventures) and approximately 119
undeveloped acres (of which approximately 9 acres are owned through joint
ventures) (the "Portfolio Properties"). From January 1, 1997 to March 15, 2000,
the Company has acquired 54 shopping centers, including those owned through
joint ventures, containing an aggregate of 11.1 million square feet of gross
leasable area ("GLA") owned by the Company for an aggregate purchase price of
approximately $1.3 billion. During 1997, 1998 and 1999, the Company completed
expansions at 34 of its shopping centers.
As of March 15, 2000, the Company was expanding three shopping centers and
expects to commence expansions at additional shopping centers in 2000. The
Company has also substantially completed the development of twelve shopping
centers since December 31, 1996, at an aggregate cost of approximately $525
million aggregating approximately 3.9 million square feet of GLA. As of March
15, 2000, the Company had fourteen shopping centers under development.
The Company's shopping centers were approximately 95.7% leased as of
December 31, 1999. On December 31, 1999, the average annualized base rent per
square foot of Company-owned GLA of the shopping centers was $9.20.
The Company is self-administered and self-managed and, therefore, does not
engage or pay for a REIT advisor. The Company manages all of the Portfolio
Properties. At December 31, 1999, the Company owned and/or managed approximately
47.3 million total square feet of GLA, which included all of the Portfolio
Properties and 21 properties owned by third parties.
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STRATEGY AND PHILOSOPHY
The Company's investment objective is to increase cash flow and the value
of its portfolio of properties and to seek continued growth through the
selective acquisition, development, redevelopment, renovation and expansion of
income-producing real estate properties, primarily shopping centers. In
addition, the Company may also pursue the disposition of certain real estate
assets and utilize the proceeds to repay debt, repurchase the Company's common
shares, reinvest in other real estate assets and developments and for other
corporate purposes. In pursuing its investment objective, the Company will
continue to seek to acquire and develop high quality, well-located shopping
centers and business centers with attractive initial yields and strong prospects
for future cash flow growth and capital appreciation where the Company's
financial strength and management and leasing capabilities can enhance value.
Management believes that opportunities to acquire existing shopping centers
have been and will continue to be available to buyers with access to capital
markets and institutional investors, such as the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The Company's real estate strategy and philosophy is to grow its business
through a combination of leasing, expansion, acquisition and development. The
Company seeks to:
- increase cash flows and property values through strategic leasing,
re-tenanting, renovation and expansion of the Company's portfolio;
- continue to selectively acquire well-located, quality shopping
centers (individually or in portfolio transactions) which have
leases at rental rates below market rates or other cash flow growth
or capital appreciation potential where the Company's financial
strength, relationships with retailers and management capabilities
can enhance value;
- increase cash flows and property values by continuing to take
advantage of attractive financing and refinancing opportunities (see
"Recent Developments -- Financings");
- increase per share cash flows through the selective disposition of
certain real estate assets and utilizing the proceeds to repay debt,
repurchase of the Company's common shares and for other corporate
purposes;
- selectively develop the Company's undeveloped parcels or new sites
in areas with attractive demographics;
- hold properties for long-term investment and place a strong emphasis
on regular maintenance, periodic renovation and capital
improvements; and
- continue to manage and develop the properties of others to generate
fee income, subject to restrictions imposed by federal income tax
laws, and create opportunities for acquisitions.
As part of its ongoing business the Company engages in discussions with
public and private real estate entities regarding possible portfolio or asset
acquisitions or business combinations.
In addition, the Company intends to maintain a conservative debt
capitalization ratio. At December 31, 1999, the Company's debt to total market
capitalization ratio, excluding the Company's proportionate share of non-
recourse indebtedness of its unconsolidated joint ventures, was approximately
0.48 to 1.0; and at March 15, 2000 this ratio was approximately 0.49 to 1.0. At
December 31, 1999, the Company's capitalization consisted of $1.2 billion of
debt (excluding the Company's proportionate share of joint venture mortgage debt
aggregating $466.6 million), $413.8 million of preferred stock and preferred
operating partnership units and $826.7 billion of market equity. (Market equity
is defined as common shares outstanding and operating partnership units
outstanding multiplied by the closing price of common shares on the New York
Stock Exchange at December 31, 1999 of $12.875.) At December 31, 1999, the
Company's total debt consisted of $751.0 million of fixed-rate debt and $401.1
million of variable rate debt. Fluctuations in the market price of the Company's
common shares may cause this ratio to vary from time to time.
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The strategy, philosophy, investment and financing policies of the Company,
and its policies with respect to certain other activities, including its growth,
debt capitalization, distributions, status as a REIT and operating policies, are
determined by the Board of Directors. Although it has no present intention to do
so, the Board of Directors may amend or revise these policies from time to time
without a vote of the shareholders of the Company.
RECENT DEVELOPMENTS
Financings
Through December 31, 1999, the Company purchased in open market
transactions 1,860,300 of its common shares, at prices ranging from $12.69 to
$14.00, for an aggregate purchase price of approximately $25.8 million. For the
period January 1, 2000 through March 15, 2000, the Company initiated the
purchase of an additional 1,368,000 shares, at prices ranging from $11.61 to
$12.29, for an aggregate purchase price of approximately $16.2 million. In
February and August 1999, the Company's Board of Directors authorized the
officers of the Company to implement and continue a common share repurchase
program in response to what the Company believed was a distinct undervaluation
of the Company's common shares in the public market. Under the terms authorized
by the Company's Board, as amended in November 1999, the Company may purchase in
the open market, subject to certain requirements, common shares of the Company,
up to a maximum value of $200 million. The Company may invest proceeds from the
sale of assets to purchase these shares. It is not the Company's intention to
increase the leverage on its balance sheet to implement this stock repurchase
program.
Also in December 1999, one of the Company's joint ventures refinanced its
secured mortgage and entered into a ten year fixed rate mortgage for $21.3
million with interest at 8.46%. Additional proceeds from this refinancing of
approximately $6.4 million were used to repay a portion of a note payable to the
Company.
During 1999, the Prudential/DDR Retail Value Fund ("Fund"), a joint venture
in which the Company effectively owns a 25% interest, agreed to acquire the
Company's 50% joint venture interests relating to the development of six
shopping centers. The Company was reimbursed by the Fund for approximately $74.3
million associated with development costs incurred on each of these projects.
The Company also obtained third party financing for three of these projects
aggregating approximately $77.1 million with rates ranging from LIBOR plus 175
to LIBOR plus 180. In addition, the Company transferred its interest in a
shopping center development in Coon Rapids, Minnesota, a suburb of Minneapolis,
to a joint venture in which the Company retained a 25% interest and was
reimbursed $2.5 million relating to development costs previously incurred on
this project. The Company also sold certain land parcels adjacent to its
shopping center in Wilmington, North Carolina, Jacksonville, North Carolina and
Erie, Pennsylvania and a portion of a shopping center and residual land in
Pensacola, Florida and received aggregate proceeds of approximately $13.9
million.
In September 1999, the Company completed a $75 million private placement of
0.3 million, 8.875% perpetual preferred "down-REIT" partnership units with an
institutional investor. The units may be exchanged, under certain circumstances,
for Class K, 8.875% cumulative preferred shares. The units may be exchangeable
into common shares if the Company fails to pay dividends for six consecutive
quarters. The net proceeds of approximately $73.1 million were effectively used
to repay approximately $25.8 million in mortgage indebtedness and $40.1 million
in convertible debentures which matured on August 15, 1999. The balance of these
proceeds was used to repay variable rate borrowings under the Company's
revolving credit facilities.
In March 1999, the Company filed a $750 million shelf registration
statement with the SEC pursuant to which the Company may issue senior or
subordinated debt securities, common shares, preferred shares or warrants to
purchase common shares.
In March 1999, the Company amended its revolving credit facility with
National City Bank to increase the available borrowings to $25 million from $20
million, to convert it to a secured facility and to extend the agreement through
November 2002. The credit facility is secured by certain partnership
investments. The Company also maintains the right to convert the credit facility
back to an unsecured credit facility and to reduce the credit facility amount to
$20 million.
In January 1999, the Company repaid a third party mortgage of a 50% owned
joint venture partnership aggregating approximately $49.2 million. In return,
the joint venture entered into a corresponding mortgage note payable to the
Company bearing an interest rate of LIBOR plus 2.75%. In addition, the Company
received a loan
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origination fee for this transaction of $0.4 million. In March 1999, the joint
venture obtained a bridge loan and used the proceeds to repay the mortgage note
to the Company. In June 1999, the joint venture entered into a 10 year, fixed
rate mortgage for $55.5 million at 7.31%.
During the year ended December 31, 1999, the Company issued $2.7 million in
OP Units in conjunction with the purchase of certain expansion areas at two
recently acquired shopping centers and the purchase of joint venture interests.
These OP Units are, in certain circumstances and at the election of the Company,
exchangeable into approximately 139,000 common shares of the Company or for
cash.
Property Acquisitions, Developments and Expansions
During 1999, the Company and its joint ventures completed the acquisition
of, or investment in five shopping centers aggregating 0.9 million square feet
of Company owned GLA for an aggregate investment of approximately $79.7 million.
In November 1999, the Company acquired, through a 50% owned joint venture,
the fourth phase of a shopping center in Phoenix, Arizona which aggregates
125,000 square feet. The total purchase price for the fourth phase of this
center aggregated approximately $15.6 million.
In July 1999, the Company acquired Deer Valley Towne Center, a 198,000
square foot shopping center in Phoenix, Arizona, for an aggregate purchase price
of $25.8 million. The Company contributed this property in March 2000 to a 50%
owned joint venture with DRA Advisors.
In July 1999, the Company purchased the remaining 50% interest of a 289,000
square foot shopping center located in Salisbury, Maryland which was developed
through one of the Company's joint ventures. The Company paid approximately $7.3
million for the remaining interest which was funded through the use of cash and
the issuance of approximately 47,000 Units.
In April 1999, the Company acquired a 50% interest in a 206,000 square foot
shopping center in St. Louis, Missouri. The joint venture's aggregate purchase
price was $16.6 million and included the assumption of debt aggregating $13.0
million.
In February 1999, the Company acquired Spring Creek Centre (Phase III), a
65,000 square foot shopping center located in Fayetteville, Arkansas, for an
aggregate purchase price of $6.2 million.
In August 1998, the Company announced a strategic investment in AIP.
Through December 31, 1998, the Company acquired 5.9 million common shares of AIP
at an aggregate cost of $91.3 million. In January 1999, the Company acquired 3.4
million additional common shares of AIP for approximately $51.8 million. In
August 1999, the Company purchased an additional 0.4 million shares of AIP for
approximately $5.5 million. At December 31, 1999, the Company's ownership in AIP
approximated 46.1% of the total outstanding shares of AIP.
In June 1999, DD Development Company, a Company in which DDR has an equity
ownership interest, acquired Prudential Real Estate Investors' ("PREI") limited
partnership interest in a joint venture, Hendon/DDR/ BP, LLC, which owned 15
sites formerly occupied by Best Products at a cost of approximately $29.7
million. As a result, the Company's aggregate investment in the joint venture
increased to approximately $36 million. Eleven of the sites are leased as of
December 31, 1999 and two were sold as of December 31, 1999. In addition, in
June 1999, Hendon/DDR/BP, LLC, entered into a $25 million mortgage, with a
financial institution secured by the leased sites. The net financing proceeds
were used to repay advances made by the Company to the joint venture.
Expansions 1999
During 1999, the Company, on a wholly-owned basis and through certain joint
ventures, completed fourteen expansion projects at an aggregate cost of $46.6
million. In addition, the Company is currently expanding/redeveloping three of
its shopping centers at an aggregate cost of $6.3 million. The Company is also
planning to commence expansion/redevelopment projects at five additional
shopping centers located in: North
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Charleston, South Carolina; North Canton, Ohio; Maple Grove, Minnesota; Mount
Pleasant, South Carolina and Wilmington, North Carolina.
Development (Wholly Owned) 1999
During 1999, the Company completed construction at five shopping centers
located in Solon, Ohio; Erie, Pennsylvania; Toledo, Ohio; Ovideo, Florida and
Macedonia, Ohio. Phase II of both the Toledo, Ohio and Oviedo, Florida projects
are under construction and scheduled for completion in 2000. In addition, the
Company is developing projects located in Meridian, Idaho and Riverdale, Utah.
Development (Joint Ventures) 1999
During 1999, the Company through certain joint ventures completed
construction of three shopping centers located in Salem, New Hampshire;
Salisbury, Maryland and Plainville, Connecticut.
During 1998 and 1999, the Company entered into joint venture development
agreements on an additional eight shopping center projects with leading regional
developers. These eight projects have a projected aggregate cost of
approximately $321.7 million. Several of these projects have commenced
development and are currently scheduled for completion in 2000. In addition to
the Salem, New Hampshire and Plainville, Connecticut developments completed, the
Company is currently financing projects located in Round Rock, Texas;
Hagerstown, Maryland; Deer Park, Illinois and Long Beach, California, through
the Prudential/DDR Retail Value Fund and also intends to finance its investment
in the Fenton, Missouri project through this fund.
In 1999, the Company entered into a joint venture relating to a 642,000
square foot shopping center in Coon Rapids, Minnesota, the initial phase of
which is scheduled to be completed in March 2000 and is anchored by a Kohl's
(opened fourth quarter 1999) and Jo-Ann, ETC. The Company owns a 25% equity
interest.
The Company, through its affiliate DDR OliverMcMillan, LP ("DDROM")
continued to pursue six urban entertainment and retail projects aggregating 1.2
million square feet of GLA at a projected cost of approximately $233 million.
The majority of the above projects are scheduled to commence construction in
1999 and 2000 with completion occurring between 2000 and 2002. The Company may
also pursue partnership relationships with institutional investors in
conjunction with the above projects.
RETAIL ENVIRONMENT
During 1999, certain national and regional retailers experienced financial
difficulties and several have filed for protection under bankruptcy laws. No
significant bankruptcies have occurred during the period January 1, 1999 through
March 15, 2000 with regard to the Company's portfolio of tenants.
See Management's Discussion and Analysis of Financial Condition and Results
of Operations included in Item 7 and the Consolidated Financial Statements and
Notes thereto included in Item 8 of this Annual Report on Form 10-K for further
information on certain of the recent developments described above.
COMPETITION
As one of the nation's largest owners and developers of neighborhood and
community shopping centers, the Company has established close relationships with
a large number of major national and regional retailers. Management is
associated with and actively participates in many shopping center and REIT
industry organizations.
Notwithstanding these relationships, there are numerous developers and real
estate companies that compete with the Company in seeking properties for
acquisition and tenants who will lease space in these properties.
Many investors believe e-commerce would seriously erode traditional retail
business, particularly big box commodity retailers. The Company believes these
fears are unfounded with the majority of the e-commerce sales occurring in the
travel and computer categories, which account for a small portion of the
Company's tenant base. In addition, the Company believes that the individual
consumer is primarily shopping in discount stores, the majority of the Company's
tenant base, rather than through e-commerce.
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EMPLOYEES
As of March 15, 2000, the Company employed 251 full-time individuals,
including executive, administrative and field personnel. The Company considers
its relations with its personnel to be good.
QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST
The Company presently meets the qualification requirements of a REIT under
Sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code").
As a result, the Company generally will not be subject to federal income tax to
the extent it meets certain requirements of the Code.
ITEM 2. PROPERTIES
At December 31, 1999 the Portfolio Properties included 185 shopping centers
and one business center (44 of which are owned through joint ventures). The
shopping centers consist of 154 community shopping centers and power centers, 12
enclosed mini-malls and 19 neighborhood shopping centers. The Portfolio
Properties also include approximately 119 undeveloped acres primarily located
adjacent to certain of the shopping centers. The shopping centers aggregate
approximately 36.3 million square feet of Company-owned GLA (approximately 45.1
million square feet of total GLA) and are located in 37 states, principally in
the East and Midwest, with significant concentrations in Ohio, Florida,
Missouri, Michigan and South Carolina.
The Company's shopping centers are designed to attract local area customers
and are typically anchored by one or more discount department stores and often
include a supermarket, drug store, junior department store and/or other major
"category-killer" discount retailer as additional anchors. Substantially all of
the shopping centers are anchored by a Wal-Mart, Kmart or Target, and the power
centers are anchored by two or more national or regional tenants. The tenants of
the shopping centers typically offer day-to-day necessities rather than
high-priced luxury items. As one of the nation's largest owners and operators of
shopping centers, the Company has established close relationships with a large
number of major national and regional retailers, many of which occupy space in
the shopping centers.
Neighborhood and community shopping centers and power centers make up the
largest portion of the Company's portfolio, comprising 32.2 million (88.6%)
square feet of Company-owned GLA. Enclosed mini-malls account for 2.9 million
(8.1%) square feet of Company-owned GLA and neighborhood shopping centers
account for 1.2 million (3.3%) square feet of Company-owned GLA. On December 31,
1999, the average annualized base rent per square foot of Company-owned GLA of
the shopping centers, including those owned through joint ventures, was $9.20.
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The following table sets forth, as of December 31, 1999, information as to
anchor and/or national retail tenants which individually accounted for at least
1.0% of total annualized base rent of the properties, including those owned
though joint ventures:
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% OF SHOPPING CENTER % OF COMPANY-OWNED
BASE RENTAL REVENUES SHOPPING CENTER GLA
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Wal-Mart...................................... 5.7% 9.3%
Kmart......................................... 3.9% 7.1%
Homeplace/Waccamaw............................ 2.3% 1.7%
OfficeMax..................................... 2.3% 2.0%
T. J. Maxx/Marshall's......................... 2.2% 2.3%
Kohl's Dept. Store............................ 2.7% 3.0%
Barnes & Noble/B. Dalton...................... 1.8% 1.0%
Best Buy...................................... 1.7% 1.0%
Lowes Home Centers............................ 1.7% 2.2%
Bed Bath & Beyond............................. 1.2% 1.0%
AMC Theaters.................................. 1.4% 1.2%
Toys R Us..................................... 1.2% 1.7%
Michaels...................................... 1.2% 1.0%
Gap/Old Navy.................................. 1.0% 0.6%
Circuit City.................................. 1.0% 0.7%
</TABLE>
In addition, as of December 31, 1999 unless otherwise indicated, with
respect to the 185 shopping centers:
- 49 of these properties were developed by DDG, 16 were developed by
the Company and the balance were acquired by the Company;
- 97 of these properties are anchored by a Wal-Mart, Kmart or Target
store;
- these properties range in size from 4,000 square feet to
approximately 900,000 square feet of GLA (with 30 properties
exceeding 400,000 square feet of GLA);
- approximately 62.3% of the Company-owned GLA of these properties is
leased to national chains, including subsidiaries, with
approximately 26.3% of the Company-owned GLA leased to regional
chains and approximately 7.1% of the Company-owned GLA leased to
local tenants;
- approximately 95.7% of the aggregate Company-owned GLA of these
properties was leased as of December 31, 1999 (and, with respect to
the properties owned by the Company at December 31, for each of the
five years beginning with 1995, between 94.8% and 97.2% of aggregate
Company-owned GLA of these properties was leased);
- Three of these properties are currently being expanded by the
Company, and the Company is pursuing the expansion of additional
properties.
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TENANT LEASE EXPIRATIONS AND RENEWALS
The following table shows tenant lease expirations for the next ten years
at the Company's shopping centers, including joint ventures, assuming that none
of the tenants exercise any of their renewal options:
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
TOTAL LEASED TOTAL BASE
ANNUALIZED AVERAGE BASE SQ. FOOTAGE RENTAL REVENUES
NO. OF APPROXIMATE BASE RENT RENT PER SQ. FOOT REPRESENTED REPRESENTED
EXPIRATION LEASES LEASE AREA IN UNDER EXPIRING UNDER EXPIRING BY EXPIRING BY EXPIRING
YEAR EXPIRING SQUARE FEET LEASES LEASES LEASES LEASES
- -------------- -------- ------------- -------------- ----------------- ------------- ---------------
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2000.......... 464 2,414,125 $ 30,488,752 $12.63 7.0% 9.7%
2001.......... 493 1,765,804 18,322,532 $10.38 5.1% 5.8%
2002.......... 472 2,298,377 20,237,220 $ 8.81 6.6% 6.4%
2003.......... 353 1,950,237 18,283,991 $ 9.38 5.6% 5.8%
2004.......... 312 1,827,419 19,089,010 $10.45 5.3% 6.1%
2005.......... 138 1,598,680 12,845,747 $ 8.04 4.6% 4.1%
2006.......... 94 966,898 11,594,295 $11.99 2.8% 3.7%
2007.......... 95 1,224,875 14,453,031 $11.80 3.5% 4.6%
2008.......... 99 1,434,630 14,179,554 $ 9.88 4.1% 4.5%
2009.......... 109 2,566,780 24,414,552 $ 9.51 7.4% 7.8%
----- ---------- ------------ ------ ---- ----
TOTAL......... 2,629 18,047,825 $183,908,684 $10.19 52.0% 58.4%
</TABLE>
The rental payments under several of these leases will remain constant
until the expiration of their base terms, regardless of inflationary increases.
There can be no assurance that any of these leases will be renewed or that any
new tenants will be obtained if not renewed.
The Company's 119 undeveloped acres primarily consist of outlots, retail
pads and expansion pads which are primarily located adjacent to certain of the
shopping centers. The Company is pursuing an active marketing program to lease,
develop or sell its undeveloped acres.
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROPERTY LIST DECEMBER 31, 1999
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<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
ALABAMA
-----------------
1 Birmingham (Brook 5291 Highway 280 South 35242 PC 100% Fee 1994 1994 64.46
Highland), AL
2 Birmingham 7001 Crestwood Blvd 35210 PC 100% Fee 1989 1995 45.49
(Eastwood
Festival), AL
3 Huntsville, AL 6140-A University 35806 PC 100% Fee 1995 1995 5.29
Drive
ARIZONA
-----------------
4 Phoenix 4711 East Ray Road 85044 PC 50% Fee(3) 1996 1997 59.28
(Ahwatukee), AZ
5 Phoenix (Deer 2805 - 3053 West Auga 85027 PC 100% Fee 1996 1999
Valley), AZ Freeway
6 Phoenix (Peoria), 7553 West Bell Road 85382 PC 50% Fee(3) 1995 1996 24.12
AZ
ARKANSAS
-----------------
7 Fayetteville, AR 464 E. Joyce Boulevard 72703 PC 100% Fee 1997 1997
8 North Little 4124 East McCain Blvd 72117 PC 100% Fee 1991 1994 27.76
Rock, AR
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
1 503,350 $ 3,957,973 $ 8.09 97.2% Wal-Mart (2004/2024), Winn-Dixie
(2014/2044), Goody's (2004/2019),
Stein Mart (2011/2021), OfficeMax
(2011/2026), Rhodes Furniture
(2004/2014), Regal Cinemas
(2014/2029)
2 301,067 2,131,147 8.12 88.0% Home Depot (not owned) Western
Supermarkets (not owned), Office
Depot (2004/2014), Goody's
(2004/2019), Cobb Theaters
(2006/2016)
3 41,000 462,125 11.27 100.0% Wal-Mart (not owned)
4 647,833 8,086,442 12.45 100.0% HomePlace (2012/2027), Smith's
(2021/2046), Stein Mart (2011/2026),
AMC Theatre (2021/2036), Barnes &
Noble (2012/2027), Baby Superstore
(2007/2022), Ross Dress For Less
(2007/2022), Best Buy (2014/2029)
5 197,889 2,710,958 13.77 100.0% Target (2077/2077), AMC Theatres
(2077/2077), Ross Dress For Less
(2009/2024), PetsMart (2014/2029),
OfficeMax (2013/2028), Michael's
(2009/2019)
6 346,430 3,928,454 11.34 100.0% Lil' Things (2009/2024), Barnes &
Noble(2011/2026), TJMaxx
(2005/2020), Circuit City
(2016/2036), Oshman's (2017/2037),
Linens 'N Things (2011/2026),
Staples (2009/2024), MacFrugal's
(2010/2025), Fry's (not owned)
7 235,932 2,032,643 8.83 97.6% TJMaxx (2005/2020), Service
Merchandise (2016/2031), Wal-Mart
(not owned)
8 294,357 1,791,416 6.51 94.0% Kmart (2016/2066), Wards
(2014/2034), TJMaxx (2001/2011),
Cinemark (2011/2031)
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
{9 Russellville, AR 3093 East Main Street 72801 PC 100% Fee 1992 1994 31.20
CALIFORNIA
-----------------
10 San Diego, CA 11610 Carmel Mntn. Rd 92128 PC 50% Fee(3) 1993 1995 50.00
COLORADO
-----------------
11 Alamosa, CO 145 Craft Avenue 81101 PC 100% Fee 1986 IPO 13.10
12 Denver (Broadway 505 South Broadway 80223 PC 50% Fee(3) 1993 1995 38.59
Marketplace), CO
13 Denver 9555 E. County Line 80223 PC 100% Fee 1997 1997 46.07
(Centennial), CO Road
14 Trinidad, CO Hwy 239 @ I25 Frontage 81082 PC 100% Fee 1986 IPO 17.88
CONNETICUT
-----------------
15 Plainville, CT 292 New Britain Ave. 06062 PC 50% Fee(3) 1999 DEV
16 Waterbury (Kmart 899 Wolcott Street 06705 PC 100% GL 1973 IPO 15.60
Plaza), CT
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
{9 272,245 $ 1,689,078 $ 6.26 99.1% Wal-Mart (2011/2041), JCPenney
(2012/2032), Beall-Ladymon
(2007/2022)
10 439,939 6,263,573 14.74 97.3% Mervyn's (not owned), Kmart
(2018/2048), Pacific Theaters
(2013/2023), Sportmart (2008/2023),
Circuit City (2009/2024), Marshall's
(2009/2029), Ross Dress For Less
(2004/2019), Michael's (2004/2014),
Barnes & Noble (2003/2013),
Blockbuster Video (2003/2013)
11 19,875 144,399 8.78 82.8% Wal-Mart (not owned)
12 369,386 3,568,429 9.83 98.3% Kmart (2019/2069), Albertson's
(2019/2049), Sam's (2018/2058),
Office Max (2010/2035), Pep Boys
(2014/2035)
13 418,608 5,864,741 14.01 100.0% Border's (2017/2027), Golfsmith
(2007/2022), HomePlace (2017/2037),
Ross Dress For Less (2008/2028),
Toys R Us (2011/2046), Soundtrack
(2017/2028), Office Max (2013/2033),
Michael's (2007/2027)
14 63,836 92,923 4.47 32.5% Wal-Mart (not owned)
15 347,916 3,275,423 9.41 100.0% Lowe's Home Improvement (2019/2044),
Kmart (2019/2049), Loew's Theaters
(2019/2044), AC Moore (2014/2029)
16 124,310 417,500 3.36 100.0% Kmart (2003/2048), Jo-Ann ETC
(2010/2025)
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
FLORIDA
-----------------
17 Cape Coral, FL 1420 Del Prado Blvd 33904 NC 100% Fee 1985 IPO 9.61
18 Crystal River, FL 420 Sun Coast Hwy 33523 PC 100% Fee 1986 IPO 21.18
19 Jacksonville, FL 3000 Dunn Avenue 32218 PC 100% Fee 1988 1995 30.82
20 Marianna, FL 2820 Highway 71 32446 PC 100% Fee 1990 IPO 17.34
21 Melbourne, FL 750-850 Apollo Blvd 32935 PC 100% GL 1978 IPO 15.52
22 Naples, FL 5010 Airport Road 33942 PC 50% Fee(3) 1994 1995 30.60
North
23 Ocala, FL 3711 Silver Sprgs, NE 32671 PC 100% Fee 1974 IPO 2.23
24 Orlando (Fern 6735 U.S. 17/92 32720 PC 100% Fee 1970 IPO 3.04
Park), FL
25 Orlando (Pine 5250 W. Colonial Dr 32808 PC 100% Fee 1989 IPO 30.57
Hills), FL
26 Orlando (Oviedo), Rte. 417 and Red Bug 32765 PC 100% Fee 1999 DEV 30.57
FL Lake Rd
27 Ormond Beach, FL 1458 West Granada Blvd 32174 PC 100% Fee 1993 1994 32.09
28 Pensacola, FL 8934 Pensacola Blvd 32534 PC 100% Fee 1998 DEV 21.00
29 Tampa, FL 15233 No. Dale Mabry 33618 PC 100% Fee 1990 IPO 23.70
30 Tampa, FL 7039 West Waters Ave 33634 PC 100% Fee 1990 IPO 30.61
31 Tampa (Bayonet U.S. 19 & S.R. 52 34667 PC 100% Fee 1985 IPO 58.67
Point), FL
32 Tampa (Brandon), 1602 Brandon Blvd 33511 PC 100% GL 1972 IPO 17.33
FL
33 Tampa (Palm 300 East Lake Road 34685 PC 100% Fee 1990 1995 5.80
Harbor), FL
34 Tampa (Spring 13050 Cortez Blvd 34613 PC 100% Fee 1988 IPO 21.60
Hill), FL
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
17 74,318 $ 498,279 $ 7.38 90.8% TJMaxx (2007/2017), Office Max
(2012/2027)
18 147,005 485,485 3.47 95.1% Beall's (2001/2016), Beall's Outlet
(2001/2016), Scotty's (2008/2038)
19 219,073 1,360,889 6.60 94.2% Wal-Mart (not owned), J.C.Penney
(2002/2022), Winn Dixie (2009/2034),
Walgreen's (2029/2029)
20 63,894 453,927 7.32 97.0% Wal-Mart (not owned), Beall's
(2005/2020), Eckerd (2010/2030)
21 121,913 407,035 3.45 96.9% Kmart (2003/2048)
22 267,838 2,956,875 11.04 100.0% Winn Dixie (2014/2038), TJMaxx
(2009/2024), Service Merchandise
(2015/2035), Ross Dress For Less
(2005/2025), Circuit City
(2015/2035), OfficeMax (2010/2025)
23 19,280 51,500 3.88 68.9% Kmart (not owned), Eckerd
(2008/2018)
24 16,000 94,768 7.40 80.0% Kmart (not owned)
25 177,037 1,182,947 6.88 97.9% Wal-Mart (not owned), Publix
(2009/2019), Walgreens (2029/2029)
26 106,229 883,060 9.79 84.9%
27 234,045 1,787,185 7.88 96.9% Kmart (2018/2064), Publix
(2013/2033), Bealls (2004/2024)
28 17,150 115,687 9.52 45.2% Wal-Mart (not owned)
29 104,473 1,177,895 11.27 100.0% Wal-Mart (not owned), Publix
(2010/2030)
30 134,166 937,223 8.31 84.0% Wal-Mart (not owned), Beall's
(2005/2029), Kash N Karry
(2010/2040)
31 203,760 1,097,696 5.76 93.5% Publix (2005/2025), Beall's
(2002/2017), TJMaxx (2010/2030)*,
Eckerd (2005/2025)
32 136,900 265,205 2.16 89.6% Kmart (2002/2047)
33 52,395 804,750 15.36 100.0% Target (not owned), Albertson's (not
owned), Eckerd (2010/2025)
34 196,073 1,331,095 7.06 96.1% Wal-Mart (not owned), Publix
(2008/2028), Walgreens (2028/2028),
Beall's (2006/2046)
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
{35 Tampa (Tarpon 41232 U.S. 19, North 34689 PC 100% Fee 1974 IPO 23.30
Springs), FL
36 Tampa (West 7201 County Rd 54 34653 PC 100% Fee 1986 IPO 24.40
Pasco), FL
GEORGIA
-----------------
37 Atlanta (Duluth), 1630 Pleasant Hill 30136 PC 100% Fee 1990 1994 30.67
GA Road
38 Atlanta 1155 Mt. Vernon 30338 PC 50% Fee(3) 1995 1995 8.70
(Dunwoody), GA Highway
39 Atlanta 2609 Bells Ferry Road 30066 PC 50% Fee(3) 1995 1995 48.28
(Marietta), GA
40 Atlanta (Stone 5615 Memorial Drive 30083 PC 100% Fee 1973 IPO 16.60
Mountain), GA
IDAHO
-----------------
41 Idaho Falls, ID 1515 Northgate Mile 83401 PC 100% Fee 1976 1998 24.46
42 Meridian, ID Eagle and Fairview Rds 83642 PC 100% Fee 1999 DEV
ILLINOIS
-----------------
43 Chicago 1430 East Golf Road 60173 PC 50% Fee(3) 1993 1995 62.80
(Schaumburg), IL
44 Harrisburg, IL 701 North Commercial 62946 PC 100% Fee 1991 1994 24.46
45 Mount Vernon, IL 42nd and Broadway 62864 MM 100% Fee 1974 1993 39.25
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
{35 198,797 $ 1,016,953 $ 5.72 90.2% Kmart (2009/2049), Big Lots
(2002/2012), Beall's Outlet
(2003/2018)
36 135,421 1,006,991 7.86 94.6% Wal-Mart (not owned), Publix
(2006/2026), Bealls (2001/2016),
Walgreens (2026/2026)
37 99,025 1,175,418 13.05 90.9% Wal-Mart (not owned), Office Depot
(2000/2020), Ethan Allen (2000/2010)
38 343,115 4,012,646 14.06 83.6% SteinMart (2010/2025), HomePlace
(2011/2026), United Artists
(2015/2035), Babies R Us
(2007/2027), Office Depot
(2012/2027), St. Joseph's Hospital
(2006/2016)
39 318,038 3,677,995 11.56 100.0% Publix (2015/2035), HomePlace
(2011/2026), PetsMart (2011/2021),
Barnes & Noble (2011/2026),
Sportslife (2011/2021), Stein Mart
(2007/2027)
40 143,860 Property sold 2/00
41 148,593 808,122 5.67 96.0% Fred Meyer (not owned), Lamonts
(2001/2016), OfficeMax, (2011/2026),
Payless Drug (2006/2026), JoAnn
Fabrics (2002/2022), Hollywood
Theaters (2001/2001)
42 109,783 876,068 7.98 100.0% Shopko (2020/2045)
43 501,092 7,369,774 14.85 99.1% Builder's Square (2019/2049),
Service Merchandise (2014/2049),
OfficeMax (2010/2020), Sports
Authority (2013/2033), Marshall's
(2009/2024), Nordstrom Rack
(2009/2024), Border's Books
(2009/2029), Circuit City
(2010/2025), Off 5th Saks Fifth
Avenue (2011/2026), Container Store
(2011/2026)
44 168,424 875,298 5.30 98.0% Wal-Mart (2011/2041), Roundy's
Grocery (2011/2031)
45 268,263 912,408 3.68 92.3% Wal-Mart (2008/2028),J.C.Penney
(2002/2022), Stage (2004/2014)
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
INDIANA
-----------------
46 Bedford, IN 1320 James Avenue 47421 PC 100% Fee 1993 1993 20.56
47 Connersville, IN 2100 Park Road 47331 PC 100% Fee 1991 1993 21.99
48 Highland Highway 41 & Main 46322 PC 100% Fee 1995 1996 16.08
(Chicago), IN Street
IOWA
-----------------
49 Cedar Rapids, IA 303-367 Collins Road, 52404 PC 100% Fee 1984 1998
N.E
50 Ottumwa, IA 1110 Quincy Avenue 52501 MM 100% Fee 1990 IPO 34.00
KANSAS
-----------------
51 Leawood (Kansas 5100 W. 119th. St 66209 PC 50.0% Fee(3) 1990 1998 34.00
City), KS
52 Merriam, KS 5700 Antioch Road 66202 PC 50% Fee(3) 1998 DEV
KENTUCKY
-----------------
53 Florence, KY 55 Spiral Blvd 41701 PC 100% Fee 1998 1998 11.74
54 Hazard, KY Kentucky Highway 80 41701 PC 100% Fee 1978 IPO 11.74
MAINE
-----------------
55 Brunswick, ME 172 Bath Road 42071 PC 100% GL 1965 1997 28.46
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
46 223,431 $ 1,324,507 $ 5.93 100.0% Kmart (2018/2068), J.C.Penney
(2008/2028), Goody's (2003/2018),
Buehler's (2010/2025)
47 141,791 823,542 5.81 100.0% Wal-Mart (2011/2041), Cox
Supermarket (2011/2026)
48 290,592 2,753,170 9.93 94.2% Marshall's (2011/2021), Circuit City
(2016/2036), Kohl's (2016/2036),
OfficeMax (2012/2032), Jewel (not
owned), Target (not owned)
49 187,068 1,531,973 8.56 95.7% Kohl's (2021/2046), TJMaxx
(2004/2014), Barnes & Noble
(2010/2025), Office Max (2010/2025)
50 184,560 1,392,402 7.40 99.0% Wal-Mart (not owned), J.C. Penney
(2005/2035), Herberger (2004/2019),
OfficeMax (2020/2020)
51 388,962 7,105,658 19.21 94.5% Jacobson's (2021/2051), Gaylan's
(not owned), AMC Theaters (not
owned), Barnes and Nobles
(2011/2011), Express/Structure
(2009/2009), Pottery Barn
(2009/2009), Limited/Limited TOO
(2009/2009), Restoration Hardware
(2011/2011)
52 302,509 3,238,165 11.03 99.5% Home Depot (not owned), Cinemark
(2018/2038), Hen House (2018/2038),
Marshall's (2008/2023), PetsMart
(2016/2041), Office Max (2013/2033)
53 15,000 273,000 18.20 100.0%
54 111,492 438,079 4.10 91.4% Kmart* (2003/2053), A&P (2003/2038)
55 314,620 2,249,702 7.44 96.1% Hoyt's Cinemas (2010/2025), TJMaxx
(2004/2019), Sears (2002/2027),
Bookland (2004/2004), Porteous
(2001/2006)
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
MARYLAND
-----------------
56 Glen Burnie, MD 8115 Governor Ritchie 21061 NC-BP 71% Fee(3) 1980 1999
Hwy
57 Salisbury, MD E. North Point Dr 21801 PC 100% Fee 1999 DEV
MASSACHUSETTS
-----------------
58 Boston 1 Worcester Road 01701 PC 50% Fee(3) 1994 1995 177.00
(Framingham), MA
MICHIGAN
-----------------
59 Bad Axe, MI 850 No. Van Dyke Rd 48413 PC 100% Fee 1991 1993 18.58
60 Cheboygan, MI 1109 East State 49721 PC 100% Fee 1988 1993 16.75
61 Detroit, MI 8400 E. Eight Mile 48234 PC 100% GL 1989 1998 24.46
Road
62 Gaylord, MI 1401 West Main Street 49735 PC 100% Fee 1991 1993 19.49
63 Grand Rapids 3390-B Alpine Ave., 49504 PC 100% Fee 1989 1995 16.40
(Walker), MI N.W
64 Houghton, MI Highway M26 49931 MM 100% Fee 1981 IPO 21.48
65 Howell, MI 3599 East Grand River 48843 PC 100% Fee 1991 1993 26.52
66 Mt Pleasant, MI 4208 E. Blue Grass Rd 48858 PC 100% Fee 1990 1993 51.13
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
56 58,000 $ 250,000 $ 4.31 100.0%
57 66,052 778,735 100.0% Home Depot (not owned), Target (not
owned), Michael's (2009/2029),
OfficeMax (2013/2033), PetsMart
(2014/2029)
58 768,136 12,170,679 15.84 100.0% General Cinema (2014/2034), TJMaxx
(2010/2020), Sears Homelife
(2004/2024), Marshall's (2011/2026),
Bob's (2011/2026), Linens 'N Things
(2011/2026), Sports Authority
(2015/2035), Barnes & Noble
(2011/2026), OfficeMax (2011/2026),
Toys R Us (2020/2070), Kids R Us
(2020/2070), Bradlee's (2005/2020),
Jordan Marsh (2020/2070), DSW
(2007/2022)
59 63,415 542,418 8.55 100.0% Wal-Mart (not owned), Farmer Jack's
(2012/2037)
60 95,094 400,693 4.45 94.7% Kmart (2005/2055), Carters Food
Center (2004/2024)
61 450,232 3,300,445 9.67 99.4% Target Stores (2017/2032), Builders
Square (2014/2029), Farmer Jack
(2008/2023), Toys 'R' Us
(2021/2036), American Multi-Cinema
(2008/2018), Kids 'R' Us
(2002/2013), Arbor Drugs (2000/2008)
62 190,482 1,135,557 5.96 100.0% Wal-Mart (2010/2040), Buy-Low
(2011/2031)
63 133,981 1,404,626 10.48 100.0% Circuit City (not owned), Target
(not owned), Toys R Us (not owned),
TJMaxx (2005/2020), Office Depot
(2005/2019)
64 257,479 1,238,762 5.06 95.0% Kmart (2005/2055), J.C. Penney
(2000/2020)
65 215,147 1,273,646 6.12 95.5% Wal-Mart (2011/2041), Kroger
(2012/2042)
66 248,963 1,541,016 6.19 100.0% Wal-Mart (2009/2039), Kroger
(2011/2041)
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
67 Sault Ste Marie, 4516 I-75 Business 49783 PC 100% Fee 1993 1994 40.08
MI Spur
MINNESOTA
-----------------
68 Bemidji, MN 1201 Paul Bunyan Dr 56601 MM 100% Fee 1977 IPO 31.55
69 Brainerd, MN 1200 Hwy 210 West 56401 MM 100% Fee 1985 IPO 17.19
70 Coon Rapids, MN 12921 Riverdale Dr 55433 PC 25% Fee(3) 1999 DEV
71 Hutchinson, MN 1060 S.R. 15 55350 MM 100% Fee 1981 IPO 36.88
72 Minneapolis I299 Promenade Place 55122 PC 50% Fee(3) 1997 1997 45.70
(Eagan), MN
73 Minneapolis Weaver Lake Road 55369 PC 50% Fee(3) 1995 1996 25.61
(Maple Grove), MN & I-94
74 St. Paul, MN 1450 University Avenue 55104 PC 100% Fee 1995 1997 20.27
75 Worthington, MN 1635 Oxford Street 56187 MM 100% Fee 1977 IPO 38.02
MISSISSIPPI
-----------------
76 Starkville, MS 882 Highway 12 West 39759 PC 100% Fee 1990 1994 28.81
77 Tupelo, MS 3850 North Gloster 38801 PC 100% Fee 1992 1994 41.91
MISSOURI
-----------------
78 Fenton, MO Gravois Rd-Hwy 141 63026 NC 100% Fee 1970 IPO 11.07
79 Independence, MO 900 East 39th Street 64057 PC 50% Fee(3) 1995 1995 46.95
80 Springfield, MO 1425 East Battlefield 65804 NC 100% GL 1989 1998
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
67 270,761 $ 1,783,726 $ 6.59 100.0% Wal-Mart (2012/2042), J.C. Penney
(2008/2033), Glen's Supermarket
(2013/2033), Office Max (2013/2028)
68 297,720 1,326,853 4.91 90.8% Kmart (2002/2052), J.C. Penney
(2003/2018), Herberger's (2005/2030)
69 260,199 1,833,673 7.16 99.5% Kmart (2004/2054), Herberger's
(2008/2023), Movies 10 Theatre
(2011/2026),
70 86,584 735,964 8.50 100.0% Kohl's (2020/2040)
71 121,001 794,870 6.90 95.2% Kmart (not owned), J.C. Penney
(2001/2021)
72 278,510 3,295,758 11.80 99.0% HomePlace (2017/2037), Office Max
(2013/2033), TJMaxx (2007/2022),
Byerly's (2016/2046), Barnes & Noble
(2012/2027)
73 250,436 2,441,552 9.75 100.0% Kohl's (2016/2036), Barnes & Noble
(2011/2026), Holiday Sports
(2011/2027), HomePlace (2016/2036),
Cub Foods (not owned)
74 324,354 2,600,755 8.02 100.0% Kmart (2022/2057), Cub Foods
(2015/2045), PetsMart
(2011/2036),Mervyn's (2016/2046)
75 185,658 1,019,597 5.85 93.8% Kmart (2001/2051), J.C. Penney
(2007/2032), Sterling (2001/2021),
Hy-Vee (2011/2031)
76 234,652 1,277,580 5.50 99.0% Wal-Mart (2015/2045), J.C. Penney
(2010/2040), Kroger (2012/2042)
77 348,236 1,927,609 5.54 100.0% Wal-Mart (2012/2042), Sam's
(2012/2042), Goody's (2002/2017)
78 93,548 789,408 9.45 90.1% Family Dollar (2003/2028), Fashion
Bug (2005/2025), Blockbuster Video
(2004/2009)
79 374,914 4,015,393 10.84 98.8% Kohl's (2016/2036), Bed Bath &
Beyond (2012/2027), Marshall's
(2012/2027), Rhodes Furniture
(2016/2026), Barnes & Noble
(2011/2026), American Multi-Cinema
(2015/2034)
80 56,033 454,293 8.11 100.0% Toys R Us (2013/2038), Pier 1
(2000/2013)
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
81 St. Louis 3144 South 63139 NC 100% Fee 1998 1998
(American), MO Kingshighway
82 St. Louis 1 Brentwood Promenade 63144 PC 100% Fee 1998 1998
(Brentwood), MO Court
83 St. Louis 11298 W. Florissant 63033 NC 50% Fee(3) 1998 1998
(Clocktower), MO
84 St. Louis 4523 Gravois Village 63049 PC 100% Fee 1983 1998
(Gravois), MO Plaza
85 St. Louis (HQ), 6303 S. Lindbergh Blvd 63123 PC 100% Fee 1992 1998
MO
86 St. Louis 4500 LeMay Ferry Road 63129 NC 100% Fee 1987 1998
(Keller), MO
87 St. Louis 12109 Manchester Road 63121 NC 100% Fee 1985 1998
(Olympic Oaks),
MO
88 St. Louis Kings Highway & 63109 PC 100% Fee 1992 1998
(Southtowne), MO Chippewa
89 St. Louis (Sunset 10980 Sunset Plaza 63128 PC 100% Fee 1997 1998
Hill), MO
NEVADA
-----------------
90 Las Vegas, NV 14833 West Charleston 89102 NC 100% Fee 1973 1998
Blvd
NEW HAMPSHIRE
-----------------
91 Salem, NH 14 Kelly Rd 03079 PC 12% Fee(3) 1999 DEV 177.00
NEW JERSEY
-----------------
92 Deptford, NJ 1450 Almonesson Road 08096 NC-BP 71% Fee(3) 1978 1999 9.45
93 Eatontown, NJ 90 Highway 36 07724 NC-BP 71% Fee(3) 1981 1999 9.12
94 Lawrenceville, NJ 4152 Quakerbridge Rd 08648 NC-BP 71% Fee(3) 1981 1999 7.26
95 Maple Shade, NJ 590 Route 38 East 08052 NC-BP 71% Fee(3) 1978 1999 10.16
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
81 0 $ 46,000 $ 0.00 n.a Home Depot (not owned), National
Tire (Gd Lease:2018/2038)
82 299,584 3,914,797 13.07 100.0% Target (2023/2048), Sports Authority
(2013/2028), Petsmart (2014/2039)
83 206,365 1,883,982 9.92 92.1% Dierberg's Market (2007/2037),
Office Depot (2008/2023), TJ Maxx
(2002/2012)
84 110,992 613,436 5.53 100.0% Kmart (2008/2048)
85 118,611 0 0.00 0.0%
86 52,842 570,307 10.79 100.0% Wehrenberg Theatres (2003/2023)
87 92,372 1,229,130 13.51 98.5% TJ Maxx (2001/2006), Michael's
(2005/2010), Walgreen's (2020/2020)
88 0 0 0.00 n.a.
89 420,867 4,527,989 10.89 98.8% Homeplace (2011/2026), Marshall's
(2012/2022), Home Depot (2023/2063),
Petsmart (2011/2031), Comp USA
(2013/2028), Toys R Us (2013/2038),
Cost Plus (2009/2024), Borders
(2011/2026)
90 62,005 696,365 11.57 97.1% Big 5 Sports (2007/2017), Chief Auto
Parts (2006/2011), Family Books
(2003/2003)
91 169,242 2,752,742 16.27 100.0% Best Buy (2020/2040), Linen N'
Things (2015/2030), M.V.P. Sports
(2019/2039), Comp USA (2014/2029),
Michael's (2009/2029), Big Party
(2010/2020)
92 50,000 775,000 16.24 100.0%
93 69,412 1,332,111 19.31 100.0%
94 67,234 425,000 6.32 100.0%
95 66,750 467,250 7.00 100.0%
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
96 Princeton, NJ Route 1 and Quaker 42071 PC 100% Fee 1995 1997
(Nassau Park) Bridge Road
97 Princeton, NJ Route 1 and Quaker 42071 PC 57% Fee(3) 1999 DEV
(Nassau Pavilion) Bridge Road
98 Tom's River, NJ 1240 Hooper Avenue 08753 NC-BP 71% Fee(3) 1981 1999 5.00
NEW MEXICO
-----------------
99 Los Alamos, NM 800 Trinity Drive 87533 NC 100% Fee 1978 IPO 8.72
NORTH CAROLINA
-----------------
100 Ahoskie, NC 1400 East Memorial 27910 PC 100% Fee 1992 1994 26.95
Drive
101 Durham, NC 5428-B New Hope 27707 PC 50% Fee(3) 1995 1995 39.53
Commons
102 Durham, NC 3500 Oxford Road 27702 PC 100% Fee 1990 IPO 41.70
103 Jacksonville, NC US Hwy 17-Western Ave 28540 PC 100% Fee 1989 IPO 27.51
104 New Bern, NC 3003 Claredon Blvd 28561 PC 100% GL 1989 IPO 28.18
105 Washington, NC 536 Pamlico Plaza 27889 PC 100% Fee 1990 IPO 22.17
106 Waynesville, NC 201 Paragon Parkway 28721 PC 100% Fee 1990 1993 28.40
107 Wilmington, NC S. College-New Centre 28403 PC 100% Fee 1989 IPO 57.78
Dr
NORTH DAKOTA
-----------------
108 Dickinson, ND 1681 Third Avenue 58601 MM 100% Fee 1978 IPO 27.10
109 Grand Forks, ND 2500 South Columbia 58201 NC-BP 71% Fee(3) 1978 1999 6.63
Road
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
96 202,121 $ 3,435,862 $17.00 100.0% Border's Books & Music (2011/2026),
Best Buy (2012/2027), Linens N
Things (2011/2026), PetsMart
(2011/2026), Wal-Mart (not owned),
Sam's (not owned), Home Depot (not
owned)
97 215,584 1,983,946 9.20 100.0% Wegman's (2024/2049), Kohl's
(2009/2039)
98 33,552 494,346 14.73 100.0%
99 97,970 569,059 6.12 94.9% Furrs (2002/2027), Furrs Pharmacy
(2003/2013), TG&Y (2018/2033)
100 188,428 923,449 5.01 97.8% Wal-Mart (2013/2043), Belk
(2008/2033), Food Lion (2012/2032)
101 408,292 4,593,183 11.25 98.2% Wal-Mart (2015/2035), Upton's (not
owned), Michael's (2005/2020),
Marshall's (2011/2026), Linens 'N
Things (2011/2026), Best Buy
(2011/2026), OfficeMax (2010/2025),
Barnes & Noble (2010/2025)
102 206,827 1,307,353 6.71 94.2% Wal-Mart (not owned), Food Lion
(2010/2030), Lowe's (2011/2031)
103 67,060 538,433 8.24 97.4% Wal-Mart (not owned), Wilson's
(2009/2024)
104 258,690 1,414,703 5.61 97.5% Wal-Mart (2009/2034), Goody's
(2007/2017)
105 278,311 1,424,924 5.12 100.0% Wal-Mart (2009/2034)
106 181,894 1,054,177 6.00 98.5% Wal-Mart (2011/2041), Food Lion
(2011/2031)
107 442,110 3,085,918 7.08 98.6% Wal-Mart (2009/2034), Sam's (not
owned), Lowes (2009/2029), Hamrick's
(2002/2007), Goody's (2005/2015),
Barnes & Noble (2007/2022)
108 267,506 1,085,101 4.28 94.8% Kmart (2003/2053), J.C. Penney
(2003/2018), Herberger (2000/2020),
Thrifty Drug (2001/2001)
109 65,008 0 0.00 0.0%
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
OHIO
-----------------
110 Akron, OH 1990 Buchholzer Blvd 44310 NC-BP 71% Fee(3) 1973 1999 4.78
111 Akron (Stow), OH 4332 Kent Road 44224 PC 100% Fee 1969 IPO 20.14
112 Akron (Stow), OH Kent Road 44224 PC 100% Fee 1997 DEV
113 Ashland, OH U.S. Route 42 44805 PC 100% Fee 1977 IPO 6.26
114 Bellefontaine, OH 2250 South Main Street 43311 NC 100% Fee 1995 1998
115 Boardman, OH I-680 & US-224 44514 PC 100% Fee 1997 DEV 57.04
116 Canton, OH 5496 Dressler Road 44720 PC 50% Fee(3) 1995 DEV 20.00
117 Canton (II), OH Dressler Road 44720 PC 100% Fee 1997 DEV
118 Chillicothe, OH 867 North Bridge 45601 PC 100% GL 1974 IPO 16.70
Street
119 Cincinnati, OH 5100 Glencrossing Way 45238 PC 100% Fee 1990 1993 24.47
120 Cincinnati 1371 Main Street 43450 NC 100% Fee 1986 1998
(Hamilton), OH
121 Cleveland 70-130 Barrington Town 44202 NC 100% Fee 1996 DEV
(Aurora), OH Square Drive
122 Cleveland 33752 Vine Street 44094 PC 100% Fee 1971 IPO 0.99
(Eastlake), OH
123 Cleveland 825 Cleveland 44035 PC 100% Fee 1977 IPO 16.30
(Elyria), OH
124 Cleveland 6235 Wilson Mills Rd 44143 PC 100% Fee 1995 IPO 11.63
(Highland Hts.),
OH
125 Cleveland (Mac 8210 Macedonia Commons 44056 PC 100% Fee 1999 DEV
II), OH
126 Cleveland 8210 Macedonia Commons 44056 PC 50% Fee(3) 1994 1994 19.94
(Macedonia), OH
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
110 45,000 $ 517,500 $11.50 100.0% Dick's (2013/2028)
111 116,806 189,344 1.62 100.0% Kmart (2001/2006)
112 283,140 2,164,862 7.94 96.3% Target (not owned), Giant Eagle
(2017/2032), Stein Mart (2007/2022),
OfficeMax (2011/2026)
113 110,656 233,382 2.11 100.0% Kmart (2002/2052), Quality Farm
(2000/2003)
114 54,780 0 0.00 0.0% Big Bear Supermarket (2016/2031)
115 506,254 4,147,108 8.19 100.0% Lowe's (2016/2046), Staples
(2012/2032), Dick's Clothing &
Sporting Goods (2012/2027), Wal-
Mart (2017/2047), PetsMart
(2013/2038), Giant Eagle (2018/2033)
116 230,065 1,967,323 11.08 77.2% Kohl's (2016/2046), Target (not
owned), London Fog (2011/2011),
Dick's Clothing & Sporting Goods
(2010/2025)
117 225,874 1,160,373 9.13 76.7% PetsMart (2013/2028), Service
Merchandise (2013/2028), Homeplace
(2012/2027), Jo-Ann ETC. (2008/2023)
118 236,009 1,808,673 7.66 100.0% Lowes, (2015/2035), Kroger
(2001/2031), Super X (2001/2031),
Office Max (2012/2027)
119 235,616 2,265,964 9.85 97.6% Thriftway (2009/2029), Service
Merchandise (2006/2031)
120 40,000 230,000 5.75 100.0% Roundy's (2006/2021)
121 65,373 629,421 12.20 78.9% Heinens (not owned)
122 4,000 68,400 17.10 100.0% Kmart (not owned)
123 150,200 761,970 5.07 100.0% Hill's (2003/2028), Finast
(2010/2045)
124 247,146 2,563,263 10.37 100.0% Builders Square (2020/2070), Kohl's
(2007/2047), Dick's Clothing and
Sporting Goods (2016/2036)
125 169,481 1,601,734 9.45 100.0% Home Depot (2020/2040), Cinemark
(2019/2039)
126 234,789 2,345,024 9.99 100.0% Wal-Mart (not owned), Finast
(2018/2049), Kohl's (2016/2041)
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
127 Cleveland 5140-25877 Great 44070 PC 100% Fee 1958 1997 43.14
(N.Olmsted), OH Northern Blvd
128 Cleveland (N. 26520 Lorain Avenue 44070 NC-BP 71% Fee(3) 1978 1999 6.20
Olmsted), OH
129 Cleveland Kruse Drive 44139 PC 100% Fee 1998 DEV
(Solon), OH
130 Cleveland 3250 West 65th Street 44102 PC 100% Fee 1977 IPO 4.18
(W.65th) (Kmart
Plaza), OH
131 Columbus (Lennox 1647 Olentangy River 43212 PC 50% Fee(3) 1997 1998
Town), OH Road
132 Columbus (Sun 3622-3860 W. Dublin 43017 PC 79.5% Fee(3) 1995 1998
Center), OH Granville Road
133 Columbus (Dublin 6561-6815 Dublin 43017 PC 80% Fee(3) 1987 1998
Vlg), OH Center Drive
134 Columbus 6644-6804 Perimeter 43017 PC 100% Fee 1996 1998
(Dublin), OH Loop Road
135 Columbus 3740 Easton Market 43230 PC 100% Fee 1998 1998
(Easton), OH
136 Columbus (Grove 2161-2263 Stringtown 43123 PC 100% Fee 1992 1998
City), OH Road
137 Columbus (New 1370-1399 E. Johnstown 43230 NC 100% Fee 1995 1998
Albany), OH Rd
138 Columbus 78-80 Oak Meadow Drive 43062 NC 100% Fee 1980 1998
(Pataskala), OH
139 Columbus 1701-1797 Hill Road No 43147 NC 100% Fee 1990 1998
(Pickerington),
OH
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
127 619,058 $ 6,829,148 $11.04 99.9% HomePlace (2017/2032), Best Buy
(2010/2025), PetsMart (2003/2013),
Kids R Us (2008/2008), Marshall's
(2000/2005), Regal Cinemas
(2001/2001), Marc's (2002/2007),
CompUSA (2008/2023), Kronheim's
(2009/2009), Finast (not owned)
128 61,000 0 0.00 100.0% Kids R' Us (2008/2008)
129 181,318 2,642,160 14.63 98.2% Bed, Bath, & Beyond (2009/2029),
Borders Books (2018/2043), Mustard
Seed (2019/2044)
130 49,420 267,604 5.41 100.0% Kmart (not owned), A&P (2002/2027)
131 336,273 2,880,191 8.94 95.8% Target (2016/2031), AMC Theatres
(2021/2036), Barnes & Noble
(2007/2022), Staples (2011/2026),
Just For Feet (2007/2022), Old Navy
(2009/2009)
132 317,581 3,426,209 10.84 99.5% Big Bear (2016/2031), Homeplace
(2010/2025), Babies R Us
(2011/2026), Rhodes Furniture
(2012/2027), Stein Mart (2007/2022),
Staples (2010/2025), Old Navy
(2009/2009)
133 327,242 2,962,432 10.56 85.7% AMC (2007/2033), DSW (2005/2015),
PharMor (2003/2015), Michaels
(2014/2019)
134 137,610 1,467,399 11.05 96.5% Big Bear Supermarket (2016/2031),
CVS (2011/2026)
135 509,959 5,570,905 11.33 96.4% Kittle's (2012/2037), Galyans
(2013/2038), TJMaxx (2008/2023),
Staples (2013/2028), Comp USA
(2013/2028), PetsMart (2015/2035),
Golfsmith (2013/2028), Michael's
(2013/2023), DSW Shoe Warehouse
(2012/2027), Bed Bath & Beyond
(2014/2029)
136 128,050 1,249,629 9.76 100.0% Big Bear Supermarket (2012/2027)
137 30,110 463,775 15.40 100.0% Hoggy's Barn & Grille (2005/2015)
138 33,270 184,340 5.54 100.0% Village Market (2007/2017), Rite Aid
(2000/2010)
139 59,495 792,208 13.68 97.3% CVS (2020/2035)
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
140 Dayton (Huber 8280 Old Troy Pike 45424 PC 100% Fee 1990 1993 17.39
Hts.), OH
141 Dayton 615-799 Lyons Road 45458 PC 50% Fee(3) 1990 1998
(Washington), OH
142 Hillsboro, OH 1100 North High St 45133 PC 100% Fee 1979 IPO 11.02
143 Lebanon, OH 1879 Deerfield Road 45036 PC 100% Fee 1990 1993 14.40
144 Niles, OH 909 Great East Plaza 44446 NC-BP 71% Fee(3) 1980 1999 4.83
145 St. Clairsville, 67781 Mall Road 43950 NC-BP 71% Fee(3) 1999 5.05
OH
146 S. Dayton, OH 8336 Springboro Pike 45342 NC-BP 71% Fee(3) 1978 1999 6.38
147 Tiffin, OH 870 West Market St 44883 MM 100% Fee 1980 IPO 27.62
148 Toledo (Airport 5245 Airport Highway 43615 PC 100% Fee 1993 1995 22.87
Square), OH
149 Toledo 5245 Airport Highway 43615 PC 100% Fee 1999 DEV
(Springfield), OH
150 Westlake, OH 30100 Detroit Road 44145 PC 100% Fee 1974 IPO 12.71
151 Wilmington, OH 1025 S. South Street 45177 PC 100% Fee 1977 IPO 7.38
152 Xenia, OH 1700 West Park Square 45385 PC 100% Fee 1994 DEV 7.38
153 Zanesville, OH 3431 North Maple Ave 43701 PC 100% Fee 1990 IPO 3.28
OREGON
-----------------
154 Portland NW Evergreen Pkwy. & 97006 PC 50% Fee(3) 1995 1996 18.29
(Hillsboro), OR NW Ring Road
PENNSYLVANIA
-----------------
155 Erie, PA 2301 West 38th Street 16506 PC 100% GL 1973 IPO 13.27
156 Erie (Peach 1902 Keystone Drive 16509 PC 100% Fee 1995 DEV 65.69
Street), PA
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
140 163,741 $ 1,469,242 $ 9.13 98.3% Wal-Mart (not owned), Cub Foods
(2011/2031), Sears (2002/2012)
141 213,798 1,361,641 8.15 78.9% Books-A-Million (2005/2015), PharMor
(2008/2023), Just For Feet
(2007/2017)
142 58,583 257,539 4.55 96.6% Kmart (2004/2054) *, CVS
(2000/2000), Bob & Carls (not owned)
143 26,500 230,090 8.68 89.4% Wal-Mart (not owned), PK Lumber (not
owned)
144 23,500 0 0.00 0.0%
145 33,292 0 0.00 0.0%
146 33,379 239,250 5.90 100.0% National City Mortgage (2008/2019)
147 231,793 797,364 3.99 83.9% Kmart (2005/2055), J.C. Penney
(2000/2010), Heileg-Myers
(2004/2014)
148 187,674 1,504,451 8.02 100.0% Best Buy (2009/2024),Office Depot
(2009/2024),Michaels
(2004/2014)Sears (2002/2012), The
Pharm (2004/2014)
149 188,264 1,431,328 9.08 100.0% Kohl's (2019/2049), Bed Bath and
Beyond (2010/2030), Gander Mtn
(2014/2034), Babies 'R' Us
(2010/2045)
150 165,120 806,385 5.88 84.5% Kmart (2004/2049), Marc's
(2004/2019)
151 55,130 218,892 4.09 97.1% Kmart (not owned), Super Valu
(2003/2018)
152 104,873 741,356 7.82 90.4% Wal-Mart (not owned), Kroger
(2019/2049)
153 13,283 138,777 10.45 100.0% Kmart (not owned)
154 306,269 4,568,124 14.92 100.0% Office Depot (2010/2025), Haggan
Supermarket (2021/2046), Barnes &
Noble (2011/2026), Mervyn's (not
owned), Target (not owned)
155 95,000 263,488 5.23 50.5% West Telemarketing (2015/2015)
156 484,030 3,694,037 7.94 96.1% Wal-Mart (2015/2045), Lowe's
(2015/2045), Media Play (2010/2025),
Kohl's (2016/2046), Cinemark
(2011/2026)
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
157 Erie (Peach 1902 Keystone Drive 16509 PC 100% GL 1999 DEV
Street), PA
158 Philadelphia 2700 DeKalb Pike 19401 PC 100% Fee 1975 IPO 24.22
(E.Norriton), PA
SOUTH CAROLINA
-----------------
159 Anderson 406 Highway 28 By-Pass 29624 PC 100% Fee 1990 1994 20.90
(Crossroads), SC
160 Anderson 3812 Liberty Highway 29621 PC 100% Fee 1993 1995 2.13
(Northtowne), SC
161 Camden, SC 1671 Springdale Drive 29020 PC 100% Fee 1990 1993 22.97
162 Charleston 1500 Highway 17 North 29465 PC 100% Fee 1992 1995 22.70
(Mt.Pleasant), SC
163 Charleston 7400 Rivers Avenue 29406 PC 100% Fee 1989 1993 28.10
(North), SC
164 Columbia, SC 5420 Forest Drive 29206 PC 100% Fee 1995 1995 7.04
165 Greenville 621 Fairview Road 29681 PC 100% Fee 1990 1994 17.23
(Simpsonville),
SC
166 Orangeburg, SC 2795 North Road 29115 PC 100% Fee 1994 1995 2.65
167 Union, SC Highway 176 By-Pass #1 29379 PC 100% Fee 1990 1993 45.65
SOUTH DAKOTA
-----------------
168 Rapid City, SD 740-780 Mountain View 57702 NC 100% Fee 1972 1998
Road
169 Watertown, SD 1300 9th Avenue, S.E 56401 MM 100% Fee 1977 IPO 29.30
TEXAS
-----------------
170 El Paso, TX 10501 Gateway West 79925 NC-BP 71% Fee(3) 1982 1999
171 Ft. Worth, TX SWC Eastchase Pkwy. 76112 PC 50% Fee(3) 1995 1996 17.00
and I-30
172 San Antonio, TX 125 NE Loop 410 78216 PC 35% Fee(3) 1996 1997 26.45
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
157 54,257 $ 633,731 $11.68 100.0% Home Depot (not owned), PetsMart
(2015/2040), Circuit City
(2020/2040)
158 179,609 1,128,174 6.48 100.0% Kmart (2000/2050), Acme (2002/2027),
Thrift Drug (2002/2022)
159 163,809 652,679 4.72 84.4% Wal-Mart (2010/2040), Ingles
(2011/2066)
160 14,250 145,315 10.20 100.0% Wal-Mart (not owned), Sam's (not
owned)
161 349,475 1,735,565 4.97 95.1% Wal-Mart (2009/2039), Winn-Dixie
(2011/2036), Goody's (2001/2016),
Belk (2020/2020)
162 205,032 1,295,093 6.42 98.4% Wal-Mart (not owned), Lowe's
(2012/2032), Piggly Wiggly
(2012/2022), TJMaxx (2002/2012)
163 251,039 1,746,909 7.17 97.1% Wal-Mart (2009/2039), Office
Warehouse (2002/2012), Service
Merchandise (not owned), Rainbow Bay
Crafts (2000/2015)
164 46,700 496,350 10.63 100.0% Wal-Mart (not owned)
165 142,133 747,357 5.61 93.8% Kmart (2015/2065), Ingles
(2011/2065)
166 50,760 447,537 8.82 100.0% Wal-Mart (not owned)
167 184,331 1,010,778 5.52 99.3% Wal-Mart (2009/2039), Belk's
(2010/2030), Winn-Dixie (2010/2035)
168 35,544 249,247 7.01 100.0% Computerland (2005/2005)
169 285,525 1,441,461 5.18 98.3% Kmart (2002/2052), J.C. Penney
(2003/2018), Herberger's
(2004/2019), Osco (2003/2003)
170 35,175 228,637 6.50 100.0%
171 204,997 1,785,505 10.83 82.9% PetsMart (2011/2036), MJ Designs
(2011/2031), Ross Dress For Less
(2006/2026), United Artists
(2012/2027), Toys R Us (not owned),
Target (not owned)
172 310,394 4,444,130 14.32 100.0% Ross Dress For Less (2007/2027), DSW
Warehouse (2007/2027), Best Buy
(2011/2026), Oshman's (2017/2037),
HomePlace (2012/2027)
</TABLE>
23
<PAGE> 24
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
UTAH
-----------------
173 Logan, UT 400 North Street 84321 NC 100% Fee 1975 1998
174 Ogden, UT 21-129 Harrisville 84404 PC 100% Fee 1977 1998
Road
175 Orem, UT 1300 South Street 84058 PC 100% Fee 1991 1998
176 Riverdale, UT 1050 West Riverdale 84405 PC 100% Fee 1995 1998
Road
177 Salt Lake City 3300 South Street 84115 NC 100% Fee 1978 1998
(FC at 33rd), UT
178 Salt Lake City 455 East 500 South 84111 BC 100% Fee 1985 1998
(Hermes Street
Building), UT
179 Salt Lake City 900 East Ft. Union 84047 PC 100% Fee 1973 1998
(Midvale), UT Blvd
180 Salt Lake City 5600 South Redwood 84123 PC 100% Fee 1982 1998
(Taylorsville), Road
UT
VERMONT
-----------------
181 Berlin, VT Route 4 05602 MM 100% Fee 1986 IPO 50.25
VIRGINIA
-----------------
182 Fairfax, VA 12210 Fairfax Towne 22033 PC 50% Fee(3) 1994 1995 22.79
Center
183 Martinsville, VA 240 Commonwealth Blvd 24112 MM 50% Fee(3) 1989 IPO 43.73
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
173 19,200 $ 201,730 $10.51 100.0% Hasting's (2003/2008), Kinko's
(2002/2002)
174 162,316 792,300 5.23 93.4% Harmon's (2002/2012)
175 147,976 1,518,286 10.26 100.0% Kids R Us (2011/2021), Media Play
(2015/2035), Toys R Us (2090/2090),
Heart's Desire (2013/2023)
176 590,338 4,292,560 7.38 98.5% Wal-Mart (2011/2041), Gart Sports
(2012/2017), OfficeMax (2008/2023),
Target (2017/2047), Media Play
(2016/2036), Circuit City
(2016/2036), PetsMart (2014/2039)
177 39,032 305,676 8.37 93.6% Brighton Bank (2004/2019)
178 42,543 652,620 15.94 95.1%
179 667,769 6,699,078 10.49 95.6% Mervyn's (2005/2045), OfficeMax
(2007/2017), Wal-Mart (2015/2045),
Future Shop (2016/2036), Media Play
(2016/2036), Bed Bath & Beyond
(2014/2029), Baby Superstore
(2013/2033)
180 756,205 7,072,351 9.88 94.7% Cineplex Odeon (2017/2027), Future
Shop (2016/2036), Gart Sports
(2017/2032), Circuit City
(2016/2041), Media Play (2015/2035),
OfficeMax (2008/2018), PetsMart
(2012/2027), Shopko (2014/2044)
181 174,646 1,400,827 8.47 94.7% J.C. Penney (2009/2034)
182 253,941 3,987,559 16.06 97.8% United Artists (2014/2034), Safeway
(2019/2054), TJMaxx (2009/2024),
Bed, Bath & Beyond (2010/2020),
Tower Records (2009/2019)
183 435,402 2,803,479 7.05 90.9% J.C. Penney (2009/2034), Leggett
(2009/2024), Sears (2009/2029),
Kroger (2017/2062), Goody's
(2006/2016), Office Max (2012/2027)
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE
TYPE OF DDR TERMINATION/ LAND
PROPERTY OWNERSHIP OPTION YEAR YEAR AREA
CENTER/PROPERTY LOCATION ZIP CODE (1) INTEREST TERMINATION) DEVELOPED ACQUIRED (ACRES)
----------------- ---------------------- -------- -------- --------- ------------ --------- -------- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
{184 Pulaski, VA 1000 Memorial Dr 24301 PC 100% Fee 1990 1993 21.93
185 Winchester, VA 2190 So Pleasant 22601 PC 100% Fee 1990 1993 26.42
Valley
WEST VIRGINIA
-----------------
186 Huntington 5-13 Mall Road 25504 NC 100% GL 1985 1998
(Barboursville),
WV
<CAPTION>
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT ANCHOR TENANTS
AREA (SF) BASE RENT (2) LEASED (LEASE EXPIRATION/OPTION EXPIRATION)
-------------- ------------ ---------- --------- ------------------------------------
<C> <C> <C> <C> <C> <C>
{18 143,299 $ 890,185 $ 6.29 98.7% Wal-Mart (2011/2041), Food Lion
(2011/2031)
185 230,940 2,089,355 9.05 100.0% Office Max (2012/2027), Kohl's
(2018/2048), Giant Foods
(2010/2040), Books-A-Million
(2007/2017)
186 70,900 272,125 3.84 100.0% OfficeMax (2006/2021), Jo Ann
Fabrics (2004/2009)
=========== ============
36,316,515 $314,927,672 95.7%
</TABLE>
- ---------------
(1) "PC" indicates a power center or a community shopping center, "NC" indicates
a neighborhood shopping center, "MM" indicates an enclosed mini-mall, "BC"
indicates a business center and "BP" indicates the former Best Products
sites acquired through the Retail Value Fund.
(2) Calculated as total annualized base rentals divided by Company-owned GLA
actually leased as of December 31, 1999.
(3) One of the forty-four (44) properties owned through joint ventures which
serve as collateral for joint venture mortgage debt aggregating
approximately $25.0 million (of which the Company's proportionate share is
$66.6 million) which is not reflected in the consolidated indebtedness.
* This anchor tenant has closed and sublet the space.
25
<PAGE> 26
ITEM 3. LEGAL PROCEEDINGS
Other than routine litigation and administrative proceedings arising in the
ordinary course of business, the Company is not presently involved in any
litigation nor, to its knowledge, is any litigation threatened against the
Company or its properties, which is reasonably likely to have a material adverse
effect on the liquidity or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS
Pursuant to Instruction 3 to Item 401(b) of Regulation S-K, the following
information is reported below.
(a) The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICE WITH THE COMPANY
---- --- ------------------------------------
<S> <C> <C>
Scott A. Wolstein 47 Chairman of the Board of Directors and Chief
Executive Officer
James A. Schoff 54 Vice Chairman, Chief Investment Officer and a
Director
David M. Jacobstein 53 President and Chief Operating Officer and a
Director Nominee
Daniel B. Hurwitz 35 Executive Vice President
Joan U. Allgood 47 Vice President and General Counsel
William H. Schafer 42 Vice President and Chief Financial Officer
Eric Mallory 39 Vice President of Development
</TABLE>
Scott A. Wolstein has been the Chief Executive Officer and a Director of
the Company since its organization. Mr. Wolstein has been Chairman of the Board
of Directors of the Company since May 1997 and was President of the Company from
its organization until May 1999, when Mr. Jacobstein joined the Company. Prior
to the organization of the Company, Mr. Wolstein was a principal and executive
officer of Developers Diversified Group ("DDG"), the Company's predecessor. Mr.
Wolstein is a graduate of the Wharton School at the University of Pennsylvania
and of the University of Michigan Law School. He has served as President of the
Board of Trustees of the United Cerebral Palsy Association of Greater Cleveland
and as a member of the Board of the Great Lakes Theater Festival, Heartland PAC,
Neighborhood Progress, Inc., The Park Synagogue, the Convention and Visitors
Bureau of Greater Cleveland and Bellefaire. Mr. Wolstein also serves as Chairman
of the Board of Trust Managers of American Industrial Properties REIT ("AIP"), a
New York Stock Exchange listed REIT in which the Company has a significant
investment, as a representative of the Company.
James A. Schoff has been the Vice Chairman of the Board of Directors and
Chief Investment Officer of the Company since March 1998. From the organization
of the Company until March 1998, Mr. Schoff served as Executive Vice President,
Chief Operating Officer and a Director of the Company. Prior to the organization
of the Company, Mr. Schoff was a principal and executive officer of DDG. After
graduating from Hamilton College and Cornell University Law School, Mr. Schoff
practiced law with the firm of Thompson, Hine and Flory LLP in Cleveland, Ohio
where he specialized in the acquisition and syndication of real estate
properties. Mr. Schoff serves as a member of the Executive Committee and Board
of Trustees of the Western Reserve Historical Society and the National Committee
for Community and Justice. Mr. Schoff also serves as a director of AIP as a
representative of the Company.
David M. Jacobstein has been the President and Chief Operating Officer of
the Company since May 1999. From 1986 until the time he joined the Company, Mr.
Jacobstein was employed by Wilmorite, Inc., a Rochester, New York based shopping
center developer where most recently he served as Vice Chairman and Chief
Operating Officer. Mr. Jacobstein is a graduate of Colgate University and George
Washington University Law School. Prior to joining Wilmorite, Mr. Jacobstein
practiced law with the firms of Thompson, Hine & Flory in Cleveland, Ohio and
Harris, Beach & Wilcox in Rochester, New York where he specialized in corporate
and securities law. He is a member of the International Council of Shopping
Centers and has served as a Vice-President of the Colgate
26
<PAGE> 27
University Alumni Corporation and as President of the Allendale Columbia School
(Rochester, NY) Board of Trustees.
Daniel B. Hurwitz was appointed Executive Vice President in June 1999. Mr.
Hurwitz most recently served as Senior Vice President and Director of Real
Estate and Development for Reading, Pennsylvania based Boscov's Department
Store, Inc., a privately held department store chain from 1991 until he joined
the Company. Prior to Boscov's, Mr. Hurwitz served as Development Director for
The Shopco Group, a New York City based developer of regional shopping malls.
Mr. Hurwitz is a graduate of Colgate University, and the Wharton School of
Business Executive Management Program at the University of Pennsylvania. He is a
member of the International Council of Shopping Centers and has served as a
Board member of the Colgate University Alumni Corporation, Reading JCC, American
Cancer Society (Regional), and the Greater Berk's Food Bank.
Joan U. Allgood has been a Vice President and General Counsel of the
Company since its organization as a public company and General Counsel of its
predecessor entities since 1987. Mrs. Allgood practiced law with the firm of
Thompson, Hine and Flory from 1983 to 1987, and is a graduate of Denison
University and Case Western Reserve University School of Law.
William H. Schafer has been a Vice President and Chief Financial Officer of
the Company since its organization as a public company and the Chief Financial
Officer of its predecessor entities since April 1992. Mr. Schafer joined the
Cleveland, Ohio office of the Price Waterhouse LLP accounting firm in 1983 and
served there as a Senior Manager from July 1990 until he joined the organization
in 1992. Mr. Schafer graduated from the University of Michigan with a Bachelor
of Arts degree in Business Administration.
Eric Mallory is the Vice President of Development since April 1999. Prior
to that Mr. Mallory was Executive Vice President of PREIT-Rubin, Inc. in
Philadelphia, Pennsylvania since 1993. Mr. Mallory is a graduate of the
University of Pittsburgh and received his MBA from the University of Evansville.
27
<PAGE> 28
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The following table shows the high and low sales price of the Company's
common shares on the New York Stock Exchange (the "NYSE") composite tape for the
quarterly periods indicated and the dividends declared per common share with
respect to each such quarter:
<TABLE>
<CAPTION>
1999 HIGH LOW DIVIDENDS
---- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
First..................................... $18 1/2 $13 5/8 $ .35
Second.................................... 17 1/2 13 7/8 .35
Third..................................... 16 5/8 13 5/16 .35
Fourth.................................... 14 7/8 12 5/16 .35
-----
$1.40
</TABLE>
<TABLE>
<CAPTION>
1998 HIGH LOW DIVIDENDS
---- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
First..................................... $20 7/16 $18 1/4 $.3275
Second.................................... 21 15/32 18 21/32 .3275
Third..................................... 20 9/16 16 .3275
Fourth.................................... 19 5/8 15 7/8 .3275
------
$ 1.31
</TABLE>
The approximate number of record holders of the Company's common shares
(its only class of common equity) at March 15, 2000 was 452, and the approximate
number of beneficial owners of such shares was 18,500.
In March 2000, the Company declared its 2000 first quarter dividend to
shareholders of record on March 22, 2000 of $.36 per share, a 2.9% increase over
the quarterly dividend rate of $.35 per share in 1998.
The Company intends to continue to declare quarterly dividends on its
common shares. However, no assurances can be made as to the amounts of future
dividends, since such dividends are subject to the Company's cash flow from
operations, earnings, financial condition, capital requirements and such other
factors as the Board of Directors considers relevant. The Company is required by
the Internal Revenue Code of 1986, as amended, to distribute at least 95% of its
REIT taxable income. The amount of cash available for dividends is impacted by
capital expenditures and debt service requirements to the extent that the
Company were to fund such items out of cash flow from operations.
In June 1995, the Company implemented a dividend reinvestment plan under
which shareholders may elect to reinvest their dividends automatically in common
shares. Under the plan, the Company may, from time to time, elect to purchase
common shares in the open market on behalf of participating shareholders or may
issue new common shares to such shareholders.
28
<PAGE> 29
ITEM 6. SELECTED FINANCIAL DATA
The financial data included in the following table has been derived from
the financial statements for the last five years and includes the information
required by Item 301 of Regulation S-K.
COMPARATIVE SUMMARY OF SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1999(1) 1998(1) 1997(1) 1996(1) 1995(1)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues (primary real estate
rentals).......................... $263,933 $228,168 $169,223 $130,905 $107,805
-------- -------- -------- -------- --------
Expenses:
Rental operation.................. 69,670 59,498 47,200 35,123 28,069
Depreciation & amortization....... 52,444 43,180 32,313 25,062 21,865
Interest.......................... 68,023 57,196 35,558 29,888 29,595
-------- -------- -------- -------- --------
190,137 159,874 115,071 90,073 79,529
-------- -------- -------- -------- --------
Income before equity in net income
from joint ventures, minority
equity investment, minority equity
interests, (loss) gain on
disposition of real estate and
extraordinary items............... 73,796 68,294 54,152 40,832 28,276
Equity in net income of joint
ventures.......................... 20,621 12,888 10,893 8,710 486
Equity in net income from minority
equity investment................. 6,453 686 -- -- --
Minority equity interests........... (11,809) (3,312) (1,049) -- --
(Loss) gain on disposition of real
estate............................ (1,664) 248 3,526 -- 300
-------- -------- -------- -------- --------
Income before extraordinary item.... 87,397 78,804 67,522 49,542 29,062
Extraordinary item (2).............. -- (882) -- -- (3,557)
-------- -------- -------- -------- --------
Net income..................... $ 87,397 $ 77,922 $ 67,522 $ 49,542 $ 25,505
======== ======== ======== ======== ========
Net income applicable to common
shareholders...................... $ 60,135 $ 57,969 $ 53,322 $ 35,342 $ 24,250
======== ======== ======== ======== ========
Earnings per share data -- Basic: (3)
Income before extraordinary
item.............................. $ 0.99 $ 1.03 $ 1.03 $ 0.84 $ 0.74
Net income........................ $ 0.99 $ 1.02 $ 1.03 $ 0.84 $ 0.65
Weighted average number of common
shares......................... 60,985 56,949 51,760 42,294 37,560
Earnings per share data- Diluted: (3)
Income before extraordinary
item.............................. $ 0.95 $ 1.00 $ 1.03 $ 0.84 $ 0.74
Net income........................ $ 0.95 $ 0.98 $ 1.03 $ 0.84 $ 0.64
Weighted average number of common
shares......................... 63,468 58,509 52,124 42,372 37,818
Annual cash dividend................ $ 1.40 $ 1.31 $ 1.26 $ 1.20 $ 1.08
</TABLE>
29
<PAGE> 30
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate (at cost).......... $2,068,274 $1,896,763 $1,325,742 $991,647 $848,373
Real estate, net of accumulated
depreciation................. 1,818,362 1,693,666 1,154,005 849,608 728,333
Advances to and investments in
joint ventures............... 299,176 266,257 136,267 106,796 83,190
Total assets................... 2,320,860 2,126,524 1,391,918 975,126 830,060
Total debt..................... 1,152,051 1,000,481 668,521 478,432 405,726
Shareholders' equity........... 852,345 902,785 669,050 469,336 404,161
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1999(1) 1998(1) 1997(1) 1996(1) 1995(1)
-------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Cash flow provided from (used in):
Operating activities............ $152,652 $140,078 $ 94,393 $ 75,820 $ 49,039
Investing activities............ (209,708) (538,289) (416,220) (199,670) (217,198)
Financing activities............ 60,788 400,453 321,832 123,851 167,252
Funds from operations(4):
Net income applicable to common
shareholders................. $ 60,135 $ 57,969 $ 53,322 $ 35,342 $ 24,250
Depreciation and amortization of
real estate investments...... 51,498 42,631 31,955 24,832 21,706
Equity in net income of joint
ventures..................... (20,621) (12,888) (10,893) (8,710) (486)
Joint venture funds from
operations................... 32,316 20,779 16,077 13,172 1,364
Equity in net income from
minority equity investment... (6,453) (686) -- -- --
Minority equity investment funds
from operations.............. 12,965 1,493 -- -- --
Minority interest expense (OP
Units)....................... 6,541 3,069 10 -- --
Loss (gain) on disposition of
real estate.................. 1,664 (248) (3,526) -- (300)
Non-recurring and extraordinary
items(2)..................... 802 882 -- -- 3,557
-------- -------- --------- --------- ---------
$138,847 $113,001 $ 86,945 $ 64,636 $ 50,091
======== ======== ========= ========= =========
Weighted average number of common
shares outstanding (Basic)(3)... 60,985 56,949 51,760 42,294 37,560
</TABLE>
- ---------------
(1) As described in the consolidated financial statements, the Company acquired
five properties in 1999 (two of which are owned through joint ventures), 41
properties in 1998 (five of which are owned through joint ventures), eight
properties in 1997 (one of which is owned through a joint venture), five
properties in 1996 and 20 properties in 1995 (10 of which are owned through
joint ventures).
(2) In 1999, the non-recurring charge related to severance costs and in 1998 and
1995, the extraordinary charges relate primarily to the write-off of
deferred finance costs.
(3) Effective August 3, 1998, the Company executed a two-for-one stock split for
shareholders of record on July 27, 1998. Earnings per share data is
reflected for all years utilizing SFAS 128.
(4) Industry analysts generally consider funds from operations ("FFO") to be an
appropriate measure of the performance of an equity REIT. FFO does not
represent cash generated from operating activities in accordance with
generally accepted accounting principles and is not necessarily indicative
of cash available
30
<PAGE> 31
to fund cash needs and should not be considered as an alternative to net
income as an indicator of the Company's operating performance or as an
alternative to cash flow as a measure of liquidity. FFO is defined generally
as net income applicable to common shareholders excluding gains (losses) on
sales of property, non-recurring charges and extraordinary items, adjusting
for certain noncash items, principally real property depreciation, equity
income (loss) from its joint ventures and minority equity investment and
adding the Company's proportionate share of FFO of its unconsolidated joint
ventures and minority equity investment, determined on a consistent basis.
The Company calculates FFO in accordance with the foregoing definition,
which is currently used by NAREIT. Certain other real estate companies may
calculate FFO in a different manner.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements, the notes thereto and the comparative summary
of selected financial data appearing elsewhere in this report. Historical
results and percentage relationships set forth in the consolidated financial
statements, including trends which might appear, should not be taken as
indicative of future operations. The Company considers portions of this
information to be "forward-looking statements" within the meaning of Section 27A
of the Securities Exchange Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both as amended, with respect to the Company's
expectations for future periods. Forward-looking statements include, without
limitation, statements related to acquisitions (including any related pro forma
financial information) and other business development activities, future capital
expenditures, financing sources and availability, the effects of environmental
and other regulations. Although the Company believes that the expectations
reflected in those forward-looking statements are based upon reasonable
assumptions, it can give no assurance that its expectations will be achieved.
For this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks,"
"estimates," and similar expressions are intended to identify forward-looking
statements. Readers should exercise caution in interpreting and relying on
forward-looking statements since they involve known and unknown risks,
uncertainties and other factors which are, in some cases, beyond the Company's
control and could materially affect the Company's actual results, performance or
achievements.
Factors that could cause actual results, performance or achievements to
differ materially from those expressed or implied by forward-looking statements
include, but are not limited to, the following:
- The Company is subject to general risks affecting the real estate
industry, including the need to enter into new leases or renew leases on
favorable terms to generate rental revenues;
- The Company is subject to competition for tenants from other owners of
retail properties, and its tenants are subject to competition from other
retailers and methods of distribution. The Company is dependent upon the
successful operations and financial condition of its tenants,
particularly certain of its most prominent tenants, and could be
adversely affected by the bankruptcy of those tenants;
- The Company may fail to anticipate the effects on its properties of
changes in consumer buying practices, including sales over the Internet,
and the resulting retailing practices and space needs of its tenants;
- E-commerce may affect the sales volume of the Company's tenants which may
reduce the amount of percentage rental income;
- The Company may fail to identify, acquire, construct or develop
additional properties that do not produce a desired yield on invested
capital, or may fail to effectively integrate acquisitions of properties
or portfolios of properties;
- Debt and equity financing may not be available, or may not be available
on favorable terms, for the Company to continue to grow and operate its
business;
- The Company is subject to complex regulations related to its status as a
real estate investment trust ("REIT") and would be adversely affected if
it failed to qualify as a REIT;
31
<PAGE> 32
- The Company must make distributions to shareholders to continue to
qualify as a REIT, and if the Company borrows funds to make distributions
then those borrowings may not be available on favorable terms;
- The Company could be adversely affected by changes in the local markets
where its properties are located, as well as by adverse changes in
national economic and market conditions;
- The Company is subject to potential environmental liabilities;
- The Company could be adversely affected by changes in government
regulations, including changes in environmental, zoning, tax and other
regulations; and
- Changes in interest rates could adversely affect the market price for the
Company's common shares, as well as its performance and cash flow.
COMPARISON OF 1999 TO 1998 RESULTS OF OPERATIONS
Revenues from Operations
Total revenues increased $35.8 million, or 15.7%, to $263.9 million for the
year ended December 31, 1999 as compared to $228.1 million in 1998. Base and
percentage rents for 1999 increased $22.9 million, or 13.4%, to $193.8 million
as compared to $170.9 million in 1998. Approximately $6.6 million of the
increase in base and percentage rental income was the result of new leasing,
re-tenanting and expansion of the Core Portfolio Properties (shopping center
properties owned as of January 1, 1998), an increase of 5.8% over 1998 revenues
from Core Portfolio Properties. The 38 shopping centers acquired by the Company
in 1999 and 1998 contributed $28.1 million of additional revenue and the nine
shopping center developments contributed $4.6 million. These increases were
offset by a decrease of $16.4 million relating to the transfer of five business
centers to American Industrial Properties REIT ("AIP") in July 1998 and the
transfer of six properties to a joint venture in September 1998.
At December 31, 1999, the aggregate occupancy rate of the Company's
shopping centers was 95.7% as compared to 96.5% at December 31, 1998. The
average annualized base rent per leased square foot, including those properties
owned through joint ventures, was $9.20 at December 31, 1999 as compared to
$8.99 at December 31, 1998. During 1999, same store sales, for those tenants
required to report sales (approximately 18.9 million square feet), increased
3.4% to $235 per square foot.
The increase in recoveries from tenants of $4.7 million was directly
related to the increase in operating and maintenance expenses and real estate
taxes primarily associated with the 1999 and 1998 shopping center acquisitions
and developments. Recoveries were approximately 92.1% of operating and
maintenance expenses and real estate taxes in 1999 as compared to 92.5% in 1998.
Management fee income increased by approximately $1.5 million, primarily
associated with twelve additional joint ventures formed in 1998 and 1999, and
interest income increased $1.3 million primarily associated with advances made
to certain joint ventures formed in 1998 and 1999. Other income generally
related to increases in (i) development fee income of approximately $2.3
million, (ii) lease termination fees of approximately $1.8 million and (iii)
other income, comprised of commissions, financing fees and other miscellaneous
revenue items, increased approximately $1.2 million.
Expenses from Operations
Rental operating and maintenance expenses for the year ended December 31,
1999 increased $4.6 million, or 22.8%, to $24.6 million as compared to $20.0
million in 1998. An increase of $3.0 million was attributable to the 47 shopping
centers acquired and developed in 1999 and 1998 and $3.1 million related to the
Core Portfolio Properties generally associated with increased snow removal costs
and other maintenance related costs. These increases were offset by a decrease
of $1.5 million relating to the transfer of five business center properties to
AIP in August 1998 and the transfer of six shopping center properties into a
joint venture in September 1998.
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<PAGE> 33
Real estate taxes increased $0.7 million, or 2.8%, to $27.2 million for the
year ended December 31, 1999 as compared to $26.5 million in 1998. This increase
was primarily attributable to the growth related to the 47 shopping centers
acquired and developed in 1999 and 1998 which contributed $4.1 million of the
increase and an additional $0.4 million of the increase primarily related to
expansions associated with the Core Portfolio Properties. These increases were
offset by a decrease of $3.8 million relating to the transfer of five business
center properties to AIP in August 1998 and the transfer of six shopping center
properties into a joint venture in September 1998.
General and administrative expenses increased $4.9 million, or 37.6%, to
$17.8 million for the year ended December 31, 1999 as compared to $12.9 million
in 1998. Total general and administrative expenses were approximately 4.1% (3.9%
after excluding a $0.8 million severance charge, described below) and 3.8% of
total revenues, including revenues of joint ventures, for the years ended
December 31, 1999 and 1998, respectively.
The increase in general and administrative expenses is attributable to the
growth of the Company primarily related to shopping center acquisitions,
expansions and developments (including those owned through joint ventures),
relocation of the Company's headquarters to a new office, additional consulting
costs, professional services, several new key executives and a severance charge.
The increase was offset by adjustments to certain variable rate executive
incentive compensation accruals of approximately $1.3 million. The Company
continues to maintain a conservative policy with regard to the expensing of all
internal leasing salaries, legal salaries and related expense associated with
the leasing and re-leasing of existing space.
Depreciation and amortization expense increased $9.2 million, or 21.5%, to
$52.4 million for the year ended December 31, 1999 as compared to $43.2 million
in 1998. The increase was primarily attributable to the growth related to the 47
shopping centers acquired and developed in 1999 and 1998 which contributed $10.4
million of the increase, an additional $2.4 million increase related to the
expansions and improvements associated with the Core Portfolio Properties and
approximately $0.4 million related to increased depreciation expense related to
personal property primarily associated with the relocation of the Company's
headquarters. These increases were offset by a decrease of $4.0 million relating
to the transfer of five business center properties to AIP in August 1998 and the
transfer of six shopping center properties into a joint venture in September
1998.
Interest expense, net of amounts capitalized, increased $10.8 million, or
18.9%, to $68.0 million for the year ended December 31, 1999 as compared to
$57.2 million in 1998. The overall increase in interest expense was primarily
related to the acquisition and development of shopping centers during 1999 and
1998. The weighted average debt outstanding and related weighted average
interest rate during 1999 was $1.1 billion and 7.2%, respectively, as compared
to $911.7 million and 7.4%, respectively, during 1998. Interest capitalized, in
connection with development and expansion projects, was $13.5 million for the
year ended December 31, 1999 as compared to $9.9 million in 1998.
Other
Equity in net income of joint ventures increased $7.7 million, or 60.0%, to
$20.6 million in 1999 as compared to $12.9 million in 1998. An increase of $6.9
million is primarily attributable to the joint ventures formed/acquired during
1998 and 1999 and the remaining $1.1 million increase is primarily due to the
Community Centers Joint Venture and Liberty Fair Joint Venture of $0.9 million
and $0.2 million, respectively. This increase in income of $6.9 million is
comprised of $2.8 million relating to the formation of a joint venture in
September 1998 with DRA Advisors whereby the Company contributed six wholly
owned shopping centers, $1.1 million from DD Development Company and $1.5
million through the formation of the Sansone management and development
companies. An additional $0.3 million relates to the acquisition of four joint
venture interests acquired from Continental Real Estate Companies
("Continental") of Columbus, Ohio during the first half of 1998. The Company's
joint venture in Merriam, Kansas contributed $0.4 million of additional income
and a joint venture in Leawood, Kansas contributed $0.7 million of additional
income. The remaining $0.1 million increase primarily relates to various other
joint ventures formed in 1998 to develop shopping center properties which were
in the lease-up phase in 1999.
Equity in net income of minority equity investment increased $5.8 million,
to $6.5 million for the year ended December 31, 1999, as compared to $0.7
million for the same period in 1998. This increase related to the
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<PAGE> 34
Company's equity investment in AIP (NYSE: IND) which began in August 1998.
Initially, the Company owned approximately 16% of the outstanding shares of AIP
and as of December 31, 1999, the Company owned approximately 9.7 million shares
of AIP which approximates 46.1% of AIP's outstanding common shares.
The expense relating to minority interests increased $8.5 million, to $11.8
million for the year ended December 31, 1999 as compared to $3.3 million in
1998. An increase of $5.0 million relates to the Company's issuance of preferred
operating partnership minority units ("Units") in September 1999 and December
1998. These units may be exchanged, under certain circumstances, into preferred
and/or common shares of the Company. An increase of $3.6 million relates to the
Company's issuance of operating partnership units ("OP Units") as partial
consideration for shopping centers acquired in 1998 and 1999. This increase
related to the Company's purchase of 22 shopping centers in 1998 and 1999 and as
consideration, the related issuance of OP Units which are exchangeable, in
certain circumstances and at the option of the Company, into 4.7 million common
shares of the Company or for cash. This expense represents the income allocation
associated with the priority distributions associated with the minority equity
interests. These increases were offset by a $0.1 million net decrease related to
minority interests in shopping centers.
The loss on disposition of real estate aggregating $1.7 million primarily
relates to the sale of a shopping center and residual land in Pensacola, Florida
aggregating a $2.2 million loss. The shopping center was sold to a major
retailer. In connection with this disposition, the Company developed a 17,000
square foot shopping center adjacent to the site sold. In addition, the Company
sold four properties at an aggregate gain of approximately $0.5 million which
offsets the previously described loss. Net proceeds received in conjunction with
the above sales aggregated $13.9 million.
The extraordinary item, which aggregated $0.9 million for the year ended
December 31, 1998, relates to the write-off of unamortized deferred finance
costs associated with the amended and restated $375 million revolving credit
facility.
Net Income
Net income increased $9.5 million to $87.4 million for the year ended
December 31, 1999 as compared to $77.9 million in 1998. The increase in net
income was primarily attributable to increased net operating revenues (total
revenues less operating and maintenance expenses, real estate taxes, and general
and administrative expense) aggregating $25.5 million, resulting from new
leasing, re-tenanting and expansion of Core Portfolio Properties and the 47
shopping centers acquired and developed in 1999 and 1998. An additional increase
of $13.5 million related to equity in net income from joint ventures and
minority equity investment and an increase of $0.9 million relating to the 1998
extraordinary item. This increase was offset by increases in interest expense,
depreciation and amortization, minority interest expense and a loss on
disposition of real estate of $10.8 million, $9.2 million, $8.5 million and $1.9
million, respectively.
COMPARISON OF 1998 TO 1997 RESULTS OF OPERATIONS
Revenues from Operations
Total revenues increased $58.9 million, or 34.8%, to $228.1 million for the
year ended December 31, 1998 as compared to $169.2 million in 1997. Base and
percentage rents for 1998 increased $44.6 million, or 35.3%, to $170.9 million
as compared to $126.3 million in 1997. Approximately $4.8 million of the
increase in base and percentage rental income was the result of new leasing,
re-tenanting and expansion of the Core Portfolio Properties (shopping center
properties owned as of January 1, 1997), an increase of 4.6% over 1997 revenues
from Core Portfolio Properties. The 48 shopping centers acquired by the Company
in 1998 and 1997 contributed $44.1 million of additional revenue and the 5 new
shopping center developments contributed $4.2 million. These increases were
offset by a decrease of $1.3 million relating to the sale of one shopping center
in December 1997 and the transfer of five business centers to AIP in July 1998
and $7.2 million relating to the transfer of six properties to a joint venture
in September 1998.
At December 31, 1998, the aggregate occupancy rate of the Company's
shopping centers was 96.5% as compared to 96.1% at December 31, 1997. The
average annualized base rent per leased square foot, including
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<PAGE> 35
those properties owned through joint ventures, was $8.99 at December 31, 1998 as
compared to $8.49 at December 31, 1997. During 1998, same store sales, for those
tenants required to report sales (approximately 17.5 million square feet),
increased 3.0% to $231 per square foot.
The increase in recoveries from tenants of $10.7 million was directly
related to the increase in operating and maintenance expenses and real estate
taxes primarily associated with the 1998 and 1997 shopping center acquisitions
and developments. Recoveries were approximately 92.5% of operating and
maintenance expenses and real estate taxes in 1998 as compared to 90.0% in 1997.
Management fee income and other income increased by approximately $3.7
million which generally related to increases in (i) interest income of
approximately $3.0 million, (ii) management fee income of approximately $0.6
million primarily related to the acquisition of four properties owned through
joint ventures and the formation of a joint venture in September 1998, (iii)
development fee income of approximately $0.7 million and (iv) other income of
approximately $0.6 million. These increases were offset by a decrease in lease
termination fees of $1.2 million.
Expenses from Operations
Rental operating and maintenance expenses for the year ended December 31,
1998 increased $3.9 million, or 24.3%, to $20.0 million as compared to $16.1
million in 1997. An increase of $5.2 million was attributable to the 53 shopping
centers acquired and developed in 1998 and 1997. This increase was offset by
decreases of $0.6 million related to the Core Portfolio Properties generally
associated with lower maintenance activities in 1998 as compared to 1997 at a
majority of the Company's shopping centers, and $0.7 million relating to the
sale and/or transfer of 12 properties in 1998 and 1997.
Real estate taxes increased $6.5 million, or 32.5%, to $26.5 million for
the year ended December 31, 1998 as compared to $20.0 million in 1997. This
increase was primarily attributable to the growth related to the 53 shopping
centers acquired and developed in 1998 and 1997 which contributed $7.5 million
of the increase. An additional $0.8 million increase primarily related to
expansions associated with the Core Portfolio Properties. These increases were
offset by a decrease of $1.8 million relating to the sale and/or transfer of 12
properties in 1997 and 1998.
General and administrative expenses increased $1.8 million, or 16.8%, to
$12.9 million for the year ended December 31, 1998 as compared to $11.1 million
in 1997. The increase is attributable to the growth of the Company primarily
related to the 1998 and 1997 acquisitions, expansions and developments. The
Company continues to maintain a conservative policy with regard to the expensing
of all internal leasing salaries, legal salaries and related expenses associated
with the leasing and re-leasing of existing space. Total general and
administrative expenses were approximately 3.8% and 4.4% of total revenues,
including revenues of joint ventures, for the years ended December 31, 1998 and
1997, respectively.
Depreciation and amortization expense increased $10.9 million, or 33.6%, to
$43.2 million for the year ended December 31, 1998 as compared to $32.3 million
in 1997. The increase was primarily attributable to the growth related to the 53
shopping centers acquired and developed in 1998 and 1997 which contributed an
$11.4 million increase and an additional $1.3 million increase related to the
expansions and improvements associated with the Core Portfolio Properties. These
increases were offset by a decrease of $1.8 million relating to the sale and/or
transfer of 12 properties in 1998 and 1997.
Interest expense, net of amounts capitalized, increased $21.6 million, or
60.9%, to $57.2 million for the year ended December 31, 1998 as compared to
$35.6 million in 1997. The overall increase in interest expense was primarily
related to the acquisition and development of 53 shopping centers during 1998
and 1997. The weighted average debt outstanding and related weighted average
interest rate during 1998 was $911.7 million and 7.4%, respectively, as compared
to $510.5 million and 7.7%, respectively, during 1997. Interest capitalized, in
connection with development and expansion projects, was $9.9 million for the
year ended December 31, 1998 as compared to $4.0 million in 1997.
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<PAGE> 36
Other
Equity in net income of joint ventures increased $2.0 million, or 18.3%, to
$12.9 million in 1998 as compared to $10.9 million in 1997. This increase is
primarily attributable to the joint ventures formed or acquired during 1998
which aggregated approximately $3.2 million of income. Approximately $1.3
million related to four joint venture interests acquired from Continental during
the first half of 1998. An additional $1.2 million relates to the formation of a
joint venture in September 1998 with DRA Advisors whereby the Company
contributed six wholly owned shopping centers to a newly formed joint venture in
exchange for cash of $192 million and a 50% joint venture interest. The
remaining $0.7 million increase primarily relates to various other joint
ventures formed including Merriam, Nassau Pavilion, Retail Value Fund,
OliverMcMillan and Sansone Management Company. The above increases were offset
by a decrease in net income from the Community Center Joint Ventures of
approximately $1.0 million, primarily associated with an increase in interest
costs relating to the refinancing of the variable rate bridge financings to long
term fixed rate financing in May 1997.
Equity in net income of minority equity investment of $0.7 million relates
to the Company's investment in AIP for the period July 30, 1998 to December 31,
1998. At December 31, 1998, the Company owned 5.9 million shares of AIP which
represented approximately 34.5% of AIP's outstanding common shares.
The expense relating to minority interests increased $2.3 million, to $3.3
million for the year ended December 31, 1998 as compared to $1.0 million in
1997. The increase generally relates to the Company's issuance of OP Units as
partial consideration for 21 shopping centers acquired in 1998. These OP Units
are exchangeable, in certain circumstances and at the option of the Company,
into approximately 4.6 million common shares of the Company. This increase is
offset by the Company's purchase, in March 1998, of the minority interest in one
shopping center located in Cleveland, Ohio, for approximately $16.3 million. The
minority equity interest expense primarily represents the priority distributions
associated with such interests.
The extraordinary item, which aggregated $0.9 million for the year ended
December 31, 1998, relates to the write-off of unamortized deferred finance
costs associated with the Company's former $150 million revolving credit
facility which was replaced with a $375 million revolving credit facility.
Net Income
Net income increased $10.4 million to $77.9 million for the year ended
December 31, 1998 as compared to $67.5 million in 1997. The increase in net
income was primarily attributable to increased net operating revenues (total
revenues less operating and maintenance expenses, real estate taxes, and general
and administrative expense) aggregating $46.7 million, resulting from new
leasing, re-tenanting and expansion of Core Portfolio Properties and the 53
shopping centers acquired and developed in 1998 and 1997. An additional increase
of $2.7 million related to equity in net income from joint ventures and minority
equity investment. This increase was offset by increases in interest expense,
depreciation and amortization, minority interest expense, extraordinary item and
a reduction of gain on sales of real estate of $21.6 million, $10.9 million,
$2.3 million, $0.9 million and $3.3 million, respectively.
FUNDS FROM OPERATIONS
Management believes that Funds From Operations ("FFO") provides an
additional indicator of the financial performance of a Real Estate Investment
Trust. FFO is defined generally as net income applicable to common shareholders
excluding gains (or losses) from sales of real estate, non-recurring charges and
extraordinary items, adjusted for certain non-cash items, principally real
property depreciation, equity income from its joint ventures and equity income
from its minority equity investment and adding the Company's proportionate share
of FFO from its unconsolidated joint ventures and minority equity investment,
determined on a consistent basis.
The Company calculates FFO in accordance with the foregoing definition,
which is currently used by the National Association of Real Estate Investment
Trusts ("NAREIT"). Certain other real estate companies may calculate FFO in a
different manner.
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<PAGE> 37
In 1999, FFO increased $25.8 million, or 22.8%, to $138.8 million as
compared to $113.0 million in 1998 and $86.9 million in 1997. The increases in
each year were attributable to the continuing increases in revenues from Core
Portfolio Properties, acquisitions, developments and joint venture interests.
The Company's calculation of FFO is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net income applicable to common shareholders(1)............ $ 60,135 $ 57,969 $ 53,322
Depreciation and amortization of real estate investments... 51,498 42,631 31,955
Equity in net income of joint ventures..................... (20,621) (12,888) (10,893)
Equity in net income of minority equity investment......... (6,453) (686) --
Joint ventures' FFO(2)..................................... 32,316 20,779 16,077
Minority equity investment FFO............................. 12,965 1,493 --
Minority interest (OP Units)............................... 6,541 3,069 10
Loss (gain) on disposition of real estate.................. 1,664 (248) (3,526)
Non-recurring and extraordinary items...................... 802 882 --
-------- -------- --------
$138,847 $113,001 $ 86,945
======== ======== ========
</TABLE>
- ---------------
(1) Includes straight-line rental revenues, which approximated $4.1 million,
$3.3 million and $2.0 million in 1999, 1998 and 1997, respectively,
primarily relating to acquisitions and new developments.
(2) Joint ventures' FFO is summarized as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Net income(a)............................................. $38,045 $25,070 $22,132
Depreciation and amortization of real estate
investments............................................. 22,948 16,009 11,658
Gain on sales of real estate.............................. (344) (314) (1,085)
------- ------- -------
$60,649 $40,765 $32,705
------- ------- -------
DDRC ownership interests(b)............................... $32,316 $20,779 $16,077
======= ======= =======
</TABLE>
--------------------
(a) Includes straight-line rental revenue of approximately $4.2 million,
$3.1 million and $2.9 million in 1999, 1998 and 1997, respectively. The
Company's proportionate share of straight-line rental revenues was $2.1
million, $1.5 million and $1.4 million in 1999, 1998 and 1997,
respectively.
(b) At December 31, 1999, the Company owned joint venture interests
relating to 28 operating shopping center properties, a 25% interest in
the Prudential Retail Value Fund and a 50% joint venture in a real
estate management company. At December 31,1998, the Company owned joint
venture interests relating to 26 operating shopping center properties,
a 25% interest in the Prudential Retail Value Fund and a 50% joint
venture interest in a real estate management company. At December 31,
1997, the Company owned joint venture interests relating to 14
operating shopping center properties.
LIQUIDITY AND CAPITAL RESOURCES
The Company anticipates that cash flow from operating activities will
continue to provide adequate capital for all interest and principal payments on
outstanding indebtedness, recurring tenant improvements, as well as dividend
payments in accordance with REIT requirements and that cash on hand, borrowings
under its existing revolving credit facilities, as well as other debt and equity
alternatives, including the issuance of OP Units and joint venture capital, will
provide the necessary capital to achieve continued growth. Cash flow from
operating activities for 1999 increased to $152.7 million as compared to $137.5
million in 1998. The increase was attributable to the 47 shopping center
acquisitions and developments completed in 1999 and 1998, new leasing, expansion
and re-tenanting of the Core Portfolio Properties and the equity offerings
completed in 1999 and 1998.
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<PAGE> 38
The Company satisfied its REIT requirement of distributing at least 95% of
ordinary taxable income with declared common and preferred share dividends of
$112.5 million in 1999 as compared to $95.1 million and $79.7 million in 1998
and 1997, respectively. Accordingly, federal income taxes were not incurred at
the corporate level. The Company's common share dividend payout ratio for the
year approximated 61.4% of its 1999 FFO as compared to 67.0% and 75.3% in 1998
and 1997, respectively.
In December 1999, the REIT Modernization Act ("RMA") was passed by the
federal government. The RMA, which is effective in 2001, allows REITs to own a
taxable REIT subsidiary which can provide services to a REIT's tenants without
disqualifying the rents that a REIT receives from these tenants. In addition,
this act lowers the distribution requirements for a REIT from 95% to 90% of its
ordinary taxable income.
An increase in the 2000 quarterly dividend per common share to $0.36 from
$0.35 was approved in March 2000 by the Company's Board of Directors. It is
anticipated that the new dividend level will continue to result in a
conservative payout ratio. A low payout ratio enables the Company to retain more
capital which will be utilized towards attractive investment opportunities in
the development, acquisition and expansion of portfolio properties.
ACQUISITIONS, EXPANSIONS AND DEVELOPMENTS
During the three year period ended December 31, 1999, the Company and its
joint ventures expended $2.1 billion, net, to acquire, develop, expand, improve
and re-tenant its properties as follows (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
------ -------- ------
<S> <C> <C> <C>
COMPANY:
Acquisitions.............................................. $ 78.3(1) $ 688.4(3) $267.9
Completed expansions...................................... 43.3 11.2 29.8
Developments and construction in progress................. 75.6 121.0 41.1
Tenant improvements and building renovations.............. 6.6 4.4 3.5
Furniture and fixtures and equipment...................... 5.3 2.3 0.7
Other real estate investments............................. -- -- 72.1
------ -------- ------
209.1 827.3 415.1
Less real estate sales and property contributed to joint
ventures............................................... (37.6) (328.8) (8.9)
------ -------- ------
Company total........................................ 171.5 498.5 406.2
------ -------- ------
JOINT VENTURES:
Acquisitions/Contributions................................ 96.5(2) 489.3(4) 38.8
Completed expansions...................................... 3.3 -- 9.2
Developments and construction in progress................. 169.0 86.7 31.9
Tenant improvements and building renovations.............. 1.5 1.8 0.2
Minority equity investment in AIP......................... 42.2 95.1 --
------ -------- ------
312.5 672.9 80.1
Less real estate sales............................... (26.5)(1) (33.8) (6.1)
------ -------- ------
Joint ventures total................................. 286.0 639.1 74.0
------ -------- ------
$457.5 $1,137.6 $480.2
====== ======== ======
</TABLE>
- ---------------
(1) Includes a transfer of the Everett development project to the Company and
Salem to DD Development Company.
(2) Includes a transfer of $20.4 million from the Company relating to the
development project in Coon Rapids, MN and the transfer of the 13 remaining
Best Products sites from the Retail Value Fund, which had an aggregate cost
basis of $43.9 million at December 31, 1999.
(3) Includes developments and construction in progress aggregating $64.9 million
at the date of acquisition.
(4) Includes transfers aggregating $323.1 million from the Company and the
acquisition of joint venture interests aggregating $166.2 million.
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<PAGE> 39
Acquisitions 1999
In November 1999, the Company acquired, through a 50% owned joint venture,
the fourth phase of a shopping center in Phoenix, Arizona which aggregates
125,000 square feet. The total purchase price for the fourth phase of this
center aggregated approximately $15.6 million.
In July 1999, the Company acquired Deer Valley Towne Center, a 198,000
square foot shopping center in Phoenix, Arizona, for an aggregate purchase price
of $25.8 million. The Company transferred this property in March 2000 to a 50%
owned joint venture with DRA Advisors.
In August 1998, the Company announced a strategic investment in AIP.
Through December 31, 1998, the Company acquired 5.9 million common shares of AIP
at an aggregate cost of $91.3 million. In January 1999, the Company acquired 3.4
million additional common shares of AIP for approximately $51.8 million. In
August 1999, the Company purchased an additional 0.4 million shares of AIP for
approximately $5.5 million. At December 31, 1999, the Company's ownership in AIP
approximated 46.1% of the total outstanding shares of AIP.
In June 1999, DD Development Company, a Company in which DDR has an equity
ownership interest, acquired Prudential Real Estate Investors' ("PREI") limited
partnership interest in a joint venture, Hendon/DDR/ BP, LLC, which owned 15
sites formerly occupied by Best Products at a cost of approximately $29.7
million. As a result, the Company's aggregate investment in the joint venture
increased to approximately $36 million. Eleven of the sites are leased as of
December 31, 1999 and two were sold as of December 31, 1999. In addition, in
June 1999, Hendon/DDR/BP, LLC, entered into a $25 million mortgage, with a
financial institution secured by the leased sites. The net financing proceeds
were used to repay advances made by the Company to the joint venture.
In April 1999, the Company acquired a 50% interest in a 206,000 square foot
shopping center in St. Louis, Missouri. The joint venture's aggregate purchase
price was $16.6 million and included the assumption of debt aggregating $13.0
million.
Expansions 1999
During 1999, the Company, on a wholly-owned basis and through certain joint
ventures, completed fourteen expansion projects at an aggregate cost of $46.6
million. The major expansion projects completed during 1999 are as follows:
- A 132,000 square foot Home Depot and Cost Plus expansion at The Plazas at
Great Northern in North Olmsted, Ohio.
- A 183,000 square foot Wal-Mart Superstore at Springdale Plaza in Camden,
South Carolina.
- A 33,500 square foot Office Max and retail expansion at Quincy Place Mall
in Ottumwa, Iowa.
- A 137,800 square foot Wal-Mart and Office Max expansion at Western Plaza
in Jacksonville, North Carolina.
- A 32,000 square foot Bed, Bath & Beyond expansion at Spring Creek Centre
in Fayetteville, Arkansas.
- A 23,500 square foot Office Max expansion at Copper Country Mall in
Houghton, Michigan.
In addition, the Company is currently expanding/redeveloping three of its
shopping centers at an aggregate cost of $6.3 million. These expansion projects
include:
- A 71,000 square foot retail expansion at Springdale Plaza in Camden,
South Carolina.
- A 26,000 square foot retail expansion at the K-Mart shopping center in
Brandon, Florida.
- A 25,000 square foot Old Navy expansion at the Spring Creek Centre in
Fayetteville, Arkansas.
The Company is also planning to commence expansion/redevelopment projects
at five additional shopping centers located in: North Charleston, South
Carolina; North Canton, Ohio; Maple Grove, Minnesota; Mount Pleasant, South
Carolina and Wilmington, North Carolina.
39
<PAGE> 40
Development (Wholly Owned) 1999
During 1999, the Company completed construction at the following five
shopping centers:
- A 185,000 square foot shopping center in Solon, Ohio, which includes a
Borders, Bed, Bath & Beyond, Mustard Seed (a gourmet grocery store), Old
Navy, Talbots, Pier 1 and Newman Outfitters.
- A 200,000 square foot second phase of its Erie, Pennsylvania center
anchored by Home Depot (not owned by the Company), PETsMART and Circuit
City.
- Phase I of the 282,000 square foot shopping center in Toledo, Ohio, which
includes Kohl's, Gander Mountain, Bed, Bath & Beyond and Babies R Us.
- Phase I of the 185,000 square foot shopping center in Oviedo, Florida (a
suburb of Orlando), which included OfficeMax, Michael's, Ross Dress for
Less and Shoe Carnival.
- A 170,000 square foot Phase II development in Macedonia, Ohio which
includes Home Depot and Cinemark Theaters.
Phase II of both the Toledo, Ohio and Oviedo, Florida projects are under
construction and scheduled for completion in 2000. The other wholly-owned
development projects are as follows:
- A 416,000 square foot shopping center in Meridian, Idaho (a suburb of
Boise), which is scheduled for completion in 2000 and is expected to be
anchored by Wal-Mart (not owned by the Company), Shopko (which opened
during the fourth quarter of 1999), Shepler's, Bed, Bath & Beyond, Office
Depot and Old Navy.
- The Company is also in the initial phase of development relating to a
shopping center located in Riverdale, Utah.
Development (Joint Ventures) 1999
During 1999, the Company through certain joint ventures completed
construction of the following three shopping centers:
- The Village Shoppes of Salem, a 170,278 square foot shopping center in
Salem, New Hampshire, which is anchored by Best Buy, Linens N' Things,
MVP Sports, CompUSA, Michael's and Big Party.
- Phase I of The Commons, a 310,475 square foot shopping center in
Salisbury, Maryland. Phase I is anchored by Michael's, OfficeMax,
PETsMART, Home Depot (not owned by the Company) and Target (not owned by
the Company). Upon completion, the Company acquired its joint venture
partners' interest.
- Phase I of Connecticut Commons, a 569,340 square foot shopping center in
Plainville, Connecticut. Phase I is anchored by Lowe's Home Improvement,
K-mart, Sony/Loews Theater and A.C. Moore.
During 1998 and 1999, the Company entered into joint venture development
agreements on an additional eight shopping center projects with leading regional
developers. These eight projects have a projected aggregate cost of
approximately $321.7 million. Several of these projects have commenced
development and are currently scheduled for completion in 2000. In addition to
the Salem, New Hampshire and Plainville, Connecticut developments discussed
above, the Company is currently financing projects located in Round Rock, Texas;
Hagerstown, Maryland; Deer Park, Illinois and Long Beach, California, through
the Prudential/DDR Retail Value Fund and also intends to finance its investment
in the Fenton, Missouri project through this fund.
In 1999, the Company entered into a joint venture relating to a 642,000
square foot shopping center in Coon Rapids, Minnesota, the initial phase of
which is scheduled to be completed in March 2000 and is anchored by a Kohl's
(opened fourth quarter 1999) and Jo-Ann, ETC. The Company owns a 25% equity
interest.
The Company, through its affiliate DDR OliverMcMillan, LP ("DDROM")
continued to pursue six urban entertainment and retail projects aggregating 1.2
million square feet of gross leasable area ("GLA") at a projected cost of
approximately $233 million. The majority of the above projects are scheduled to
commence
40
<PAGE> 41
construction in 1999 and 2000 with completion occurring between 2000 and 2002.
The Company may also pursue partnership relationships with institutional
investors in conjunction with the above projects.
1998 Activity
During 1998, the Company and its joint ventures completed the acquisition
of, or investment in, 41 shopping centers aggregating 7.4 million square feet of
Company owned gross leasable area (GLA) for an aggregate investment of
approximately $854.6 million. In December 1998, the Company acquired a 50%
ownership interest in a 0.4 million square foot shopping center in Leawood,
Kansas. The Company's investment aggregated approximately $18 million and was
comprised of an equity investment of approximately $12.3 million and a note
receivable due from the joint venture partner of $5.7 million. In September
1998, the Company entered into a 50/50 joint venture with DRA Advisors. In
conjunction with this joint venture the Company contributed properties valued at
approximately $238 million to the joint venture and DRA contributed cash of
approximately $42 million. In addition, the joint venture entered into a $156
million, seven year mortgage with a coupon interest rate of 6.64%. Net proceeds
aggregating approximately $192 million were distributed to the Company and used
to repay borrowings on the Company's revolving credit facilities. The Company
continues to manage the shopping centers and receive market fees for these
services.
In 1998, the Company, in a joint release with AIP, announced the execution
of a definitive agreement providing for the strategic investment in AIP by the
Company. In July 1998, the Company, in exchange for five industrial properties
owned by the Company with a net book value of $7.4 million and valued at
approximately $19.5 million, acquired approximately 1.3 million additional newly
issued AIP shares of beneficial interest. As of December 31, 1998, the Company
had purchased 5.9 million of common shares for approximately $91.3 million.
Combined, the Company's acquired shares represented 34.5% of AIP's total
outstanding shares as of December 31, 1998.
During 1998, the Company completed seven expansion projects at an aggregate
cost of $11.2 million. During 1998, the Company substantially completed the
construction of a 445,000 square foot shopping center in Merriam, Kansas which
was being developed through a joint venture formed in October 1996, 50% of which
is owned by the Company. The Company began construction at four shopping centers
including: (i) a 200,000 square foot second phase of the Company's Erie,
Pennsylvania center; (ii) a 280,000 square foot shopping center in Toledo, Ohio;
(iii) a 185,000 square foot shopping center in Solon, Ohio and (iv) a 220,000
square foot shopping center in Oviedo, Florida (a suburb of Orlando).
In 1998, the Company entered into joint venture development agreements for
six additional projects with various developers throughout the country. In May
1998, the Company formed DDROM, with OliverMcMillan, LLC, based in San Diego,
California to develop, acquire, operate and manage urban entertainment and
retail projects throughout the United States. DDROM's initial investments are
comprised of six OliverMcMillan urban entertainment and retail projects located
in Southern California and Reno, Nevada.
1997 Activity
During 1997, the Company acquired seven shopping centers aggregating 2.4
million square feet of Company owned GLA for an aggregate investment of
approximately $267.9 million. In addition, in January 1997, the Company entered
into a joint venture with certain institutional investors which are advised by
DRA Advisors, Inc. to acquire a 0.3 million square foot shopping center located
in San Antonio, Texas. The aggregate cost of the shopping center was
approximately $38.3 million of which the Company's proportionate ownership share
is 35%. The Company also contributed approximately $0.5 million of additional
assets to the DOTRS Joint Venture during 1997.
During 1997, the Company and its joint ventures completed expansions and
redevelopments aggregating approximately 0.8 million square feet at an aggregate
cost of approximately $39.0 million at 13 of its shopping centers.
During 1997, the Company substantially completed the construction of four
shopping centers which included: (i) a 235,000 square foot Phase II development
of the Canton, Ohio shopping center; (ii) a 500,000
41
<PAGE> 42
square foot shopping center in Boardman, Ohio; (iii) a 475,000 square foot
shopping center in Stow, Ohio and (iv) an 84,000 square foot shopping center in
Aurora, Ohio.
Development activity was completed at two of the Company's joint venture
shopping centers located in Atlanta, Georgia and Framingham, Massachusetts which
were acquired in connection with the Community Center Joint Ventures in November
1995.
In December 1997, the Company acquired 33 retail redevelopment sites,
formerly occupied by Best Products, at a cost of approximately $54.5 million. In
February 1998, these assets were contributed to the Prudential/DDR Retail Value
Fund, a joint venture with Prudential Real Estate Investors.
FINANCING ACTIVITIES
The above acquisitions, developments and expansions were generally financed
through cash provided from operating activities, revolving credit facilities,
mortgages assumed, construction loans, unsecured public debt, common and
preferred equity offerings, joint venture capital, OP Units and asset sales.
Total debt outstanding at December 31, 1999 was $1.2 billion as compared to $1.0
billion and $668.5 million at December 31, 1998 and 1997, respectively. In 1999,
the Company increased total debt by $151.6 million primarily to fund
acquisitions, developments, expansions and other real estate investments.
Through December 31, 1999, the Company purchased in open market
transactions 1,860,300 of its common shares, at prices ranging from $12.69 to
$14.00, for an aggregate purchase price of approximately $25.8 million. For the
period January 1, 2000 through March 3, 2000, the Company initiated the purchase
of an additional 1,163,700 shares for an aggregate purchase price of
approximately $13.7 million. In February and August 1999, the Company's Board of
Directors authorized the officers of the Company to implement and continue a
common share repurchase program in response to what the Company believed was a
distinct undervaluation of the Company's common shares in the public market.
Under the terms authorized by the Company's Board, as amended in November 1999,
the Company may purchase in the open market, subject to certain requirements,
common shares of the Company, up to a maximum value of $200 million. The Company
may invest proceeds from the sale of assets to purchase these shares. It is not
the Company's intention to increase the leverage on its balance sheet to
implement this stock repurchase program.
Also in December 1999, one of the Company's joint ventures refinanced its
secured mortgage and entered into a ten year fixed rate mortgage for $21.3
million with interest at 8.46%. Additional proceeds from this refinancing of
approximately $6.4 million were used to repay a portion of a note payable to the
Company.
During 1999, the Prudential/DDR Retail Value Fund ("Fund"), a joint venture
in which the Company effectively owns a 25% interest, agreed to acquire the
Company's 50% joint venture interests relating to the development of six
shopping centers. The Company was reimbursed by the Fund for approximately $74.3
million associated with development costs incurred on each of these projects.
The Company also obtained third party financing for three of these projects
aggregating approximately $77.1 million with rates ranging from LIBOR plus 175
to LIBOR plus 180. In addition, the Company transferred its interest in a
shopping center development in Coon Rapids, Minnesota, a suburb of Minneapolis,
to a joint venture in which the Company retained a 25% interest and was
reimbursed $2.5 million relating to development costs previously incurred on
this project. The Company also sold certain land parcels adjacent to its
shopping center in Wilmington, North Carolina and received aggregate proceeds of
approximately $6.1 million.
In September 1999, the Company completed a $75 million private placement of
0.3 million, 8.875% perpetual preferred "down-REIT" partnership units with an
institutional investor. The units may be exchanged, under certain circumstances,
for Class K, 8.875% cumulative preferred shares. The units may be exchangeable
into common shares if the Company fails to pay dividends for six consecutive
quarters. The net proceeds of approximately $73.1 million were effectively used
to repay approximately $25.8 million in mortgage indebtedness and $40.1 million
in convertible debentures which matured on August 15, 1999. The balance of these
proceeds was used to repay variable rate borrowings under the Company's
revolving credit facilities.
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<PAGE> 43
In March 1999, the Company filed a $750 million shelf registration
statement with the SEC pursuant to which the Company may issue senior or
subordinated debt securities, common shares, preferred shares or warrants to
purchase common shares.
In March 1999, the Company amended its revolving credit facility with
National City Bank to increase the available borrowings to $25 million from $20
million, to convert it to a secured facility and to extend the agreement through
November 2002. The credit facility is secured by certain partnership
investments. The Company also maintains the right to convert the credit facility
back to an unsecured credit facility and to reduce the credit facility amount to
$20 million.
In January 1999, the Company repaid a third party mortgage of a 50% owned
joint venture partnership aggregating approximately $49.2 million. In return,
the joint venture entered into a corresponding mortgage note payable to the
Company bearing an interest rate of LIBOR plus 2.75%. In addition, the Company
received a loan origination fee for this transaction of $0.4 million. In March
1999, the joint venture obtained a bridge loan and used the proceeds to repay
the mortgage note to the Company. In June 1999, the joint venture entered into a
10 year, fixed rate mortgage for $55.5 million at 7.31%.
During the year ended December 31, 1999, the Company issued $2.7 million in
OP Units in conjunction with the purchase of certain expansion areas at two
recently acquired shopping centers and the purchase of joint venture interests.
These OP Units are, in certain circumstances and at the election of the Company,
exchangeable into approximately 139,000 common shares of the Company or for
cash.
A summary of the aggregate gross proceeds raised through the issuance of
common shares, preferred shares, preferred partnership units, warrants, senior
unsecured notes, construction loans and OP Units issued as consideration for the
purchase of real estate assets aggregated $983.5 million during the three year
period ended December 31, is as follows (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
----- ------ ------
<S> <C> <C> <C>
EQUITY:
Common shares............................................. $ -- $ 80.9 $204.1
Operating partnership units............................... 2.7 91.4 0.4
Class C preferred shares.................................. -- 100.0 --
Class D preferred shares.................................. -- 54.0 --
Preferred partnership units and warrant................... 75.0 35.0 --
----- ------ ------
Total Equity...................................... 77.7 361.3 204.5
DEBT:
Senior fixed rate notes................................... -- 200.0 102.0
Construction loans........................................ 8.3 29.7 --
----- ------ ------
$86.0 $591.0 $306.5
===== ====== ======
</TABLE>
During the year ended December 31, 1999, the Company also assumed mortgage
debt in conjunction with certain property acquisitions aggregating $18.0
million.
CAPITALIZATION
At December 31, 1999, the Company's capitalization consisted of $1.2
billion of debt (excluding the Company's proportionate share of joint venture
mortgage debt aggregating $466.6 million), $413.8 million of preferred stock and
preferred partnership units and $826.7 million of market equity (market equity
is defined as common shares outstanding and operating partnership units
outstanding multiplied by the closing price of the common shares on the New York
Stock Exchange at December 31, 1999 of $12.875) resulting in a debt to total
market capitalization ratio of .48 to 1.0 as compared to the ratios of .40 to
1.0 and .36 to 1.0 at December 31, 1998 and 1997, respectively. At December 31,
1999, the Company's total debt consisted of $751.0 million of fixed rate debt
and $401.1 million of variable rate debt.
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<PAGE> 44
It is management's intention that the Company have access to the capital
resources necessary to expand and develop its business. Accordingly, the Company
may seek to obtain funds through additional equity offerings or debt financings
in a manner consistent with its intention to operate with a conservative debt
capitalization policy and maintain its investment grade ratings with Moody's
Investor Services and Standard and Poor's. As of December 31, 1999, the Company
had a shelf registration statement with the Securities and Exchange Commission
under which $750 million of debt securities, preferred shares or common shares
may be issued. In addition, as of December 31, 1999, the Company had $109.2
million available under its $400.0 million of revolving credit facilities. As of
December 31, 1999, the Company also had 118 operating properties with $201.4
million, or 72.5%, of the total revenue for the year ended December 31, 1999
which were unencumbered thereby providing a potential collateral base for future
borrowings.
INFLATION
Substantially all of the Company's long-term leases contain provisions
designed to mitigate the adverse impact of inflation. Such provisions include
clauses enabling the Company to receive percentage rentals based on tenants'
gross sales, which generally increase as prices rise, and/or escalation clauses,
which generally increase rental rates during the terms of the leases. Such
escalation clauses are often related to increases in the consumer price index or
similar inflation indices. Most of the Company's leases require the tenants to
pay their share of operating expenses, including common area maintenance, real
estate taxes, insurance and utilities, thereby reducing the Company's exposure
to increases in costs and operating expenses resulting from inflation. In
addition, many of the Company's leases are for terms of less than ten years,
which permits the Company to seek to increase rents upon re-rental at market
rates.
The Company intends to continuously monitor and actively manage interest
costs on its variable rate debt portfolio and may enter into swap positions
based on market fluctuations. In addition, the Company believes that it has the
ability to obtain funds through additional equity and/or debt offerings,
including the issuance of medium term notes and joint venture capital.
Accordingly, the cost of obtaining such protection agreements in relation to the
Company's access to capital markets will continue to be evaluated.
ECONOMIC CONDITIONS
Historically, real estate has been subject to a wide range of cyclical
economic conditions which affect various real estate sections and geographic
regions with differing intensities and at different times. Adverse changes in
general or local economic conditions could result in the inability of some
existing tenants of the Company to meet their lease obligations and could
otherwise adversely affect the Company's ability to attract or retain tenants.
The Company's shopping centers are typically anchored by one or more discount
department stores (Wal-Mart, Kmart, Target), off price department stores
(Kohl's, TJ Maxx/Marshalls), home improvement stores (Home Depot, Lowes) and
supermarkets which generally offer day-to-day necessities, rather than high-
priced luxury items. Since these merchants typically perform better in an
economic recession than those who market high priced luxury items, the
percentage rents received by the Company have remained relatively stable. In
addition, the Company seeks to reduce its operating and leasing risks through
ownership of a portfolio of properties with a diverse geographic and tenant
base.
During 1999 and 1998, certain national and regional retailers have
experienced financial difficulties and several have filed for protection under
bankruptcy laws. Although the Company has a number of tenants filing for
protection under bankruptcy laws, the Company has not incurred any significant
financial losses through March 3, 2000 with regard to the Company's portfolio of
tenants.
YEAR 2000
The Year 2000 issue ("Year 2000") resulted from computer programs being
written using two digits rather than four to define the applicable year. A
concern arose that if not corrected, computer programs having time-sensitive
hardware and software may have interpreted a date using "00" as the year 1900
rather than the year 2000. This situation could result in a system failure or
erroneous results.
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<PAGE> 45
In 1999 and through March 3, 2000, the Company did not experience any
difficulties with either its information technology ("IT"), non-IT systems or
significant suppliers or vendors with the arrival of the Year 2000. The Company
expended approximately $94,000 in connection with upgrading building management,
mechanical and computer systems and believes that the Company's Year 2000
assessments are complete. The Company does not anticipate any further expense to
be incurred for Year 2000 remediation.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is interest rate risk. At
December 31, 1999 and 1998, approximately 65.2% and 83.6%, respectively, of the
Company's debt (excluding joint venture debt) bore interest at fixed rates with
a weighted average maturity of approximately 7.3 years and 7.9 years,
respectively, and a weighted average interest rate of approximately 7.5% and
7.6%, respectively. The remainder of the Company's debt bears interest at
variable rates with a weighted average maturity of approximately 1.2 years and
2.3 years, respectively, and a weighted average interest rate of approximately
7.4% and 6.5%, respectively, at December 31, 1999 and 1998. As of December 31,
1999 and 1998, the Company's joint ventures' indebtedness aggregated $721.9
million and $601.6 million, respectively, of fixed rate debt, of which the
Company's proportionate share was $364.4 million and $310.0 million,
respectively, and $203.1 million and $117.2 million, respectively, of variable
rate debt, of which the Company's proportionate share was $102.2 million and
$59.6 million, respectively. The Company intends to utilize variable rate
indebtedness available under its revolving credit facilities in order to
initially fund future acquisitions, developments and expansions of shopping
centers. Thus, to the extent that the Company incurs additional variable rate
indebtedness, its exposure to increases in interest rates in an inflationary
period would increase. The Company believes, however, that in no event would
increases in interest expense as a result of inflation significantly impact the
Company's distributable cash flow.
At December 31, 1999 and 1998, the fair value of the Company's fixed rate
debt amounted to a liability of $729.0 million and $823.5 million, respectively
(excluding joint venture debt) compared to its carrying amount of $751.0 million
and $836.3 million, respectively. The fair value of the Company's proportionate
share of joint venture fixed rate debt was $353.3 million and $315.8 million,
respectively, compared to its carrying amount $364.4 million and $310 million,
respectively. The Company estimates that a 100 basis point decrease in market
interest rates at December 31, 1999 and 1998 would have changed the fair value
of the Company's fixed rate debt to a liability of $765.9 million and $866.1
million, respectively, and would have changed the fair value of the Company's
proportionate share of joint ventures fixed rate debt to a liability of $366.5
million and $319.7 million, respectively. The sensitivity to changes in interest
rate of the Company's fixed rate debt was determined utilizing a valuation model
based upon factors that measure the net present value of such obligations which
arise from the hypothetical estimate as discussed above.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is included in a separate section at the end of
this report beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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<PAGE> 46
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item 10 is incorporated by reference to
the information under the headings "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" contained in the Company's Proxy
Statement in connection with its annual meeting of shareholders to be held on
May 15, 2000, and the information under the heading "Executive Officers" in Part
I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to the "Executive Compensation" section of
the Company's Proxy Statement in connection with its annual meeting of
shareholders to be held on May 15, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to the "Security Ownership of Certain
Beneficial Owners and Management" section of the Company's Proxy Statement in
connection with its annual meeting of shareholders to be held on May 15, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to the "Certain Transactions" section of
the Company's Proxy Statement in connection with its annual meeting of
shareholders to be held on May 15, 2000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENTS SCHEDULES AND
REPORTS ON FORM 8-K
a.) 1. Financial Statements
The following documents are filed as a part of this report:
Report of Independent Accountants - Developers Diversified Realty
Corporation
Consolidated Balance Sheets as of December 31, 1999 and 1998.
Consolidated Statements of Operations for the three years ended
December 31, 1999.
Consolidated Statements of Shareholders' Equity for the three years
ended December 31, 1999.
Consolidated Statements of Cash Flows for the three years ended
December 31, 1999.
Notes to the Consolidated Financial Statements.
2. Financial Statement Schedules
The following financial statement schedules are filed herewith as
part of this Annual Report on Form 10-K and should be read in
conjunction with the Consolidated Financial Statements of the
registrant:
SCHEDULE
II Valuation and Qualifying Accounts Reserves for the three years
ended December 31, 1999
III Real Estate and Accumulated Depreciation at December 31, 1999
Schedules not listed above have been omitted because they are not
applicable or because the information required to be set forth therein
is included in the Consolidated Financial Statements or notes thereto.
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<PAGE> 47
b.) Current Reports on Form 8-K were filed on January 29, 1999 and March 8,
1999 in which information regarding Items 2, 5 and 7 of Form 8-K was reported.
c.) Exhibits
The following exhibits are filed as part of, or incorporated by
reference into, this Report:
<TABLE>
<CAPTION>
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
<C> <C> <S> <C>
2 2.1 Share Purchase Agreement between AIP's Current Report on Form 8-K
the Company and American (Filed with the SEC on August 5,
Industrial Properties REIT 1998, SEC file number 1-9016)
("AIP") 1998, SEC file number
1-9016) dated as of July 30, 1998
2 2.2 Amendment No. 1 to the Share Amendment No. 1 to Schedule 13D
Purchase Agreement between the (Filed with the SEC with respect
Company and AIP dated as of to AIP by the Company on
September 14, 1998 September 17, 1998, SEC file
number 1-9016)
3 3.1 Amended and Restated Articles of Quarterly Report on Form 10-Q
Incorporation of the Company (Filed with the SEC on August 16,
1999)
3 3.2 Code of Regulations of the Quarterly Report on Form 10-Q
Company (Filed with the SEC on August 16,
1999)
4 4.1 Specimen Certificate for Common Form S-11 Registration No.
Shares 33-54930 (Filed with the SEC on
November 23, 1992)
4 4.2 Specimen Certificate for Annual Report on Form 10-K (Filed
Depositary Shares Relating to with the SEC on March 30, 1996)
9.5% Class A Cumulative
Redeemable Preferred Shares
4 4.3 Specimen Certificate for 9.5% Annual Report on Form 10-K (Filed
Class A Cumulative Redeemable with the SEC on March 30, 1996)
Preferred Shares
4 4.4 Specimen Certificate for Annual Report on Form 10-K (Filed
Depositary Shares Relating to with the SEC on March 30, 1996)
9.44% Class B Cumulative
Redeemable Preferred Shares
4 4.5 Specimen Certificate for 9.44% Annual Report on Form 10-K (Filed
Class B Cumulative Redeemable with the SEC on March 30, 1996)
Preferred Shares
4 4.6 Form of Indemnification Agreement Form S-11 Registration No.
33-54930 (Filed with the SEC on
November 23, 1992)
4 4.7 Indenture dated as of May 1, 1994 Filed herewith
by and between the Company and
Chemical Bank, as Trustee
4 4.8 Indenture dated as of May 1, 1994 Filed herewith
by and between the Company and
National City Bank, as Trustee
(the "NCB Indenture")
4 4.9 First Supplement to NCB Indenture Filed herewith
</TABLE>
47
<PAGE> 48
<TABLE>
<CAPTION>
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
<C> <C> <S> <C>
4 4.10 Shareholder Rights Agreement Quarterly Report on Form 10-Q
dated as of May 26, 1999 between (Filed with the SEC on August 16,
the Company and National City 1999)
Bank
4. 4.11 Specimen Senior Note due May 15, Annual Report on Form 10-K (Filed
2000 with the SEC on March 30, 1996)
4 4.12 Loan Agreement dated as of May Current Report on Form 8-K (Filed
15, 1997, between Community with the SEC on June 18, 1997)
Centers One L.L.C., Community
Centers Two L.L.C., Shoppers
World Community Center, L.P. and
Lehman Brothers Holdings Inc.,
d/b/a/ Lehman Capital, a Division
of Lehman Brothers Holdings, Inc.
4 4.13 Amended and Restated Promissory Current Report on Form 8-K (Filed
Note, dated as of May 15, 1997, with the SEC on June 18, 1997)
between Community Centers Two
L.L.C. and Shoppers World
Community Center L.P. and Lehman
Brothers Holdings Inc., d/b/a/
Lehman Capital, a Division of
Lehman Brothers Holdings, Inc.
4 4.14 Amended and Restated Promissory Current Report on Form 8-K (Filed
Note, dated as of May 15, 1997, with the SEC on June 18, 1997)
between Community Centers One
L.L.C. and Lehman Brothers
Holdings Inc., d/b/a/ Lehman
Capital, a Division, of Lehman
Brothers Holdings, Inc.
4 4.15 Amended and Restated Promissory Current Report on Form 8-K (Filed
Note, dated as of May 15, 1997, with the SEC on June 18, 1997)
between Community Centers One
L.L.C. and Lehman Brothers
Holdings Inc., d/b/a/ Lehman
Capital, a Division of Lehman
Brothers Holdings, Inc.
4 4.16 Second Amended and Restated Current Report on Form 8-K (Filed
Credit Agreement among the with the SEC on March 8, 1999)
Company and The First National
Bank of Chicago and other lenders
named therein
4 4.17 Form of Fixed Rate Senior Medium- Filed herewith
Term Note
4 4.18 Form of Floating Rate Senior Filed herewith
Medium-Term Note
4 4.19 Form of Fixed Rate Subordinated Filed herewith
Medium-Term Note
4 4.20 Form of Floating Rate Filed herewith
Subordinated Medium-Term Note
</TABLE>
48
<PAGE> 49
<TABLE>
<CAPTION>
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
<C> <C> <S> <C>
4 4.21 First Amendment to the Second Filed herewith
Amended and Restated Credit
Agreement among the Company and
The First National Bank of
Chicago and other lenders named
therein
4 4.22 Specimen Certificate for Form 8-A Registration Statement
Depositary Shares Relating to 8 (Filed with the SEC July 2, 1998)
3/8% Class C Cumulative
Redeemable Preferred Shares
4 4.23 Specimen Certificate for 8 3/8% Form 8-A Registration Statement
Class C Cumulative Redeemable (Filed with the SEC July 2, 1998)
Preferred Shares
4 4.24 Specimen Certificate for Form 8-A Registration Statement
Depositary Shares Relating to (Filed with the SEC August 18,
8.68% Class D Cumulative 1998)
Redeemable Preferred Shares
4 4.25 Specimen Certificate for 8.68% Form 8-A Registration Statement
Class D Cumulative Redeemable (Filed with the SEC August
Preferred Shares 18,1998)
10 10.1 Registration Rights Agreement Form S-11 Registration No.
33-54930 (Filed with the SEC on
November 23, 1992)
10 10.2 Stock Option Plan Form S-8 Registration No.
33-74562 (Filed with the SEC on
January 28, 1994)
10 10.3 Employment Agreement dated as of Quarterly Report on Form 10-Q
April 2, 1999 between the Company (Filed with the SEC September 30,
and Scott A. Wolstein 1999)
10 10.4 Employment Agreement dated as of Quarterly Report on Form 10-Q
April 2, 1999 between the Company (Filed with the SEC September 30,
and James A. Schoff 1999)
10 10.5 Limited Partnership Agreement Annual Report on Form 10-K (filed
dated as of November 16, 1995 with the SEC on March 30, 1996)
among DD Community Centers Three,
Inc. and certain other parties
named therein
10 10.6 Amended and Restated Limited Annual Report on Form 10-K (Filed
Liability Company Agreement dated with the SEC on March 30, 1996)
as of November 17, 1995 among DD
Community Centers One, Inc. and
certain other parties named
therein
10 10.7 Amended and Restated Limited Annual Report on From 10-K (Filed
Liability Company Agreement dated with the SEC on March 30, 1996)
as of November 17, 1995 among DD
Community Centers Two, Inc. and
certain other parties named
therein
</TABLE>
49
<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
<C> <C> <S> <C>
10 10.8 Limited Liability Company Annual Report on Form 10-K (Filed
Agreement dated as of November with the SEC on March 30, 1996)
17, 1995 among the Company and
certain other parties named
therein
10 10.9 Purchase and Sale Agreement dated Annual Report on Form 10-K (Filed
as of October 16, 1995 among the with the SEC on March 30, 1996)
Company and certain other parties
named therein
10 10.10 Directors' Deferred Compensation Annual Report on Form 10-K (Filed
Plan with the SEC on April 1, 1995)
10 10.11 Elective Deferred Compensation Annual Report on Form 10-K (filed
Plan with the SEC on April 1, 1995)
10 10.12 Developers Diversified Realty Current Report on Form 8-K (Filed
Corporation Equity-Based Award with the SEC on January 14, 1997)
Plan
10 10.13 Restricted Shares Agreement, Current Report on Form 8-K (Filed
dated July 17, 1996, between the with the SEC on June 18, 1997)
Company and Scott A. Wolstein
10 10.14 Performance Units Agreement, Current Report on Form 8-K (Filed
dated July 17, 1996, between the with the SEC on June 18, 1997)
Company and Scott A. Wolstein
10 10.15 Program Agreement for Retail Annual Report on Form 10-K (Filed
Value Investment Program, dated with the SEC on March 31, 1998)
as of February 11, 1998, among
Retail Value Management, Ltd.,
the Company and The Prudential
Insurance Company of America
10 10.16 Share Option Agreement, dated Annual Report on Form 10-K (Filed
April 15, 1997, between the with the SEC on March 31, 1998)
Company and Scott A. Wolstein
10 10.17 Share Option Agreement, dated May Annual Report on Form 10-K (Filed
12, 1997, between the Company and with the SEC on March 31, 1998)
Scott A. Wolstein
10 10.18 Form of Medium-Term Note Filed herewith
Distribution Agreement
10 10.19 Amended and Restated 1998 Form S-8 Registration No.
Developers Diversified Realty 333-76537 (Filed with the SEC on
Corporation Equity-Based Award April 19, 1999)
Plan
10 10.20 Form of Change of Control Quarterly Report on Form 10-Q
Agreement dated as of March 24, (Filed with the SEC on May 17,
1999 between the Company and each 1999)
of Joan U. Allgood, Loren F.
Henry, John R. McGill and William
H. Schafer
10 10.21 Form of Change of Control Quarterly Report on Form 10-Q
Agreement dated as of March 24, (Filed with the SEC on May 17,
1999 between the Company and each 1999)
of Scott A. Wolstein and James A.
Schoff
</TABLE>
50
<PAGE> 51
<TABLE>
<CAPTION>
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
<C> <C> <S> <C>
10 10.22 Agreement and Release between the Quarterly Report on Form 10-Q
Company and Richard J. Kaplan (Filed with the SEC on May 17,
dated as of March 9, 1999 1999)
10 10.23 Employment Agreement dated as of Quarterly Report on Form 10-Q
April 21, 1999 between the (Filed with the SEC on August 16,
Company and David M. Jacobstein 1999)
10 10.24 Change of Control Agreement as of Quarterly Report on Form 10-Q
May 17, 1999 between the Company (Filed with the SEC on August 16,
and David M. Jacobstein 1999)
10 10.25 Employment Agreement dated as of Quarterly Report on Form 10-Q
April 12, 1999 between the (Filed with the SEC on August 16,
Company and Eric M. Mallory 1999)
10 10.26 Change of Control Agreement dated Quarterly Report on Form 10-Q
as of April 12, 1999 between the (Filed with the SEC on August 16,
Company and Eric M. Mallory 1999)
10 10.27 Employment Agreement dated as of Quarterly Report on Form 10-Q
May 25, 1999 between the Company (Filed with the SEC on August 16,
and Daniel B. Hurwitz 1999)
10 10.28 Change of Control Agreement dated Quarterly Report on Form 10-Q
as of May 25, 1999 between the (Filed with the SEC on August 16,
Company and Daniel B. Hurwitz 1999)
12 12.1 Computation of Ratio of Earnings Form S-3 Registration No.
to Fixed Charges 333-72519 (Filed with the SEC on
March 2, 1999)
21 21.1 List of Subsidiaries Filed herewith
23 23.1 Consent of Price Waterhouse Filed herewith
</TABLE>
51
<PAGE> 52
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
By: /s/ SCOTT A. WOLSTEIN
---------------------------------------
Scott A. Wolstein, Chairman and
Chief Executive Officer
Date: March 29, 2000
------------------------------------------
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES INDICATED ON THE 29TH DAY OF MARCH, 2000.
<TABLE>
<S> <C>
/s/ SCOTT A. WOLSTEIN Chairman, Chief Executive Officer and Director
- ------------------------------------------------ (Principal Executive Officer)
Scott A. Wolstein
/s/ JAMES A. SCHOFF Vice Chairman of the Board, Chief Investment
- ------------------------------------------------ Officer
James A. Schoff and Director
/s/ WILLIAM H. SCHAFER Vice President and Chief Financial Officer
- ------------------------------------------------ (Principal Financial and Accounting Officer)
William H. Schafer
Director
- ------------------------------------------------
William N. Hulett III
/s/ ALBERT T. ADAMS Director
- ------------------------------------------------
Albert T. Adams
/s/ DEAN S. ADLER Director
- ------------------------------------------------
Dean S. Adler
/s/ BARRY A. SHOLEM Director
- ------------------------------------------------
Barry A. Sholem
/s/ ETHAN PENNER Director
- ------------------------------------------------
Ethan Penner
</TABLE>
52
<PAGE> 53
DEVELOPERS DIVERSIFIED REALTY CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Financial Statements:
Report of Independent Accountants...................... F-2
Consolidated Balance Sheets at December 31, 1999 and
1998.................................................. F-3
Consolidated Statements of Operations for the three
years ended December 31, 1999......................... F-4
Consolidated Statements of Shareholders' Equity for the
three years ended December 31, 1999................... F-5
Consolidated Statements of Cash Flows for the three
years ended December 31, 1999......................... F-6
Notes to Consolidated Financial Statements............. F-7
Financial Statement Schedules:
II -- Valuation and Qualifying Accounts and Reserves
for the three years ended December 31, 1999..... F-36
III -- Real Estate and Accumulated Depreciation at
December 31, 1999............................... F-37
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
Financial statements of the Company's unconsolidated joint venture
companies have been omitted because each of the joint venture's proportionate
share of the income from continuing operations is less than 20% of the
respective consolidated amount, and the investment in and advances to each joint
venture is less than 20% of consolidated total assets.
F-1
<PAGE> 54
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Developers Diversified Realty Corporation:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 46 present fairly, in all material
respects, the financial position of Developers Diversified Realty Corporation
and its subsidiaries (the "Company") at December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. In addition, in our opinion, the
financial statement schedules listed in the index appearing under Item 14(a)(2)
on page 46 present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. These financial statements and financial statement schedules are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Cleveland, Ohio
March 3, 2000
F-2
<PAGE> 55
DEVELOPERS DIVERSIFIED REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Real estate rental property:
Land...................................................... $ 342,859 $ 317,823
Buildings................................................. 1,542,333 1,404,734
Fixtures and tenant improvements.......................... 34,176 24,131
Land under development.................................... 27,830 34,534
Construction in progress.................................. 121,076 115,541
---------- ----------
2,068,274 1,896,763
Less accumulated depreciation............................. (249,912) (203,097)
---------- ----------
Real estate, net........................................ 1,818,362 1,693,666
Cash and cash equivalents................................... 5,992 2,260
Accounts receivable, net.................................... 39,262 24,022
Notes receivable............................................ 5,590 49,008
Advances to and investments in joint ventures............... 299,176 266,257
Minority equity investment.................................. 137,234 80,710
Deferred charges, net....................................... 3,916 5,230
Other assets................................................ 11,328 5,371
---------- ----------
$2,320,860 $2,126,524
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured indebtedness:
Fixed rate senior notes................................... $ 592,311 $ 592,154
Revolving credit facility................................. 272,000 132,000
Subordinated convertible debentures....................... -- 40,065
---------- ----------
864,311 764,219
Secured indebtedness:
Revolving credit facility................................. 18,775 --
Mortgage and other secured indebtedness................... 268,965 236,262
---------- ----------
Total indebtedness.......................................... 1,152,051 1,000,481
Accounts payable and accrued expenses....................... 49,860 50,380
Dividends payable........................................... 20,826 20,072
Other liabilities........................................... 29,867 11,878
---------- ----------
1,252,604 1,082,811
---------- ----------
Minority equity interests................................... 8,219 8,177
Preferred operating partnership minority interests.......... 104,736 32,101
Operating partnership minority interests.................... 102,956 100,650
Commitments and contingencies (Note 15)
Shareholders' equity:
Class A -- 9.5% cumulative redeemable preferred shares,
without par value, $250 liquidation value; 750,000
shares authorized; 421,500 shares issued and
outstanding at December 31, 1999 and 1998.............. 105,375 105,375
Class B -- 9.44% cumulative redeemable preferred shares,
without par value, $250 liquidation value; 750,000
shares authorized; 177,500 shares issued and
outstanding at December 31, 1999 and 1998.............. 44,375 44,375
Class C -- 8.375% cumulative redeemable preferred
shares, without par value, $250 liquidation value;
750,000 shares authorized; 400,000 shares issued and
outstanding at December 31, 1999 and 1998.............. 100,000 100,000
Class D -- 8.68% cumulative redeemable preferred shares,
without par value, $250 liquidation value; 750,000
shares authorized; 216,000 shares issued and
outstanding at December 31, 1999 and 1998.............. 54,000 54,000
Common shares, without par value, $.10 stated value;
100,000,000 shares authorized; 61,364,035 and
61,289,186 shares issued at December 31, 1999 and 1998,
respectively........................................... 6,136 6,129
Paid-in-capital......................................... 674,735 673,910
Accumulated dividends in excess of net income........... (105,757) (80,697)
---------- ----------
878,864 903,092
Less: Unearned compensation -- restricted stock......... (674) (307)
Common stock in treasury at cost: 1,860,300 shares
at December 31, 1999.............................. (25,845) --
---------- ----------
852,345 902,785
---------- ----------
$2,320,860 $2,126,524
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 56
DEVELOPERS DIVERSIFIED REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues from operations:
Minimum rents............................................ $189,613 $168,182 $123,998
Percentage and overage rents............................. 4,226 2,746 2,343
Recoveries from tenants.................................. 47,786 43,071 32,377
Management fee income.................................... 5,148 3,653 3,097
Interest................................................. 6,361 5,056 2,083
Other.................................................... 10,799 5,460 5,325
-------- -------- --------
263,933 228,168 169,223
-------- -------- --------
Rental operation expenses:
Operating and maintenance................................ 24,648 20,070 16,144
Real estate taxes........................................ 27,248 26,510 20,001
General and administrative............................... 17,774 12,918 11,055
Interest................................................. 68,023 57,196 35,558
Depreciation and amortization............................ 52,444 43,180 32,313
-------- -------- --------
190,137 159,874 115,071
-------- -------- --------
Income before equity in net income of joint ventures,
minority equity investment, (loss) gain on disposition of
real estate, minority interests and extraordinary item... 73,796 68,294 54,152
Equity in net income of joint ventures..................... 20,621 12,888 10,893
Equity in net income from minority equity investment....... 6,453 686 --
(Loss) gain on disposition of real estate.................. (1,664) 248 3,526
-------- -------- --------
Income before minority interests and extraordinary item.... 99,206 82,116 68,571
Minority interests:
Minority equity interests................................ (111) (244) (1,039)
Preferred operating partnership minority interests....... (5,157) (186) --
Operating partnership minority interests................. (6,541) (2,882) (10)
-------- -------- --------
(11,809) (3,312) (1,049)
-------- -------- --------
Income before extraordinary item........................... 87,397 78,804 67,522
Extraordinary item -- extinguishment of debt-deferred
finance costs written off................................ -- (882) --
-------- -------- --------
Net income................................................. $ 87,397 $ 77,922 $ 67,522
======== ======== ========
Net income applicable to common shareholders............... $ 60,135 $ 57,969 $ 53,322
======== ======== ========
Per share data:
Earnings per common share -- basic:
Income before extraordinary item...................... $ 0.99 $ 1.03 $ 1.03
Extraordinary item.................................... -- (0.01) --
-------- -------- --------
Net income............................................ $ 0.99 $ 1.02 $ 1.03
======== ======== ========
Earnings per common share -- diluted:
Income before extraordinary item...................... $ 0.95 $ 1.00 $ 1.03
Extraordinary item.................................... -- (0.02) --
-------- -------- --------
Net income............................................ $ 0.95 $ 0.98 $ 1.03
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 57
DEVELOPERS DIVERSIFIED REALTY CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON ACCUMULATED UNEARNED
PREFERRED SHARES DIVIDENDS IN COMPENSATION TREASURY
SHARES ($250 ($.10 STATED PAID-IN EXCESS OF RESTRICTED STOCK,
STATED VALUE) VALUE) CAPITAL NET INCOME STOCK AT COST TOTAL
------------- ------------ -------- ------------ ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996(1)........ $149,750 $2,168 $369,417 $ (51,384) $(615) $ -- $469,336
Issuance of 137,145 common shares for
cash related to exercise of stock
options, employee 401(k) plan,
executive stock purchase plan and
dividend reinvestment plan......... -- 14 3,495 -- -- -- 3,509
Issuance of 5,474,760 common shares
for cash -- underwritten
offerings.......................... -- 548 194,713 -- -- -- 195,261
Vesting of restricted stock.......... -- -- -- -- 154 -- 154
Conversion of debentures into 392,754
common shares...................... -- 39 12,884 -- -- -- 12,923
Net income........................... -- -- -- 67,522 -- -- 67,522
Dividends declared -- common
shares............................. -- -- -- (65,455) -- -- (65,455)
Dividends declared -- preferred
shares............................. -- -- -- (14,200) -- -- (14,200)
-------- ------ -------- --------- ----- -------- --------
Balance, December 31, 1997(1)........ 149,750 2,769 580,509 (63,517) (461) -- 669,050
Issuance of 1,077,994 shares(2) for
cash related to exercise of stock
options, employee 401(k) plan,
executive stock purchase plan and
dividend reinvestment plan......... -- 108 15,782 -- -- -- 15,890
Issuance of 3,669,639 common
shares(2) for cash -- underwritten
offerings.......................... -- 367 77,404 -- -- -- 77,771
Stated value of shares issued in
connection with a two-for-one stock
split.............................. -- 2,861 (2,861) -- -- -- --
Issuance of 616,000 Class C and Class
D preferred shares for
cash -- underwritten offerings..... 154,000 -- (5,720) -- -- -- 148,280
Vesting of restricted stock.......... -- -- -- -- 154 -- 154
Conversion of debentures into 236,779
common shares(2)................... -- 24 6,747 -- -- -- 6,771
Issuance of warrant.................. -- -- 2,049 -- -- -- 2,049
Net income........................... -- -- -- 77,922 -- -- 77,922
Dividends declared -- common
shares............................. -- -- -- (75,730) -- -- (75,730)
Dividends declared -- preferred
shares............................. -- -- -- (19,372) -- -- (19,372)
-------- ------ -------- --------- ----- -------- --------
Balance, December 31, 1998........... 303,750 6,129 673,910 (80,697) (307) -- 902,785
Issuance of 26,256 common shares for
cash related to exercise of stock
options, employee 401(k) plan and
dividend reinvestment plan......... -- 2 108 -- -- -- 110
Issuance of 47,095 common shares
related to restricted stock plan... -- 5 646 -- (521) -- 130
Vesting of restricted stock.......... -- -- -- -- 154 -- 154
Conversion of OP Units and debentures
into 1,498 common shares........... -- -- 71 -- -- -- 71
Purchases of 1,860,300 common
shares............................. -- -- -- -- -- (25,845) (25,845)
Net income........................... -- -- -- 87,397 -- -- 87,397
Dividends declared -- common
shares............................. -- -- -- (85,195) -- -- (85,195)
Dividends declared -- preferred
shares............................. -- -- -- (27,262) -- -- (27,262)
-------- ------ -------- --------- ----- -------- --------
Balance, December 31, 1999........... $303,750 $6,136 $674,735 $(105,757) $(674) $(25,845) $852,345
======== ====== ======== ========= ===== ======== ========
</TABLE>
- ---------------
(1) Share amounts do not reflect the effect of the July 1998 stock split.
(2) Share amounts reflect issuances both pre and post the July 1998 stock split.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 58
DEVELOPERS DIVERSIFIED REALTY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flow operating activities:
Net income................................................ $ 87,397 $ 77,922 $ 67,522
Adjustments to reconcile net income to net cash flow
provided by operating activities net of contributions to
joint ventures:
Depreciation and amortization......................... 52,444 43,180 32,313
Amortization of deferred finance costs................ 1,524 1,474 1,399
Write-off of deferred finance costs................... -- 882 --
Equity in net income of joint ventures................ (20,621) (12,888) (10,893)
Equity in net income from minority equity
investment......................................... (6,453) (686) --
Cash distributions from joint ventures................ 20,277 19,643 10,185
Cash distributions from minority equity investment.... 7,209 442 --
Preferred operating partnership minority interest
expense............................................ 5,157 186 --
Operating partnership minority interest expense....... 6,541 2,882 10
Loss (gain) on disposition of real estate............. 1,664 (248) (3,526)
Net change in accounts receivable..................... (15,540) (7,743) (4,907)
Net change in accounts payable and accrued expenses... (165) 11,936 1,369
Net change in other operating assets and
liabilities........................................ 13,218 3,096 921
--------- --------- ---------
Total adjustments.................................. 65,255 62,156 26,871
--------- --------- ---------
Net cash flow provided by operating activities..... 152,652 140,078 94,393
--------- --------- ---------
Cash flow from investing activities:
Real estate developed or acquired......................... (182,496) (569,566) (391,798)
Equity contributions to joint ventures.................... (134,746) (130,592) (8,093)
Advances to joint ventures................................ (17,184) (17,559) (22,085)
Acquisition of minority equity interest................... -- (16,293) --
Repayment (issuance) of notes receivable, net............. 21,427 (44,928) (4,081)
Proceeds resulting from contribution of properties to
joint ventures and repayments of advances from
affiliates.............................................. 81,821 233,986 --
Joint venture distribution from refinancing proceeds...... 7,552 -- --
Proceeds from disposition of real estate.................. 13,918 6,663 9,837
--------- --------- ---------
Net cash flow used for investing activities:....... (209,708) (538,289) (416,220)
--------- --------- ---------
Cash flow from financing activities:
Proceeds from (repayment of) revolving credit facilities
and temporary bridge loans, net......................... 158,775 (7,700) 44,200
Proceeds from construction loans and other mortgage
debt.................................................... 60,332 29,732 --
Principle payments on rental property debt................ (45,630) (17,029) (17,764)
Repayment of convertible debentures....................... (40,040) -- --
Proceeds from issuance of Medium Term Notes, net of
underwriting commissions and $400 and $200 of offering
expenses paid in 1998 and 1997, respectively............ -- 198,012 101,234
Proceeds from issuance of Fixed Rate Senior Notes, net of
underwriting commissions and discounts and $500 of
offering expenses paid in 1997.......................... -- -- 74,147
Proceeds relating to premium on issuance Fixed Rate Senior
Notes................................................... -- -- 1,430
Payment of deferred finance costs (bank borrowings)....... (150) (1,193) (674)
Proceeds from issuance of common shares, net of
underwriting commissions and $400 and $900 of offering
expenses paid in 1998 and 1997, respectively............ -- 77,771 195,261
Proceeds from issuance of preferred shares, net of
underwriting commissions and $459 of offering expenses
paid in 1998............................................ -- 148,280 --
Proceeds from issuance of preferred operating partnership
units (and warrant in 1998) net of $450 and $850 of
offering expenses paid in 1999 and 1998, respectively... 72,675 34,150 --
Proceeds from issuance of common shares in conjunction
with exercise of stock options, 401(k) plan,
reinvestment plan and restricted stock plan............. 394 16,044 3,663
Purchase of treasury stock................................ (25,845) -- --
Payments of distributions to preferred and operating
partnership minority interests.......................... (8,020) (2,585) (10)
Dividends paid............................................ (111,703) (75,029) (79,655)
--------- --------- ---------
Net cash provided by financing activities............. 60,788 400,453 321,832
--------- --------- ---------
Increase in cash and cash equivalents.............. 3,732 2,242 5
Cash and cash equivalents, beginning of year.............. 2,260 18 13
--------- --------- ---------
Cash and cash equivalents, end of year.................... $ 5,992 $ 2,260 $ 18
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 59
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Developers Diversified Realty Corporation, related real estate joint
ventures and its minority equity investment (the "Company" or "DDR"), are
engaged in the business of acquiring, expanding, owning, developing, managing
and operating neighborhood and community shopping centers, enclosed malls and
business centers. The Company's shopping centers are typically anchored by
discount department stores (Wal-Mart, Kmart, Target), off price department
stores (Kohl's, TJ Maxx/Marshall's), home improvement stores (Home Depot,
Lowes), supermarkets, book stores, office supply stores, electronic stores and
drug stores which usually offer day-to-day necessities. At December 31, 1999,
the Company owned shopping centers in 36 states. The tenant base includes
primarily national and regional retail chains and local retailers; consequently,
the Company's credit risk is concentrated in the retail industry.
Revenues derived from the Company's two largest tenants, Wal-Mart and
Kmart, aggregated 10.9%, 11.3% and 14.1% of total revenues for the years ended
December 31, 1999, 1998 and 1997, respectively, as follows:
<TABLE>
<CAPTION>
YEAR WAL-MART KMART
- ---- -------- -----
<S> <C> <C>
1999...................................................... 7.6% 3.3%
1998...................................................... 6.6% 4.7%
1997...................................................... 8.8% 5.3%
</TABLE>
The total percentage of Company owned gross leasable area ("GLA")
attributed to Wal-Mart and Kmart was 8.8% and 12.3%, respectively, at December
31, 1999. The Company's ten largest tenants comprised 22.6%, 24.4% and 27.3% of
total revenues for the years ended December 31, 1999, 1998 and 1997,
respectively. Management believes the Company's portfolio is diversified in
terms of location of its shopping centers and its tenant profile. Adverse
changes in general or local economic conditions could result in the inability of
some existing tenants to meet their lease obligations and could otherwise
adversely affect the Company's ability to attract or retain tenants. During 1999
and 1998, certain national and regional retailers experienced financial
difficulties and several filed for protection under bankruptcy laws. Although
the Company has experienced a number of tenants filing for protection under
bankruptcy laws, the Company has not incurred significant losses through March
3, 2000, with regard to the Company's portfolio of tenants.
Principles of Consolidation
All majority owned subsidiaries and affiliates where the Company has
financial and operating control are included in the consolidated financial
statements. All significant intercompany balances and transactions have been
eliminated in consolidation. Investments in real estate joint ventures and
companies for which the Company has the ability to exercise significant
influence over but does not have financial or operating control are accounted
for using the equity method of accounting. Accordingly, the Company's share of
the earnings of these joint ventures and companies is included in consolidated
net income. Other investments are accounted for using the cost method of
accounting.
Statement of Cash Flows and Supplemental Disclosure of Non-Cash Investing and
Financing Information
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
F-7
<PAGE> 60
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Non-cash investing and financing activities are summarized as follows (in
millions):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------------------
1999 1998 1997
----- ------ -----
<S> <C> <C> <C>
Minority interests and operating partnership units
issued relating to shopping center
acquisitions..................................... $ 2.7 $108.5 $16.6
Contribution of net assets to joint ventures....... 21.2 27.6 0.5
Acquisition of a minority equity investment........ -- 7.4 --
Mortgages assumed, shopping center acquisitions.... 18.0 133.9 --
Other liabilities assumed, shopping center
acquisitions..................................... -- 2.8 6.2
Accounts payable related to construction in
progress......................................... 0.2 6.6 0.2
Two-for-one stock split............................ -- 2.9 --
Conversion of debentures and related deferred
finance costs.................................... -- 6.7 12.9
Dividends declared, not paid....................... 20.8 20.1 --
Notes receivable exchanged for the purchase of a
shopping center and common shares of the minority
equity investment................................ 22.0 -- --
</TABLE>
The foregoing transactions did not provide or use cash and, accordingly,
they are not reflected in the statements of cash flows.
Real Estate
Real estate assets are stated at cost less accumulated depreciation which,
in the opinion of management, is not in excess of the individual property's
estimated undiscounted future cash flows, including estimated proceeds from
disposition.
Depreciation and amortization are provided on a straight-line basis over
the estimated useful lives of the assets as follows:
<TABLE>
<CAPTION>
BUILDINGS 18 TO 31 YEARS
- --------- --------------
<S> <C>
Furniture/Fixtures and Tenant Improvements..... Useful lives, which approximate
lease terms, where applicable
</TABLE>
Depreciation expense was $52.4 million, $43.2 million and $32.3 million for
the years ended December 31, 1999, 1998 and 1997, respectively. Expenditures for
maintenance and repairs are charged to operations as incurred. Renovations which
improve or extend the life of the asset are capitalized. Included in land at
December 31, 1999 was undeveloped real estate, generally outlots or expansion
pads adjacent to the shopping centers owned by the Company (excluding shopping
centers owned through joint ventures) which aggregated approximately 110 acres.
Construction in progress includes shopping center developments and
significant expansions and re-developments. The Company capitalizes interest on
funds used for the construction, expansion or redevelopment of shopping centers,
including funds advanced to joint ventures with qualifying development
activities. Capitalization of interest ceases when construction activities are
completed and the property is available for occupancy by tenants. For the years
ended December 31, 1999, 1998 and 1997, the Company capitalized interest of
$13.5 million, $9.9 million, and $4.0 million, respectively. In addition, the
Company capitalized certain
F-8
<PAGE> 61
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
construction administration costs of $2.5 million, $1.8 million and $1.3 million
in 1999, 1998 and 1997, respectively.
Deferred Financing Costs
Costs incurred in obtaining long-term financing are included in deferred
charges in the accompanying balance sheets and are amortized over the terms of
the related debt agreements; such amortization is reflected as interest expense
in the consolidated statements of operations.
Revenue Recognition
Minimum rents from tenants are recognized monthly using the straight-line
method. Percentage and overage rents are recognized after the tenants reported
sales have exceeded the applicable sales breakpoint set forth in the applicable
lease. Revenues associated with tenant reimbursements are recognized in the
period in which the expenses are incurred based upon the tenant lease
provisions. Lease termination fees are included in other income and recognized
upon termination of a tenant's lease, which generally coincides with the receipt
of cash. Development fees are in other income and recognized when the related
services are performed and the earnings process is complete.
Accounts Receivable
Accounts receivable, other than straight-line rents receivable, are
expected to be collected within one year and are net of estimated unrecoverable
amounts of approximately $2.1 million at December 31, 1999 and 1998. At December
31, 1999 and 1998, straight-line rent receivables, net of a provision for
uncollectible amounts, aggregated $8.3 million and $4.2 million, respectively.
Disposition of Real Estate
Disposition of real estate generally relates to the sale of outlots and
land adjacent to existing shopping centers and is recognized at closing when the
earnings process is deemed to be complete.
General and Administrative Expenses
General and administrative expenses include internal leasing and legal
salaries and related expenses which are charged to operations as incurred.
Interest and Real Estate Taxes
Interest and real estate taxes incurred during the development and
significant expansion of shopping centers are capitalized and depreciated over
the life of the building. Interest paid during the years ended December 31,
1999, 1998 and 1997 aggregated $79.4 million, $63.4 million and $36.2 million,
respectively.
Intangible Assets
Intangible assets consist primarily of the goodwill and property management
contracts and rights to certain development projects obtained through the
acquisitions of real estate management businesses, which are amortized on the
straight line basis over their estimated useful lives of 15 years. The carrying
value of intangible assets is periodically reviewed by the Company and
impairments are recognized when the expected future operating cash flows derived
from such intangible assets are less than their carrying value.
F-9
<PAGE> 62
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Derivative Financial Instruments
The Company may from time to time enter into interest rate swap contracts
as hedges against increasing rates on its variable rate debt. The Company does
not utilize these arrangements for trading or speculative purposes. To qualify
for hedge accounting, the contracts must meet defined correlation and
effectiveness criteria, be designated as a hedge and result in cash flows and
financial statement effects which substantially offset those of the position
being hedged. The Company records net amounts received or paid under these
contracts as adjustments to interest expense. At December 31, 1999 and 1998,
there were no interest rate swap contracts or other derivative instruments
outstanding. See Note 3 for a description of the Company's funding commitment
relating to its minority equity investment.
Federal Income Taxes
The Company has elected to be taxed as a qualified Real Estate Investment
Trust ("REIT") under the Internal Revenue Code of 1986, as amended. As a REIT,
the Company is entitled to a tax deduction for the amount of dividends paid to
its shareholders, thereby effectively subjecting the distributed net income of
the Company to taxation at the shareholder level only, provided it distributes
at least 95% of its taxable income and meets certain other REIT qualification
requirements. As the Company distributed sufficient taxable income for the years
ended December 31, 1999, 1998 and 1997, no U.S. Federal income or excise taxes
were incurred. The Company is subject to state and local income and franchise
taxes in certain states and municipalities which are reflected in operating and
maintenance expenses. The tax basis of assets and liabilities exceeds the
amounts reported in the accompanying financial statements by approximately $122
million, $110 million and $111 million at December 31, 1999, 1998 and 1997,
respectively.
Business Segment
The sole business of the Company and its consolidated affiliates is the
ownership, development and operation of retail shopping centers. The Company
evaluates operating results and allocates resources on a property-by-property
basis. The Company does not distinguish or group its operations on a geographic
basis. Accordingly, the Company believes it has a single reportable segment for
disclosure purposes in accordance with generally accepted accounting principles.
Further, all operations are within the United States and significant tenant
revenues have been previously disclosed.
Comprehensive Income
For the years ended December 31, 1999, 1998 and 1997, the Company had no
items of other comprehensive income requiring additional disclosure.
New Accounting Standards
In June 1998, the FASB issued Statement of Financial Accounting Standard
("SFAS") No. 133 -- Accounting for Derivative Instruments and Hedging
Activities. This statement requires fair value accounting for all derivatives
including recognizing all such instruments on the balance sheet with an
offsetting amount recorded in the income statement or as part of comprehensive
income. The new standard becomes effective for the Company for the year ending
December 31, 2001. (SFAS No. 137 deferred the effective date from December 31,
2000.) The Company does not expect this pronouncement to have a material impact
on the Company's financial position or cash flows.
In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements," which among other things provides
guidance on lessors' accounting for contingent rent. This bulletin clarifies
that contingent rental income should be recognized once the factors that trigger
payment actually
F-10
<PAGE> 63
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
occur. The Company does not anticipate this bulletin to have a material impact
on the Company's results of operations or financial position.
Treasury Stock
In February and August 1999, the Company's Board of Directors authorized
the repurchase, subject to certain requirements, of up to $200 million of the
Company's common shares. The Company's repurchases are reflected as treasury
stock utilizing the cost method of accounting and are presented as a reduction
to consolidated shareholders' equity.
Stock Split
The Board of Directors of the Company approved a two-for-one stock split to
shareholders of record on July 27, 1998. On August 3, 1998, each such
shareholder received one common share for each share held. This stock split was
effected in the form of a stock dividend. Accordingly, $2.9 million was
transferred from additional paid in capital to common stock, representing the
stated value of additional shares issued. All share and per share data and
Operating Partnership Units ("OP Units") included in these consolidated
financial statements including all such disclosures have been adjusted to
reflect this split, except as indicated.
Reclassification
Certain reclassifications have been made to the 1998 and 1997 financial
statements to conform to the 1999 presentation.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities, the
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses during the year. Actual results could differ from those
estimates.
2. ADVANCES TO AND INVESTMENTS IN JOINT VENTURES
The Company's equity investments in joint ventures at December 31, 1999
consisted of the following:
- A 50% joint venture interest in 25 operating shopping centers (two of
which were acquired in 1999 and three of which were acquired in 1998);
- A 35% joint venture interest in one operating shopping center (1997);
- A 57% joint venture interest in one shopping center, a portion of which
is under development (1998);
- A 50% interest in seven joint ventures each of which is developing a
shopping center (1998 and 1999);
- An 80% joint venture interest in two operating shopping center properties
acquired in 1998;
- A 50% joint venture interest in a real estate management company and a
development company, both acquired in 1998;
- A 50% joint venture interest in a limited partnership acquired in 1998
which is developing six shopping centers;
- A 25% interest in one joint venture which is developing a shopping center
(1999);
- A 95% economic interest in a management service subsidiary formed in 1998
of which the Company owns 1% of the voting and 100% of the non-voting
common stock. This entity owns a 25% joint venture
F-11
<PAGE> 64
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
interest in an opportunity fund formed in 1998 which has acquired a
retail site in Long Beach, California (1998), which is being redeveloped,
6 operating retail shopping centers in Kansas City, Kansas and Kansas
City, Missouri (1999), a 75% joint venture interest which owns 13 retail
sites formerly occupied by Best Products (1998), and 12.5% interest in a
joint venture interest which is developing a shopping center (1998); and
- An 81% economic interest in a management service subsidiary formed in
1998 of which the Company owns 9% of the voting and 100% of the
non-voting common stock.
Combined condensed financial information of the Company's joint venture
investments is summarized as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
COMBINED STATEMENTS OF OPERATIONS 1999 1998
--------------------------------- ------------- -------------
<S> <C> <C>
Land.............................................. $ 262,485 $ 232,105
Buildings......................................... 917,507 826,521
Fixtures and tenant improvements.................. 5,010 2,467
Construction in progress.......................... 187,825 67,898
---------- ----------
1,372,827 1,128,991
Accumulated depreciation.......................... (82,481) (59,580)
---------- ----------
Real estate, net.................................. 1,290,346 1,069,411
Other assets...................................... 76,173 57,527
---------- ----------
$1,366,519 $1,126,938
========== ==========
Mortgage debt..................................... $ 887,650 $ 718,846
Amounts payable to DDR............................ 123,743 85,846
Other liabilities................................. 48,913 21,193
---------- ----------
1,060,306 825,885
Accumulated equity................................ 306,213 301,053
---------- ----------
$1,366,519 $1,126,938
========== ==========
Company's proportionate share of accumulated
equity.......................................... $ 153,745 $ 152,764
========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
COMBINED STATEMENTS OF OPERATIONS 1999 1998 1997
--------------------------------- -------- -------- -------
<S> <C> <C> <C>
Revenues from operations.................... $170,714 $109,752 $82,434
-------- -------- -------
Rental operation expenses................... 51,170 28,045 20,189
Depreciation and amortization expense....... 22,949 16,009 11,658
Interest expense............................ 58,894 40,942 29,540
-------- -------- -------
133,013 84,996 61,387
-------- -------- -------
Income before gain on sale of real estate... 37,701 24,756 21,047
Gain on sales of real estate................ 344 314 1,085
-------- -------- -------
Net income.................................. $ 38,045 $ 25,070 $22,132
======== ======== =======
Company's proportionate share of net
income.................................... $ 20,621 $ 12,888 $10,893
======== ======== =======
</TABLE>
F-12
<PAGE> 65
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The Company has made advances to several partnerships in the form of notes
receivable which accrue interest at rates ranging from LIBOR plus 0.85% to fixed
rate loans of 12%. Maturity dates range from payment on demand to December 2008.
Notes aggregating approximately $20.2 million serve as collateral for a $22
million secured loan. In December 1999, one of the Company's joint ventures
refinanced its secured mortgage and entered into a ten year fixed rate mortgage
for $21.3 million with interest at 8.46%. Additional proceeds, aggregating $6.4
million, from this refinancing were used to partially repay a note payable to
the Company. Included in accounts receivable is approximately $1.4 million and
$0.8 million at December 31, 1999 and 1998, respectively, due from affiliates
related to construction receivables.
Advances to and investments in joint ventures include the following items
which represent the difference between the Company's investment and its
proportionate share of the joint ventures underlying net assets (in millions):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------------
1999 1998
------- -------
<S> <C> <C>
Basis differential(a)...................................... $ 44.1 $ 50.0
Deferred development fees, net of portion relating to the
Company's interest....................................... (2.6) (2.1)
Basis differential upon transfer........................... (19.9) (20.3)
</TABLE>
- ---------------
(a) Basis differentials occur primarily when the Company has purchased an
interest in existing joint ventures at fair market value which differs from
their proportionate share of the historical net assets of the joint venture.
In addition, acquisition, transaction and other costs, including capitalized
interest, are not reflected in the net assets at the joint venture level.
Certain basis differentials are assigned and amortized over the life of the
related assets.
Service fees earned by the Company through management, development and
financing activities performed related to the Company's joint ventures are as
follows (in millions):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Management fees and leasing commissions................ $5.7 $3.2 $2.7
Development fees....................................... 1.4 1.7 0.6
Interest income........................................ 4.4 2.4 1.5
</TABLE>
In September 1999, the Company transferred its interest in a shopping
center under development in Coon Rapids, Minnesota, a suburb of Minneapolis, to
a joint venture in which the Company retained a 25% ownership interest. The
Company effectively sold a 75% interest in this project and was reimbursed $2.5
million relating to development costs previously incurred on this project. See
also Transactions with Related Parties (Note 14).
In April 1999, the Company acquired a 50% interest in a 206,000 square foot
shopping center in St. Louis, Missouri. The joint venture's aggregate purchase
price was $16.6 million. In November 1999, the Company acquired, through a 50%
owned joint venture, the fourth phase of a shopping center in Phoenix, Arizona
which aggregates 125,000 square feet. The total purchase price for the fourth
phase of this center aggregated approximately $15.6 million.
In January 1999, the Company repaid a third party mortgage of a 50% owned
joint venture partnership aggregating approximately $49.2 million. The joint
venture entered into a corresponding mortgage note payable to the Company
bearing an interest rate of LIBOR plus 2.75%. In addition, the Company received
a loan
F-13
<PAGE> 66
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
origination fee for this transaction of $0.4 million which is included in other
revenue in the consolidated statements of operations. In March 1999, the joint
venture obtained a bridge loan, which was converted into a permanent mortgage in
June 1999, and used the proceeds to repay the mortgage note to the Company.
The Company's joint venture agreements generally include provisions whereby
each partner has the right to trigger a purchase or sale of its interest in the
joint ventures (Reciprocal Purchase Rights) or to initiate a purchase and sale
of the properties (Property Purchase Rights) after a certain number of years or
if either party is in default of the joint venture agreements.
In addition, several of the joint venture agreements include a provision
whereby the Company's joint venture partners may convert all, or a portion of,
their respective interests in such joint ventures into common shares of the
Company. The terms of the conversion are set forth in the governing documents of
such joint ventures. However, if the joint venture partners elect to convert
their respective interest into common shares, the Company will, in most cases,
have the option to pay cash instead of issuing common shares. If the Company
agrees to the issuance of common shares, the agreement provides that the
converting joint venture partner will execute a lock-up arrangement acceptable
to the Company.
Retail Value Fund
In February 1998, the Company entered into an agreement with Prudential
Real Estate Investors and formed the Retail Value Fund (the "Fund"). The Fund
invests in retail development projects and retail properties within the United
States that are in need of substantial retenanting and market repositioning and
may also make equity and debt investments in companies owning or managing retail
properties as well as in third party development projects that provide
significant growth opportunities. The retail property investments may include
enclosed malls, neighborhood and community centers or other potential commercial
redevelopment opportunities. The Company maintains a 25.57% effective ownership
interest (which includes the Company's 82% share of a 1% general partner
interest which provides for a 33% profits interest once the limited partners
have received a 10% preferred return and return of capital). The Fund's general
partner has its own employees. The Company performs retail management
responsibilities including leasing, operating and maintenance, redevelopment and
accounting services and receives fees for these supervision services. The Fund
acquired a shopping center in Long Beach, CA in December 1998 which is being
redeveloped. In addition, the Fund acquired six operating retail shopping
centers in Kansas and Missouri in September 1999. In 1999, the Company entered
into separate agreements with the Fund to acquire the Company's 50% joint
venture interest relating to the development of six shopping centers. During
1999, the Company was reimbursed approximately $74.3 million, relating to
advances previously made to these joint ventures, associated with development
costs incurred on each of these projects.
DD Development Company
In June 1999, DD Development Company, a company in which DDR owns an equity
ownership interest, acquired the Fund's limited partnership interest in a joint
venture, Hendon/DDR/BP, LLC, which owned 15 sites formerly occupied by Best
Products at a cost of approximately $29.7 million. As a result, the Company's
aggregate investment in this joint venture increased to approximately $36
million. Eleven of the sites were leased as of December 31, 1999 and two were
sold as of December 31, 1999. In addition, in June 1999, Hendon/DDR/ BP, LLC
entered into a $25 million mortgage with a financial institution secured by the
leased sites. The net financing proceeds were used to repay advances made by the
Company to the joint venture.
Continental Real Estate
In March and April 1998, through transactions with Continental Real Estate
Companies of Columbus, Ohio, the Company acquired interests in four shopping
center joint ventures. The aggregate cost of these shopping centers, including
the assumption of approximately $82.0 million of debt, was approximately $114.1
million, of which the Company's proportionate share was $54.7 million and $76.2
million, respectively. The Company paid
F-14
<PAGE> 67
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
approximately $19.1 million in cash and issued $2.3 million of OP Units. The
Company manages these shopping centers pursuant to a management agreement.
OliverMcMillan
In May 1998, the Company formed DDR OliverMcMillan (DDROM) to develop,
acquire, operate and manage urban entertainment and retail projects throughout
the United States. At December 31, 1999, DDROM had six projects in various
stages of development. The investment and development activities of DDROM are
overseen by a four person Board of Directors. The Company's Chief Executive
Officer serves as Chairman of DDROM's Board of Directors, and its Vice Chairman
and Chief Investment Officer serves as a director together with two executives
from the joint venture partner. The majority of the projects are scheduled for
completion between 2000 and 2002.
Sansone Group
In July 1998, in connection with the acquisition of certain shopping center
properties from The Sansone Group, the Company acquired a 50% interest in The
Sansone Group's operating/management company which manages shopping centers and
other properties in the St. Louis, Missouri area. The Company is entitled to a
cumulative annual preferred return of the first $1.0 million in net operating
income up to the first $5 million. In addition, the Company acquired a 50%
interest in the Sansone Group Development Company.
DDRA Community Centers V
On September 10, 1998, the Company contributed six existing shopping center
properties valued at approximately $238 million to a joint venture and in
exchange received a 50% equity ownership interest in the joint venture and cash
of approximately $192 million, funded from debt and equity proceeds received as
described below. The $192 million was used to repay variable rate indebtedness
on the Company's revolving credit facilities. In conjunction with the Company's
contribution, the joint venture entered into a seven year, $156 million mortgage
with interest at a coupon rate of 6.64%, and the joint venture partner
contributed cash of approximately $42 million in exchange for a 50% equity
interest. Upon transfer of the properties, the Company did not recognize a gain.
In accordance with the joint venture agreement, the Company will continue to
manage the properties and receive management fees.
3. MINORITY EQUITY INVESTMENT
On August 4, 1998 the Company, in a joint release with American Industrial
Properties REIT [NYSE: IND] ("AIP"), announced the execution of a definitive
agreement providing for the strategic investment in AIP by the Company. Under
the terms of the Share Purchase Agreement dated to be effective as of July 30,
1998, the Company initially purchased 949,147 newly issued common shares of
beneficial interest at $15.50 per share for approximately $14.7 million. Under
the terms of a separate agreement, also dated to be effective as of July 30,
1998, the Company, in exchange for five industrial properties owned by the
Company with a net book value of approximately $7.4 million and valued at
approximately $19.5 million, acquired approximately 1.3 million additional newly
issued AIP shares of beneficial interest. Upon contribution, the Company did not
recognize a gain. Concurrent with entering into the Agreement, AIP increased its
Board of Trust Managers by four positions and appointed the Company's designees
to these positions.
On November 20, 1998, the shareholders of AIP approved additional purchases
by the Company of up to 5,226,583 newly issued shares of AIP for approximately
$81.0 million. In January 1999, the Company acquired 1,543,005 shares of AIP's
common stock at a price of $15.50 per share and 1,867,610 shares of AIP's common
stock at a price of $14.93 per common share. In August 1999, the Company
acquired 354,839 common shares of AIP at a price of $15.50 per share. At
December 31, 1999 and 1998, the Company owned 9,656,650 and
F-15
<PAGE> 68
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
5,891,196 common shares, in AIP, respectively, representing approximately 46.1%
and 34.5%, respectively, of AIP's total outstanding common shares.
The Company's investment is accounted for using the equity method of
accounting. The aggregate acquisition price for the shares exceeds the Company's
share of the historical underlying net assets of AIP by approximately $28.6
million which has been assigned principally to real estate with the remainder to
goodwill. The portion attributable to real estate is being amortized over 40
years and the amount associated with goodwill is being amortized over 15 years.
AIP's share price closed on the NYSE at $12.375 per share on December 31, 1999
resulting in an aggregate market investment of approximately $119.5 million.
Pursuant to the agreement, AIP may as of March 3, 2000, under certain
circumstances and subject to certain limitations, exercise a put right that
would require the Company to purchase additional common or convertible preferred
shares of AIP for a total amount not to exceed $166.6 million at a price not to
exceed $15.50 and $14.00 per share, respectively. AIP can only exercise its
right to put these additional shares for the purpose of financing property
acquisitions approved by AIP's Board of Trust Managers. Based on the terms of
the option, the Company has determined that the option approximates fair value.
Summarized financial information, as reflected on the accounts of AIP, as
of December 31, 1999 and 1998 and for the year ended December 31, 1999 and the
period July 30, 1998 to December 31, 1998 is as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Balance sheet:
Land................................................. $159,566 $108,891
Buildings............................................ 482,620 396,241
-------- --------
642,186 505,132
Less accumulated depreciation........................ (46,931) (33,449)
-------- --------
Real estate, net..................................... 595,255 471,683
Other assets......................................... 25,427 28,647
-------- --------
$620,682 $500,330
======== ========
Mortgage debt........................................ $334,873 $252,481
Other liabilities and minority interests............. 27,321 42,270
-------- --------
362,194 294,751
Accumulated equity................................... 258,488 205,579
-------- --------
$620,682 $500,330
======== ========
</TABLE>
F-16
<PAGE> 69
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
YEAR ENDED JULY 30, 1998 TO
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ----------------
<S> <C> <C>
Statement of operations:
Revenues from operations....................... $87,617 $ 25,460
------- --------
Rental operation expenses...................... 31,512 10,405
Depreciation and amortization expense.......... 14,535 4,219
Interest expense (1)........................... 26,562 7,766
Provisions for losses on real estate........... -- 10,060
------- --------
72,609 32,450
------- --------
Income (loss) from operations.................. 15,008 (6,990)
Minority interests............................. (313) 166
Equity in earnings of unconsolidated
subsidiaries................................ 624 --
Loss on sales of real estate................... (200) --
------- --------
Income (loss) before charge for change in
control and extraordinary item.............. 15,119 (6,824)
Charge for change in control................... -- (5,780)
------- --------
Income (loss) before extraordinary item........ 15,119 (12,604)
Extraordinary item............................. (513) --
------- --------
Net income (loss)........................... $14,606 $(12,604)
======= ========
</TABLE>
- ---------------
(1) Interest expense includes $0.1 million and $0.7 million in 1999 and 1998,
respectively, paid to the Company on advances made at an interest rate of
10.25%.
For the period from July 30, 1998 to December 31, 1998, the Company has
recorded in equity in net income from minority equity investment, $0.7 million
representing the Company's equity in AIP's $3.2 million of income excluding
provisions for loss on real estate and change in control charges. The real
estate impairment and change in control charges detailed above are reconciling
items between the Company's proportionate share of AIP's reported results of
operations and the amount reflected in the Company's financial statements as
equity in net income from minority equity investment. These amounts were
considered in DDR's allocation of purchase price associated with its investment
in AIP as discussed above.
4. ACQUISITIONS AND PRO FORMA FINANCIAL INFORMATION
During the years ended December 31, 1999, 1998 and 1997, the Company
completed the acquisition of 45 shopping centers, excluding those acquired
through joint ventures as discussed in Note 2 (3 in 1999, 35 in 1998 and 7 in
1997), at a total purchase price of $1.0 billion. These acquisitions were
accounted for using the purchase method of accounting. Significant acquisitions
were as follows:
In 1998, in a single transaction with Continental Real Estate Companies of
Columbus, Ohio, the Company completed the acquisition of 13 shopping centers,
four of which were acquired through joint ventures. The 13 shopping centers
total 2.2 million gross square feet of Company-owned retail space. The aggregate
cost of these centers was $222.3 million of which the Company's share was $184.4
million. The Company's net investment was initially funded through its revolving
credit facilities, cash and liabilities assumed of approximately $92.7 million,
mortgages assumed of approximately $82.9 million (including $54.7 million of
joint venture mortgage debt) and the issuance of OP Units valued at
approximately $8.8 million. In certain circumstances and at the option of the
Company, these units are exchangeable into 438,561 shares of the Company's
common stock.
F-17
<PAGE> 70
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
In July 1998, the Company acquired from Hermes Associates of Salt Lake
City, Utah, nine shopping centers, one office building and eight additional
expansion, development or redevelopment projects. The nine shopping centers
aggregate 2.4 million square feet of total GLA. The total consideration for this
portfolio was approximately $309 million comprised of $30.6 million of debt
assumed, the issuance of OP Units, which are exchangeable, in certain
circumstances and at the option of the Company, into 3,630,668 shares of the
Company's common stock or cash, initially valued at $73.0 million, $194.2
million of cash and $11.2 million other liabilities assumed.
In July 1998, the Company also acquired 13 shopping centers aggregating
approximately 1.6 million square feet in the St. Louis, Missouri area, at an
aggregate cost of $152.5 million. Two of these centers were subsequently sold at
an aggregate price of approximately $4.4 million. The Company also acquired a
50% ownership interest in the Sansone Group's management and development
company. The Company's net investment in this portfolio aggregated $162.6
million comprised of $27.6 million of debt assumed and $135 million of cash.
The operating results of the acquired shopping centers are included in the
results of operations of the Company from the date of purchase, including the
acquisition of properties owned through joint ventures, discussed in Note 2. The
properties owned through joint ventures are included in equity in net income of
joint ventures in the statements of operations.
The following unaudited supplemental pro forma information is presented to
reflect the effects of the common share offerings, preferred share offerings,
debt offerings and the property acquisitions consummated through December 31,
1999, including the joint venture formations and acquisitions (Note 2), as if
all such transactions had occurred on January 1, 1998 with regard to the 1998
and 1999 acquisitions and as if all such transactions relating to the 1997 and
1998 acquisitions had occurred on January 1, 1997. Pro forma information is not
presented for the year ended December 31, 1999 as the shopping centers acquired
in 1999 were either under development or in the lease-up phase and, accordingly,
the related operating information for such centers does not exist or would not
be meaningful. The pro forma financial information is presented for
informational purposes only and may not be indicative of what actual results of
operations would have been had the acquisitions occurred as indicated, nor does
it purport to represent the results of the operations for future periods (in
thousands, except per share data):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1998(a) 1997(b)
-------- --------
(UNAUDITED)
<S> <C> <C>
Pro forma revenues..................................... $229,678 $194,976
======== ========
Pro forma income before extraordinary item............. $ 80,994 $ 70,174
======== ========
Pro forma net income applicable to common
shareholders:........................................ $ 55,547 $ 55,974
======== ========
Pro forma net income applicable to common shareholders
(per share):
Basic................................................ $ 0.97 $ 1.03
======== ========
Diluted.............................................. $ 0.93 $ 1.01
======== ========
</TABLE>
- ---------------
(a) Reflects revenues and expenses of the properties acquired in 1999 and 1998
for the period January 1, 1998 through the effective date of acquisition.
Operating results for the Company's acquired properties located in Columbus
(Easton Market), OH; Princeton, NJ; Portland, OR; St. Louis (American Plaza)
MO; St. Louis (Promenade at Brentwood), MO; Florence, KY; Fayetteville, AR;
Salisbury, MD and Phoenix, AZ are not reflected in the 1998 pro forma
information prior to their respective acquisition dates because these
shopping
F-18
<PAGE> 71
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
centers were either under development or in the lease-up phase and,
accordingly, the related operating information for such centers either does
not exist or would not be meaningful. In addition, the 1998 and 1997 pro
forma information does not include the results of shopping center expansions
occurring at five of the shopping centers acquired by the Company.
(b) Reflects revenues and expenses of the properties acquired in 1998 and 1997
for the period January 1, 1997 through the effective date of acquisition.
Operating results for the Company's acquired properties located in San
Antonio, TX; Ahwatukee, AZ; Eagan, MN; St. Paul, MN; Denver, CO; Columbus
(Easton Market), OH; Princeton, NJ; Portland, OR; St. Louis (American
Plaza), MO; St. Louis (Promenade at Brentwood), MO and Florence, KY are not
reflected in the 1997 pro forma information prior to their respective
acquisition dates because these shopping centers were either under
development or in the lease-up phase and, accordingly, the related operating
information for such centers either does not exist or would not be
meaningful. In addition, the 1997 pro forma information does not include the
results of shopping center expansions occurring at five of the shopping
centers acquired by the Company.
5. DISPOSITION OF REAL ESTATE
During 1999, the Company recorded a loss on disposition of real estate
aggregating $2.2 million relating to the sale of a shopping center and residual
land in Pensacola, Florida. The shopping center was sold to a major retailer. In
connection with this disposition, the Company developed a 17,000 square foot
shopping center adjacent to the site sold. In addition, the Company sold four
properties at an aggregate gain of approximately $0.5 million which offsets the
previously described loss within the consolidated statements of operations. Net
proceeds received in conjunction with the above sales aggregated $13.9 million.
During 1998, the Company sold various outlots adjacent to the Company's shopping
centers, recognized an aggregate gain of $0.2 million, and received net proceeds
of $6.7 million. During 1997, the Company sold two business centers and a
shopping center, recognized an aggregate gain of $3.5 million and received net
proceeds of $9.8 million.
6. NOTES RECEIVABLE
Notes receivable and related accrued interest are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1999 1998
------ -------
<S> <C> <C>
Notes receivable.......................................... $5,590 $ 8,039
Construction mortgage receivable.......................... -- 6,559
Mortgage receivable....................................... -- 20,174
Notes receivable -- AIP................................... -- 14,236
------ -------
$5,590 $49,008
====== =======
</TABLE>
The Company has provided advances, including accrued interest, aggregating
$5.6 million and $8.0 million at December 31, 1999 and 1998, respectively to
certain developers in accordance with certain partnership agreements. The notes
are secured by certain rights in future development projects, partnership
interests and personal guaranties. The notes bear interest ranging from 10.5% to
14.5% with maturity dates ranging from payment on demand to December 2002.
The Company entered into a 50% participating interest, together with Bank
of America National Trust, in a construction loan receivable secured by a first
mortgage on certain real estate relating to a shopping center development in
Phoenix, Arizona. The note, including accrued interest, aggregated approximately
$6.6 million at December 31, 1998. In July 1999, the Company purchased the
shopping center from the borrower and applied the note towards the purchase
price.
F-19
<PAGE> 72
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
In July 1998, the Company advanced $20.0 million to a real estate developer
which was evidenced by a mortgage note collateralized by six real estate
projects. The mortgage note was repaid in March 1999.
At December 31, 1998 the Company had advances of $14.2 million in the form
of a demand notes receivable from AIP with interest at 10.25%. The notes and
related interest were repaid in January 1999.
7. DEFERRED CHARGES
Deferred charges consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1999 1998
------ ------
<S> <C> <C>
Deferred financing costs................................... $7,298 $9,487
Less-accumulated amortization.............................. (3,382) (4,257)
------ ------
$3,916 $5,230
====== ======
</TABLE>
The Company incurred deferred finance costs aggregating $0.2 million and
$2.9 million in 1999 and 1998, respectively, primarily relating to the Company's
issuance of Senior Notes (Note 9) and unsecured revolving credit agreements
(Note 8). Amortization of deferred charges was $1.5 million, $1.5 million and
$1.4 million for the years ended December 1999, 1998 and 1997, respectively.
During 1998, the Company wrote off $0.9 million (none in 1999 and 1997) of
unamortized deferred finance costs in conjunction with the amendment and
restructuring of its Unsecured Revolving Credit Facility (Note 8) and the
repayment of certain secured indebtedness.
8. REVOLVING CREDIT FACILITIES
Since May 1995, the Company had maintained a $150 million unsecured
revolving credit facility from a syndicate of financial institutions for which
Bank One, NA serves as agent (the "Unsecured Credit Facility"). During 1998, the
Company amended and restructured this facility to increase the facility to $375
million, reduce the specified spread over LIBOR from 1.1% to 0.85%, modify
certain covenants and extend the term for an additional year, through April
2001. The Unsecured Credit Facility includes a competitive bid option for up to
50% of the facility amount. During the first quarter of 1998, the Company
recognized a non-cash extraordinary charge of approximately $0.9 million ($0.01
per share), relating to the write-off of unamortized deferred finance costs
associated with the former revolving credit facility. Borrowings under this
facility bear interest at variable rates based on prime rate or LIBOR plus a
specified spread (0.85% at December 31, 1999). The spread is dependent on the
Company's long term senior unsecured debt rating from Standard and Poor's and
Moody's Investors Service. The Company is required to comply with certain
covenants relating to total outstanding indebtedness, secured indebtedness, net
worth, maintenance of unencumbered real estate assets and debt service coverage.
The facility also provides for a facility fee of 0.15% on the entire facility.
The Unsecured Credit Facility is used to finance the acquisition and development
of real estate, to provide working capital and for general corporate purposes.
At December 31, 1999 and 1998, total borrowings under this facility aggregated
$272.0 million and $132.0 million, respectively, with a weighted average
interest rate of 7.3% and 6.5%, respectively.
In September 1996, the Company entered into a three year $10 million
unsecured revolving credit facility with National City Bank (together with the
$375 million Unsecured Credit Facility, the "Revolving Credit Facilities"). In
June 1998, the Company renegotiated the terms of this facility to increase the
facility to $20 million and reduce the interest rate by 15 basis points. In
March 1999, the Company amended this facility to increase the available
borrowings to $25 million, to convert it to a secured revolving credit facility
and to extend the agreement through November 2002. This credit facility is
secured by certain partnership investments. The
F-20
<PAGE> 73
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Company maintains the right to reduce this facility to $20 million and to
convert the borrowings to an unsecured revolving credit facility. Borrowings
under this facility bear interest at variable rates based on the prime rate or
LIBOR plus a specified spread (0.85% at December 31, 1999). The spread is
dependent on the Company's long term senior unsecured debt rating from Standard
and Poors and Moody's Investors Service. The Company is required to comply with
certain covenants relating to total outstanding indebtedness, secured
indebtedness, net worth, maintenance of unencumbered real estate assets and debt
service coverage. The facility also provides for commitment fees of 0.15% on the
unused credit amount. At December 31, 1998, there were no borrowings outstanding
under this facility. At December 31, 1999, total borrowings under this facility
aggregated $18.8 million with a weighted average interest rate of 7.3%.
Total fees paid by the Company on its revolving credit facilities in 1999,
1998 and 1997 aggregated approximately $0.6 million, $0.5 million and $0.3
million, respectively.
9. FIXED RATE SENIOR NOTES
The following is a summary of the Company's outstanding unsecured fixed
rate senior notes:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Unsecured Fixed Rate Senior Notes (1).................. $517,470 $517,383
Pass-Through Asset Trust Securities (2)................ 74,841 74,771
-------- --------
$592,311 $592,154
======== ========
</TABLE>
- ---------------
(1) Two of the senior notes were issued at a discount. The unamortized discount
aggregated $0.2 million and $0.3 million at December 31, 1999 and 1998,
respectively. The effective interest rates of these notes range from 6.65%
to 7.67% per annum.
(2) In March 1997, the Company issued, through a grantor trust, $75 million of
Pass-Through Asset Trust Securities (PATS), due March 2002, at a discount to
99.53%. These certificates are secured by fifteen year notes maturing March
2012, issued by the Company to the trust. The trust sold an option which
enables the option holder to re-market the certificates upon maturity in
March 2002. Simultaneously with the sale of the certificates, the trust
purchased the notes from the Company for a premium in the amount of the
option payment. This premium, $1.2 and $1.3 million at December 31, 1999 and
1998, respectively, is being amortized over the fifteen year life of the
notes and is included in other liabilities. If the option holder does not
elect to remarket the certificates, then they become due and payable in
March 2002. Interest is paid semi-annually in arrears on March 15 and
September 15. These notes have a coupon interest rate of 7.13% per annum.
The above fixed rate senior notes have maturities ranging from May 2000 to
July 2018. Interest rates ranged from approximately 6.58% to 7.625% (averaging
7.2% at December 31, 1999 and 1998). These notes may not be redeemed by the
Company prior to maturity and will not be subject to any sinking fund. The fixed
rate senior notes were issued pursuant to an indenture dated May 1, 1994 which
contains certain covenants including limitation on incurrence of debt,
maintenance of unencumbered real estate assets and debt service coverage.
Interest is paid semi-annually in arrears on May 15 and November 15.
10. SUBORDINATED CONVERTIBLE DEBENTURES
In August 1994, the Company issued, through an underwritten offering, $60
million of unsecured subordinated convertible debentures ("Debentures"). At
their maturity, the remaining balance of $40.0 million was repaid on August 15,
1999. The Debentures bore interest at 7% per annum and interest was paid semi-
F-21
<PAGE> 74
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
annually. The Debentures were convertible at anytime prior to maturity into
common shares at a conversion price of $16.6875 per share.
Debentures in the principal amount of $6.8 million were converted into
approximately 0.4 million common shares during 1998. In addition, upon
conversion of the debentures, approximately $0.1 of unamortized debenture issue
costs were charged to additional paid-in-capital during 1998 (none in 1999).
11. MORTGAGES PAYABLE AND SCHEDULED PRINCIPAL REPAYMENTS
At December 31, 1999, mortgages payable, collateralized by certain notes
receivable, investments and real estate with a net book value of approximately
$566.6 million and related tenants leases, are generally due in monthly
installments of principal and/or interest and mature at various dates through
2027. Interest rates ranged from approximately 5.25% to 9.75% (averaging 8.3% at
December 31, 1999 and 1998). Variable rate debt obligations, included in
mortgages payable at December 31, 1999 and 1998, totaled approximately $110.6
million and $32.2 million, respectively. Interest rates on the variable rate
debt averaged 7.3% and 6.3% at December 31, 1999 and 1998, respectively.
As of December 31, 1999, the scheduled principal payments of Revolving
Credit Facilities, fixed rate senior notes and mortgages payable for the next
five years and thereafter are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ----------
<S> <C>
2000 $ 183,218
2001 372,168
2002 135,308
2003 36,665
2004 70,883
Thereafter 353,809
----------
$1,152,051
==========
</TABLE>
Principal payments in the year 2001 and 2002 include $272.0 million and
$18.8 million, respectively, associated with the maturing of the Revolving
Credit Facilities.
Principal payments in the year 2002 assume that the PATS option holder
(Note 9) will not exercise the option to re-market the certificates and the
trust will therefore put the certificates to the Company to finance the
reacquisition of the PATS at maturity.
12. FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating fair value disclosures of financial instruments:
Cash and cash equivalents, accounts receivable, accounts payable, accruals and
other liabilities
The carrying amounts reported in the balance sheet for these financial
instruments approximated fair value because of their short maturities. The
carrying amount of straight-line rents receivable does not materially differ
from their fair market value.
Notes receivable and advances to affiliates
The fair value is estimated by discounting the current rates at which
similar loans would be made. At December 31, 1999 and 1998, the carrying amounts
reported in the balance sheet approximate fair value.
F-22
<PAGE> 75
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Debt
The carrying amounts of the Company's borrowings under its Revolving Credit
Facilities approximate fair value because such borrowings are at variable rates.
The fair value of the fixed rate senior notes was based on borrowings with a
similar remaining maturity based on the Company's estimated interest rate spread
over the applicable treasury rate. Fair value of the mortgages payable was
estimated using a discounted cash flow analysis, based on the Company's
incremental borrowing rates for similar types of borrowing arrangements with the
same remaining maturities. Fair value of the Debentures was determined based on
their closing price as of December 31, 1998, as reported by their New York Stock
Exchange.
Considerable judgment is necessary to develop estimated fair values of
financial instruments. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize on disposition
of the financial instruments.
Financial instruments at December 31, 1999 and 1998, with carrying values
that are different than estimated fair values are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1999 1998
----------------------------- -----------------------------
CARRYING AMOUNT FAIR VALUE CARRYING AMOUNT FAIR VALUE
--------------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Fixed Rate Senior Notes............... $592,311 $565,871 $592,154 $568,624
Mortgages payable..................... 268,965 273,343 236,262 247,009
Debentures............................ -- -- 40,065 41,167
-------- -------- -------- --------
$861,276 $839,214 $868,481 $856,800
======== ======== ======== ========
</TABLE>
See Note 3 for a description of the Company's funding commitment to its minority
equity investment. The Company intends to continuously monitor and actively
manage interest costs on its variable rate debt portfolio. The Company may, from
time to time, enter into interest rate hedge agreements to manage interest costs
and risks associated with changing interest rates. The Company did not enter
into any such agreements during 1998 or 1999.
13. MINORITY EQUITY INTERESTS, PREFERRED OPERATING PARTNERSHIP MINORITY
INTERESTS, OPERATING PARTNERSHIP MINORITY INTERESTS, PREFERRED SHARES AND
COMMON SHARES
Minority Equity Interests
In 1998, the Company acquired, in conjunction with the acquisition of the
Hermes Properties, through a subsidiary partnership a majority ownership
interest in a shopping center and development parcels in Utah. The minority
partners' equity interest in this partnership is $8.2 million at December 31,
1999 and 1998. Minority equity interest expense includes approximately $0.1
million for the year ended December 31, 1999 and 1998 related to the minority
partner's share of net income.
In 1997, the Company acquired, through a subsidiary partnership, a majority
ownership interest in two adjacent shopping centers located in North Olmsted,
Ohio. At the date of acquisition the shopping centers were valued at $56.7
million. The Company contributed cash and assumed liabilities aggregating $40.4
million and the balance of $16.3 million was retained by the seller as a
minority equity interest. The minority equity interest owners were entitled to a
priority cash return of 6.5% per annum on their partnership capital account
balance, as defined in the partnership agreement. The priority cash return
during 1998 and 1997 aggregated approximately $0.2 million and $1.0 million,
respectively, and has been reflected as a charge to minority equity interest in
the consolidated statements of operations. In March 1998, the Company acquired
the minority equity interest for $16.3 million.
F-23
<PAGE> 76
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Preferred Operating Partnership Minority Interests
In December 1998, the Company completed a private placement of $35 million
with a private investment partnership. This private placement was a combination
of preferred equity securities and a warrant to purchase approximately 1.6
million common shares of the Company at a price of $21 5/8 per share or 1.4
million Class D cumulative redeemable preferred shares at a price of $25 per
share. The Company recorded $32.9 million as preferred operating partnership
minority interests and $2.1 million to additional paid in capital in respect of
the warrant. The proceeds from this private placement were used to repay amounts
outstanding on the Revolving Credit Facilities. The preferred equity securities
are structured as 8.5% cumulative redeemable preferred units of DDRC Great
Northern L.P., a wholly owned, consolidated partnership. The preferred units are
redeemable without restriction by the investment partnership, for cash or common
shares at the option of the Company, and redeemable after five years by DDRC
Great Northern L.P. for cash or common shares at the investment partnership's
option. In addition, if the warrant is exercised, the Company has the right to
redeem the preferred units. Generally, the warrant has a perpetual term, but
will expire upon redemption of the preferred units.
In September 1999, the Company completed through a consolidated partnership
a $75 million private placement of 0.3 million, 8.875% cumulative perpetual
preferred "down-REIT" preferred partnership units, together with the above
preferred units ("Preferred Units"), with an institutional investor. The units
may be exchanged, under certain circumstances, for Class K, 8.875% cumulative
preferred shares of the Company. The units may be exchangeable into common
shares if the Company fails to pay dividends for six consecutive quarters. The
net proceeds of approximately $73.1 million were effectively used to repay
approximately $25.8 million in mortgage indebtedness and $40.1 million in
Debentures which matured on August 15, 1999. The balance of the proceeds was
used to repay variable rate borrowings under the Company's Revolving Credit
Facilities.
The Company reflected $5.2 million and $0.2 million as a charge to
preferred operating partnership minority interest in the consolidated statements
of operations relating to the accrued return associated with these Preferred
Units at December 31, 1999 and 1998, respectively.
Operating Partnership Minority Interests
At December 31, 1999 and 1998, the Company had 4,702,282 and 4,581,104 OP
Units outstanding, respectively. During 1999 and 1998 the Company acquired,
through subsidiary partnerships, a majority ownership interest in several
shopping centers. In conjunction with these acquisitions, the Company issued
139,276 and 4,563,210 OP Units in 1999 and 1998, respectively, which are
exchangeable, under certain circumstances and at the option of the Company, into
an equivalent number of the Company's common shares or for the equivalent amount
of cash. In 1999, at the option of the OP Unit holder, 18,098 of these OP Units
were exchanged and redeemed for cash by the Company. In connection with the
Company's purchase of certain shopping centers during 1998 and the related
issuance of approximately 3.6 million of the above mentioned OP Units, the
Company provided a guarantee of the value of the OP Units, which includes the
aggregate value derived from both the value of the OP Units and the
distributions received pursuant to the terms of the OP Units. During 1999, the
agreement was amended to provide for the settlement of the guarantee, if
applicable, in cash, at the option of the Company. The Company intends to settle
this guarantee in cash. The purchase of the related shopping center was recorded
at the estimated fair value of the guaranteed amounts. Through the date of the
amendment, contingently issuable OP Units are considered in weighted average
shares outstanding for purposes of determining diluted earnings per share (Note
18).
The OP Unit holders are entitled to receive distributions, per OP Unit,
equal to the per share distributions on the Company's common shares. During
1999, 1998 and 1997, the unit holders received distributions aggregating $6.5
million, $2.9 million and $.01 million, respectively, which has been reflected
as a charge to operating partnership minority interest in the consolidated
statements of operations.
F-24
<PAGE> 77
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Preferred Shares
In August and September 1998, the Company sold 2,160,000 depositary shares
of 8.68% Class D Cumulative Redeemable Preferred Stock at $25 per depositary
share. In July 1998, the Company sold 4,000,000 depositary shares of 8.375%
Class C Cumulative Redeemable Preferred Stock at $25 per depositary share. The
Class A, B, C and D depositary shares represent 1/10 of a share of their
respective preferred class of shares. The Class A, Class B, Class C and Class D
depositary shares are not redeemable by the Company prior to November 15, 2000,
December 26, 2000, July 7, 2003 and August 20, 2003, respectively, except in
certain circumstances relating to the preservation of the Company's status as a
REIT. The aggregate net proceeds from the sale of the Class C and Class D shares
in 1998 of approximately $148.3 million were used to retire variable rate
indebtedness.
The Company's authorized preferred shares consist of the following:
- 750,000 Class A Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class B Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class C Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class D Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class E Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class F Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class G Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class H Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class I Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class J Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class K Cumulative Redeemable Preferred Shares, without par value
- 750,000 Non Cumulative preferred shares, without par value
Common Shares
The Board of Directors of the Company approved a two-for-one stock split to
shareholders of record on July 27, 1998. On August 3, 1998, each such
shareholder received one share of common stock for each share of common stock
held. This stock split was effected in the form of a stock dividend.
Accordingly, $2.9 million was transferred from additional paid in capital to
common stock, representing the stated value of additional shares issued.
Common share issuances over the three year period ended December 31, 1999
are as follows:
<TABLE>
<CAPTION>
ISSUANCE NUMBER OF PRICE PER NET PROCEEDS
DATE SHARES SHARE (IN MILLIONS)
- -------- --------- --------- -------------
<S> <C> <C> <C>
January 1997............................ 6,700,000 $18.3125 $115.8
June 1997............................... 2,600,000 $19.0725 49.4
September 1997.......................... 1,015,920 $19.59375 18.8
December 1997........................... 633,600 $18.875 11.3
April 1998.............................. 1,339,278 $18.86115 25.2
December 1998........................... 3,000,000 $18.5625 52.6
</TABLE>
F-25
<PAGE> 78
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The aggregate net proceeds of $273.1 million from the above offerings were
primarily used to repay amounts outstanding on Revolving Credit Facilities and
for general corporate purposes.
Stock Repurchase Program
In February and August 1999, the Company's Board of Directors authorized
the Officers of the Company to implement a common share repurchase program in
response to what the Company believed was a distinct undervaluation of the
Company's common shares in the public market. At December 31, 1999, treasury
stock recorded on the Company's consolidated balance sheet consisted of
1,860,300 common shares at a cost of $25.8 million.
14. TRANSACTIONS WITH RELATED PARTIES
In September 1999, the Company transferred its interest in a shopping
center under development in Coon Rapids, MN, a suburb of Minneapolis, to a joint
venture and simultaneously sold a 75% interest; the Company retained a 25%
interest. The remaining 75% interest is held by an entity owned in part by a
director of the Company. The Company was reimbursed $2.5 million by the joint
venture partner relating to development costs previously incurred on this
development. In addition, the Company received a development fee of
approximately $0.5 million in 1999 from the entity's joint venture partner.
In September 1998, the Company sold two properties to a principal of one of
the Company's joint venture partners. These properties aggregated approximately
33,000 square feet and were sold for approximately $4.4 million.
In June 1998, the Company acquired, from a partnership owned by the
Company's Chairman Emeritus and an officer of the Company, approximately 18
acres of land, adjacent to a shopping center owned through one of the Company's
joint ventures, at a purchase price of approximately $4.4 million.
In February 1998, the Company acquired a shopping center located in Idaho
Falls, Idaho from a limited partnership in which the Company's Chairman
Emeritus, the Chairman of the Board, and the Vice-Chairman of the Board owned,
in the aggregate, through a separate partnership, a 1% general partnership
interest. The shopping center aggregates approximately 0.2 million square feet
of Company GLA. The initial purchase price of the property was approximately
$6.5 million. In accordance with the purchase agreement, the Company paid an
earnout of $0.6 million upon the leasing of vacant space in the center in
January 1999.
In addition, in 1998 the Company paid to a partnership owned by the
Chairman Emeritus approximately $0.1 million for leasing/sales commissions
associated with leasing or sale of certain shopping center outlots. Also, the
Company paid approximately $0.1 million and $0.7 million in 1999 and 1998,
respectively, to a company owned by the brother-in-law of the Chairman of the
Board relating to fees and commissions on the acquisition of several shopping
centers in 1998.
The Chairman of the Board and Chief Executive Officer of the Company
received 100,000 stock options in his role as a Chairman of AIP's Board of
Trustees. All benefits associated with these options were assigned to the
Company.
In conjunction with the establishment of DDR's equity investment in certain
entities (described in Note 2 as entities in which the Company has a 95% and 81%
economic interest), the Company's Chairman of the Board and Chief Executive
Officer received voting shares. These entities were structured to meet certain
REIT qualification requirements.
During 1999 and 1998, the Company periodically advanced funds to the
Chairman of the Board and Chief Executive Officer in amounts up to $0.4 million.
The advances, which were made to reduce the outstanding principal balance, and
to prevent the sale of common shares in the Company from a margin account loan,
were outstanding for periods ranging from five to forty days with an interest
rate of LIBOR plus 0.85%. In addition,
F-26
<PAGE> 79
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
the Company has advanced approximately $0.2 million to certain officers of the
Company in connection with payroll taxes and relocation costs.
In 1998, the eleven members of the Company's executive committee, either
through the exercise of previously granted stock options or through the direct
purchase of unissued shares had acquired 974,663 of the Company's common shares.
The purchase of such shares was financed by a five-year personal loan program
aggregating approximately $15 million (at market interest rates) from Bank One,
NA. These loans are guaranteed by the Company. Four of these executives have
subsequently resigned from the Company. The Company has agreed to maintain the
guarantee. The individuals participating in the program are responsible for
repayment of these personal loans and have fully indemnified the Company should
the Company's guarantee be called upon.
The Company entered into a lease for office space owned by one of its
principal partners/ shareholders. General and administrative rental expense
associated with this office space aggregated $0.7 million, $0.7 million, and
$0.6 million for the years ended December 31, 1999, 1998 and 1997, respectively.
The Company continues to have management agreements with various
partnerships and performs certain administrative functions on behalf of entities
owned in part by a related party, in which management fee and leasing fee income
of $0.2 million, $0.2 million and $0.1 million was earned in 1999, 1998 and
1997, respectively. Transactions with the Company's equity affiliates have been
described in Notes 2 and 3.
15. COMMITMENTS AND CONTINGENCIES
The Company is engaged in the operation of shopping centers which are
either owned or, with respect to certain shopping centers, operated under
long-term ground leases which expire at various dates through 2070, with renewal
options. Space in the shopping centers is leased to tenants pursuant to
agreements which provide for terms ranging generally from one to 30 years and,
in some cases, for annual rentals which are subject to upward adjustments based
on operating expense levels, sales volume, or contractual increases as defined
in the lease agreements.
The scheduled future minimum revenues from rental properties under the
terms of all non-cancelable tenant leases, assuming no new or renegotiated
leases or option extensions for such premises, for the subsequent five years
ending December 31, are as follows (in thousands):
<TABLE>
<S> <C>
2000 $ 185,797
2001 176,694
2002 164,945
2003 151,905
2004 141,054
Thereafter 1,106,383
----------
$1,926,778
==========
</TABLE>
F-27
<PAGE> 80
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Scheduled minimum rental payments under the terms of all non-cancelable
operating leases in which the Company is the lessee, principally for office
space and ground leases, for the subsequent five years ending December 31, are
as follows (in thousands):
<TABLE>
<S> <C>
2000 $ 1,859
2001 1,859
2002 1,861
2003 1,862
2004 1,862
Thereafter 23,326
-------
$32,629
=======
</TABLE>
There were no capital leases in which the Company is the lessee at December
31, 1999 or 1998.
In conjunction with the development and expansion of various shopping
centers, the Company has entered into agreements for the construction of the
shopping centers and acquisition of land aggregating approximately $3.5 million
as of December 31, 1999.
As discussed in Note 2, the Company has entered into several joint ventures
with various third party developers. In conjunction with the joint venture
agreements, the Company has agreed to fund the required capital associated with
approved development projects. The Company is entitled to receive a priority
return on capital advances at rates ranging from 10.5% to 12%.
As discussed in Notes 13 and 14 the Company has provided certain guarantees
relating to OP Units and officer loans, respectively.
16. OTHER INCOME
Other income was comprised of the following (in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
Temporary tenant rentals (kiosks)............... $ 774 697 830
Lease termination fees.......................... 3,425 1,621 2,830
Development fees................................ 4,064 1,722 1,003
Other........................................... 2,536 1,420 662
------- ------ ------
$10,799 $5,460 $5,325
======= ====== ======
</TABLE>
17. BENEFIT PLANS
Stock Option and Other Equity Based Plans
Effective January 31, 1993, the Company established an incentive and
non-qualified stock option plan under which 4,113,806 of the Company's common
shares at December 31, 1999 were reserved for issuance to eligible employees.
Options may be granted at per share prices not less than fair market value at
the date of grant, and in the case of incentive options, must be exercisable
within ten years thereof (or, with respect to options granted to certain
shareholders, within five years thereof). Options granted under the plan
generally become exercisable on the year after the date of grant as to one third
of the optioned shares, with the remaining options being exercisable over the
following two-year period.
F-28
<PAGE> 81
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
In 1997, the Board of Directors approved the issuance of 900,000 stock
options to the Company's Chief Executive Officer which vested upon issuance of
the options granted. 700,000 options were issued outside of a qualified plan.
In addition to the stock option plan described above, the Company granted
options for a total of 970,000 shares to its directors and certain officers who
are not employees of the Company. Such options were granted at the fair market
value on the date of grant. Options with respect to 50,000 shares were
exercisable one year from the date of grant, and options with respect to the
remaining 920,000 shares become exercisable one year after the date of grant as
to one third of the 920,000 shares with the remaining options being exercisable
over the following two-year period.
The following table reflects the stock option activity described above (in
thousands):
<TABLE>
<CAPTION>
NUMBER OF OPTIONS
----------------------------------- WEIGHTED-AVERAGE
EXECUTIVE ----------------------------
EMPLOYEES DIRECTORS OFFICER EXERCISE PRICE FAIR VALUE
--------- --------- --------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1996........... 2,530 880 -- $13.87
Granted........................... 1,202 50 700 19.74 $3.15
Exercised......................... (254) (10) -- 12.52
Canceled.......................... (62) -- -- 16.59
------ --- --- ------
Balance December 31, 1997........... 3,416 920 700 16.18
Granted........................... 540 10 -- 19.95 $1.43
Exercised......................... (1,093) -- -- 13.31
Canceled.......................... (72) -- -- 18.44
------ --- --- ------
Balance December 31, 1998........... 2,791 930 700 17.32
Granted........................... 1,083 20 -- 15.42 $1.42
Exercised......................... (13) -- -- 14.48
Canceled.......................... (385) -- -- 19.49
------ --- --- ------
Balance December 31, 1999........... 3,476 950 700 $16.75
====== === === ======
</TABLE>
The following table summarizes the characteristics of the options
outstanding at December 31, 1998 (in thousands):
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------------- ------------------------------
OUTSTANDING WEIGHTED-AVERAGE EXERCISABLE
RANGE OF AS OF REMAINING WEIGHTED-AVERAGE AS OF WEIGHTED-AVERAGE
EXERCISE PRICES 12/31/99 CONTRACTUAL LIFE EXERCISE PRICE 12/31/99 EXERCISE PRICE
- --------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$11.00-$16.50 2,789 6.7 $14.52 2,017 $14.37
$16.50-$24.00 2,337 8.5 $19.42 1,572 $19.67
----- --- ------ ----- ------
5,126 7.5 $16.75 3,589 $16.69
</TABLE>
As of December 31, 1999, 1998 and 1997, 3,589, 2,848 and 3,097 options (in
thousands), respectively were exercisable. The weighted average exercise prices
of these exercisable options were $16.69, $16.36 and $15.03 at December 31,
1999, 1998 and 1997, respectively.
During 1998, the Company's executive committee purchased approximately 0.9
million of the shares exercised (See Note 14).
In April 1996 and May 1998, the shareholders approved equity-based award
plans ("Award Plan") which provide for the grant, to employees of the Company,
of options to purchase commons shares of the Company,
F-29
<PAGE> 82
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
rights to receive the appreciation in value of common shares, award of common
shares subject to restrictions on transfer, awards of common shares issuable in
the future upon satisfaction of certain conditions, rights to purchase common
shares and other awards based on common shares. Under the terms of the Award
Plans, awards may be granted with the respect to an aggregate of not more than
3,200,000 common shares.
In 1996, the Board of Directors approved a grant of 50,000 restricted
shares of common stock and 30,000 Performance Units to the Company's Chief
Executive Officer. In 1999, the Board of Directors approved a grant of 47,095
restricted shares of common stock to several executives of the Company. The
restricted stock granted in 1996 and 1999 vests in equal annual amounts through
the years 2000 and 2003, respectively, and had a weighted average fair value at
the date of a grant of $15.3125 and $13.8125, respectively, which was equal to
the market value of the Company's stock at the date of grant. The 30,000
Performance Units will be converted into common shares, ranging from 30,000
common shares to 200,000 common shares at the end of the five year period
(December 31, 2000) depending upon achievement of performance objectives. The
actual number of shares issued will be based upon the average annual total
shareholder return during the five year period ending December 31, 2000. During
1999, the Company reduced its accrual relating to the performance unit awards by
approximately $1.3 million. Expenses associated with restricted shares
aggregated by $0.3 million in 1999. During 1998 and 1997 approximately $0.8
million and $1.3 million, respectively, was charged to expense associated with
awards under the equity based award plan relating to restricted stock and
performance units.
The Company applies APB 25, "Accounting for Stock Issued to Employees" in
accounting for its plans. Accordingly, the Company does not recognize
compensation cost for stock options when the option exercise price equals or
exceeds the market value on the date of the grant. The compensation cost which
is required to be charged against income for all of the above mentioned plans
was $1.8 million, $1.8 million and $5.8 million for 1999, 1998 and 1997,
respectively. Had compensation cost for the Company's stock-based compensation
plans been determined based on the fair values of the options granted at the
grant dates, consistent with the method set forth in the Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation," the
Company's net income and earnings per share would have been as follows (dollars
in thousands, except per share data):
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C> <C>
Net income applicable to As reported $60,135 $57,969 $53,322
common shareholders Pro forma $58,370 $56,168 $47,515
Basic earnings As reported $ 0.99 $ 1.02 $ 1.03
per share Pro forma $ 0.96 $ 0.99 $ 0.92
Diluted earnings As reported $ 0.95 $ 0.98 $ 1.03
per share Pro forma $ 0.92 $ 0.95 $ 0.91
</TABLE>
For purposes of the pro forma presentation, the fair value of each option
grant was estimated on the date of grant using the Black-Scholes options pricing
model using the following assumptions:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Risk free interest rate or
(range)........................ 5.6%-6.4% 4.7%-5.8% 5.8%-7.9%
Dividend yield (range)........... 8.5%-10.9% 6.4%-7.5% 6.8%-7.1%
8.1-10
Expected life (range)............ 7-10 years 6-10 years years
Expected volatility (range)...... 20.2%-31.8% 13.2%-19.1% 22.5%-31.7%
</TABLE>
F-30
<PAGE> 83
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
401(k) Plan
Effective July 1, 1994, the Company adopted a 401(k) defined contribution
plan covering substantially all of the officers and employees of the Company
which permits participants to defer up to a maximum of 15% of their
compensation. The Company will match 25% of the employee's contribution up to a
maximum of 6% of an employee's annual compensation. The Company may also make
additional discretionary contributions. Employees' contributions are fully
vested and the Company's matching contributions vest 20% per year, including
service prior to the plan's effective date. Once an employee has been with the
Company five years, all matching contributions are fully vested. The Company's
contributions to the plan for the years ended December 31, 1999, 1998 and 1997
were made by the issuance of Company stock with a market value of $0.06 million,
$0.05 million, and $0.04 million, respectively. The 401(k) plan is fully funded
at December 31, 1999.
Elective Deferred Compensation Plan
Effective October 15, 1994, the Company adopted a non-qualified elective
deferred compensation plan for certain key executives which permits eligible
employees to defer up to 25% of their compensation. The Company will match 25%
of an employee's contribution up to a maximum of 6% of an employee's annual
compensation, after deducting contributions, if any, made in conjunction with
the Company's 401(k) plan. Through March 31, 1998, both the deferred and
matching contributions were made in Company performance units as well as the
gains and losses resulting from the fluctuation in the Company's quoted share
price. In April 1998, the Company elected to amend the investment elections
available to employees such that election of the Company's stock is no longer
permitted. Deferred compensation charged to expense related to an employee
contribution is fully vested and the Company's matching contribution vests 20%
per year, including service prior to the plan's effective date. Once an employee
has been with the Company five years, all matching contributions are fully
vested. The Company's contribution for the years ended December 31, 1999, 1998
and 1997 was $0.02 million, $0.06 million and $0.04 million, respectively. For
the years ended December 31, 1998 and 1997, this contribution included earnings
attributable to the employees' accounts. At December 31, 1999, 1998 and 1997,
deferred compensation under this plan aggregated $0.9 million, $0.5 million and
$0.3 million, respectively. The plan is fully funded at December 31, 1999.
F-31
<PAGE> 84
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
18. EARNINGS AND DIVIDENDS PER SHARE
Earnings Per Share (EPS) have been computed pursuant to the provisions of
Statement of Financial Accounting Standards No. 128. Further, as discussed in
Note 1, in 1998, the Company effected a stock split in the form of a stock
dividend in which each shareholder received one share of common stock for each
share of common stock held. All years presented have been restated to reflect
this stock split.
The following table provides a reconciliation of both income before
extraordinary item and the number of common shares used in the computations of
"basic" EPS, which utilized the weighted average of common shares outstanding
without regard to dilutive potential common shares, and "diluted" EPS, which
includes all such shares.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Income before extraordinary item.......................... $87,397 $78,804 $67,522
Less: Preferred stock dividend............................ (27,262) (19,953) (14,200)
------- ------- -------
Basic EPS-Income before extraordinary item applicable to
common shareholders.................................... 60,135 58,851 53,322
Effect of dilutive share securities:
Operating partnership minority interests............... -- -- 10
Joint Venture Partnerships............................. -- (632) --
------- ------- -------
Diluted EPS-Income before extraordinary item applicable to
common shareholders plus assumed conversions........... $60,135 $58,219 $53,332
======= ======= =======
Number of Shares:
Basic - average shares outstanding........................ 60,985 56,949 51,760
Effect of dilutive securities:
Operating partnership minority interests............... -- -- 6
Joint venture partnerships and minority interests...... 2,246 1,056 --
Stock options.......................................... 138 499 352
Performance Units...................................... 70 -- --
Restricted stock....................................... 29 5 6
------- ------- -------
Diluted - average shares outstanding...................... 63,468 58,509 52,124
======= ======= =======
Per share amount:
Income before extraordinary item
Basic.................................................. $ 0.99 $ 1.03 $ 1.03
Diluted................................................ $ 0.95 $ 1.00 $ 1.03
</TABLE>
Options to purchase 5,125,764, 4,420,981 and 5,036,412 shares of common
stock were outstanding at December 31, 1999, 1998 and 1997, respectively (Note
17), a portion of which has been reflected above using the treasury stock
method.
The weighted average contingently issuable OP units which are exchangeable,
in certain circumstances into common shares aggregated 2.2 million and 0.7
million for the year ended December 31, 1999 and 1998, respectively. The Company
intends to settle these contingently issuable OP Units in cash (Note 13).
Restricted shares totaling 47,676, 20,000 and 30,000, respectively, were
unvested at December 31, 1999, 1998 and 1997 and consequently, were not included
in the computation of basic EPS for all years presented (Note 17).
F-32
<PAGE> 85
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Performance Units issued in 1996, convertible into 30,000 to 200,000 common
shares of the Company, were not included in the computation of diluted EPS for
1998 and 1997 because the effect was antidilutive (Note 17).
Debentures, which were convertible prior to their August 1999 maturity into
common shares of the Company at a price of $16.6875, were not included in the
computation of diluted EPS for all years presented because the effect was
antidilutive (Note 10).
The conversion of the Company's joint venture partners' interest in several
joint ventures were not included in the computation of diluted EPS because the
effect was antidilutive, for all years presented, where applicable (Note 2)
except for the joint venture in Merriam, Kansas which was dilutive in 1998.
Significant estimates were utilized by the Company in the determination of fair
value for certain of the Company's joint ventures where the joint venture
partner has the right to convert its interest in the partnership to common
shares of the Company or cash, at the election of the Company (Note 2). These
estimates were used to determine the number of common shares assumed to be
issued by the Company upon conversion, for purposes of determining dilution, if
any. In 1999, the Company made the determination that they will settle these
conversions in cash.
The exchange into common stock of the minority interests were not included
in the computation of diluted EPS in all years presented because the effect of
assuming conversion was antidilutive (Note 13).
The redemption of the Preferred Units, including those exercisable through
the exercise of the warrant into common shares, was not included in the
computation of diluted EPS in 1999 and 1998 because the effect was antidilutive
or they were considered contingently issuable (Note 13).
Dividends declared per share for the years ended December 31, 1999, 1998
and 1997 are summarized as follows:
<TABLE>
<CAPTION>
GROSS ORDINARY NON-TAXABLE CAPITAL GAIN TOTAL
1999 DIVIDENDS DATE PAID INCOME RETURN OF CAPITAL DISTRIBUTIONS DIVIDENDS
-------------- --------- -------------- ----------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
4th quarter 1998* 01/04/99 $ 0.08 $ -- $ -- $ 0.08*
1st quarter 04/05/99 0.35 -- -- 0.35
2nd quarter 07/02/99 0.35 -- -- 0.35
3rd quarter 10/04/99 0.35 -- -- 0.35
4th quarter** 01/06/00 0.08 -- -- 0.08**
------- ------- ------- -------
$ 1.21 $ -- $ -- $ 1.21
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
GROSS ORDINARY NON-TAXABLE CAPITAL GAIN TOTAL
1998 DIVIDENDS DATE PAID INCOME RETURN OF CAPITAL DISTRIBUTIONS DIVIDENDS
-------------- --------- -------------- ----------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
1st quarter 03/31/98 $0.3199 $ -- $0.0075 $ .3275
2nd quarter 06/30/98 0.3199 -- 0.0075 .3275
3rd quarter 10/01/98 0.3199 -- 0.0075 .3275
4th quarter* 01/04/99 0.2459 -- 0.0060 .2516*
------- ------- ------- -------
$1.2056 $ -- $0.0285 $1.2341
======= ======= ======= =======
</TABLE>
F-33
<PAGE> 86
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
GROSS ORDINARY NON-TAXABLE CAPITAL GAIN TOTAL
1997 DIVIDENDS DATE PAID INCOME RETURN OF CAPITAL DISTRIBUTIONS DIVIDENDS
-------------- --------- -------------- ----------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
1st quarter 03/31/97 $ 0.25 $ 0.055 $ 0.01 $ .315
2nd quarter 06/30/97 0.26 0.055 -- .315
3rd quarter 09/30/97 0.26 0.055 -- .315
4th quarter 12/30/97 0.25 0.055 0.01 .315
------- ------- ------- -------
$ 1.02 $ 0.22 $ 0.02 $ 1.26
======= ======= ======= =======
</TABLE>
- ---------------
* A portion of the fourth quarter 1998 dividend paid on January 4, 1999 was
reported to shareholders in 1999, of which $0.2459 per share was reported as
ordinary income and $0.006 per share was reflected as capital gain
distributions for the year ended December 31, 1998.
** A portion of the fourth quarter 1999 dividend paid on January 6, 2000 will be
reported to shareholders in 2000, of which $0.08 per share was reported as
ordinary income for the year ended December 31, 1999.
19. SUBSEQUENT EVENTS
In February and March 2000, the Company initiated the purchase of 1,163,700
of its common shares on the open market for an aggregate purchase price of
approximately $13.7 million. The purchase of these shares was made in accordance
with the Company's share repurchase program approved by the Company's Board of
Directors.
In February 2000, the Company sold a shopping center in Stone Mountain,
Georgia, a suburb of Atlanta, for approximately $1.8 million. The proceeds from
this sale were used to repay variable rate debt under the Company's revolving
credit facilities.
In February 2000, the Company formed a joint venture with DRA Advisors,
Inc. whereby the Company contributed a wholly owned property in Phoenix, Arizona
valued at approximately $26.7 million and related mortgage debt of $18.0 million
and in exchange received a 50% equity ownership interest in the joint venture.
The cash proceeds to the Company of approximately $4.0 million were used to
repay variable rate debt under the Company's revolving credit facilities. The
Company will continue to manage and operate the center and receive fees for such
services.
In February 2000, the Company entered into an agreement to sell 60% of its
50% joint venture interest in the Community Centers Joint Venture to DRA
Advisors, Inc. The first closing occurred in February 2000 with various closing
dates scheduled throughout March 2000. The Company's ownership in the joint
venture subsequent to this transaction will be 20% with funds advised by DRA
Advisors, Inc. owning 80%. The Company will continue to be responsible for the
day-to-day management of the shopping centers and receive fees for such
services.
F-34
<PAGE> 87
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
20. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table sets forth the quarterly results of operations for the
years ended December 31, 1999 and 1998 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
1999:
Revenues from operations................ $65,138 $64,314 $66,226 $68,255 $263,933
Income before equity in net income of
joint ventures, minority equity
investment, loss on diposition of real
estate, minority interests and
extraordinary item.................... 18,027 18,738 19,488 17,543 73,796
Income before extraordinary item........ 21,868 21,142 22,636 21,751 87,397
Net income.............................. 21,868 21,142 22,636 21,751 87,397
Net income applicable to common
shareholders.......................... 15,053 14,326 15,821 14,935 60,135
Basic:
Income before extraordinary item per
common share....................... $ 0.25 $ 0.23 $ 0.26 $ 0.25 $ 0.99
Net income per common share........... $ 0.25 $ 0.23 $ 0.26 $ 0.25 $ 0.99
Weighted average number of shares..... 61,302 61,311 61,327 60,006 60,985
Diluted:
Income before extraordinary item per
common share....................... $ 0.24 $ 0.22 $ 0.25 $ 0.24 $ 0.95
Net income per common share........... $ 0.24 $ 0.22 $ 0.25 $ 0.24 $ 0.95
Weighted average number of shares..... 64,016 63,992 64,448 62,626 63,468
1998:
Revenues from operations................ $49,539 $52,981 $63,395 $62,253 $228,168
Income before equity in net income of
joint ventures and minority equity
investment, gain on disposition of
real estate, minority interests and
extraordinary item.................... 15,965 15,765 17,475 19,089 68,294
Income before extraordinary item........ 18,015 19,137 20,712 20,940 78,804
Net income.............................. 17,133 19,137 20,712 20,940 77,922
Net income applicable to common
shareholders.......................... 13,583 15,587 14,702 14,097 57,969
Basic:
Income before extraordinary item per
common share....................... $ 0.26 $ 0.27 $ 0.26 $ 0.24 $ 1.03
Net income per common share........... $ 0.25 $ 0.27 $ 0.26 $ 0.24 $ 1.02
Weighted average number of shares..... 55,500 56,703 57,257 58,302 56,949
Diluted:
Income before extraordinary item per
common share....................... $ 0.25 $ 0.27 $ 0.25 $ 0.23 $ 1.00
Net income per common share........... $ 0.24 $ 0.27 $ 0.25 $ 0.23 $ 0.98
Weighted average number of shares..... 56,732 58,003 58,765 60,286 58,509
</TABLE>
F-35
<PAGE> 88
SCHEDULE II
DEVELOPERS DIVERSIFIED REALTY CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF CHARGED END OF
YEAR TO EXPENSE DEDUCTIONS YEAR
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1999
Allowance for uncollectible accounts......... $3,688 $2,923 $1,960 $4,651
====== ====== ====== ======
Year ended December 31, 1998
Allowance for uncollectible accounts......... $3,678 $2,196 $2,186 $3,688
====== ====== ====== ======
Year ended December 31, 1997
Allowance for uncollectible accounts......... $2,406 $1,433 $ 161 $3,678
====== ====== ====== ======
</TABLE>
F-36
<PAGE> 89
SCHEDULE III
DEVELOPERS DIVERSIFIED REALTY CORPORATION
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 1999
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST(A)
----------------------------- ----------------------------------------------
BUILDINGS & BUILDINGS &
LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL
------------ -------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Brandon, FL............ $ 0 $ 4,111,281 $ 0 $ 0 $ 4,124,943 $ 4,124,943
Stow, OH............... 1,035,856 9,028,257 0 992,520 20,536,731 21,529,251
Fern Park, FL
(Orlando)............ 445,852 302,755 97,300 445,852 409,103 854,955
Eastlake, OH........... 40,000 141,000 0 40,000 144,188 184,188
Highland Hts., OH...... 3,987,052 7,895,991 0 3,987,052 13,627,089 17,614,141
Westlake, OH........... 424,225 3,802,863 203,235 424,225 4,956,799 5,381,024
Waterbury, CT.......... 0 3,048,300 0 0 3,154,101 3,154,101
Zanesville, OH......... 0 619,023 0 0 619,023 619,023
E. Norriton, PA........ 80,408 4,697,718 233,380 80,408 8,121,365 8,201,773
Palm Harbor, FL........ 1,136,915 4,089,138 0 1,136,915 4,166,380 5,303,295
Tarpon Springs, FL..... 248,067 7,381,640 80,859 248,067 11,100,461 11,348,528
Bayonet Pt., FL........ 2,112,566 8,180,960 127,530 2,254,649 8,404,575 10,659,224
Starkville, MS......... 1,271,081 8,209,214 0 1,112,263 9,648,182 10,760,445
Tupelo, MS............. 2,282,000 14,978,722 0 2,282,000 15,634,922 17,916,922
Jacksonville, FL....... 3,005,420 9,425,063 0 3,027,805 9,468,332 12,496,137
Stone Mountain, GA..... 460,471 3,018,074 21,890 460,471 3,063,874 3,524,345
Brunswick, MA.......... 3,836,358 15,459,460 0 3,836,358 17,802,159 21,638,517
Salisbury, MD.......... 1,073,034 6,215,570 0 1,073,034 6,215,570 7,288,604
Atlanta, GA............ 475,360 9,373,552 0 475,360 9,604,732 10,080,092
Erie, PA............... 10,880,479 19,200,609 0 6,628,614 40,588,696 47,217,310
Erie, PA............... 1 2,563,770 12,990 1 3,094,286 3,094,287
Chillicothe, OH........ 42,857 2,549,287 2,200 1,266,066 11,799,780 13,065,846
Ocala, FL.............. 26,800 351,065 25,028 26,800 382,329 409,129
Tampa, FL (Waters)..... 4,105,230 6,640,240 324,071 3,905,230 7,253,317 11,158,547
Macedonia, OH.......... 4,391,693 10,885,124 0 4,391,693 10,885,124 15,276,817
Winchester, VA......... 618,075 13,903,078 0 618,075 18,805,820 19,423,895
Huber Heights, OH...... 757,422 14,468,512 1,000 757,422 14,584,437 15,341,859
Lebanon, OH............ 651,025 911,178 30,993 651,025 1,049,306 1,700,331
Wilmington, OH......... 156,975 1,615,646 50,575 156,975 1,751,709 1,908,684
Hillsboro, OH.......... 79,579 1,984,831 0 79,579 1,986,444 2,066,023
Canton, OH Phase II.... 5,672,187 18,389,505 0 6,393,685 18,389,505 24,783,190
Xenia, OH.............. 948,202 3,938,138 0 673,202 6,052,627 6,725,829
Boardman, OH........... 9,025,281 27,982,812 0 8,152,281 27,982,812 36,135,093
Solon, OH.............. 6,220,200 7,454,151 0 6,220,200 20,001,302 26,221,502
Cincinnati, OH......... 2,399,250 11,238,105 172,198 2,399,250 12,412,732 14,811,982
<CAPTION>
TOTAL COST, NET DEPRECIABLE DATE OF
ACCUMULATED OF ACCUMULATED LIVES CONSTRUCTION(C)
DEPRECIATION DEPRECIATION ENCUMBRANCES (YEARS)(1) ACQUISITION(A)
------------ --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Brandon, FL............ $ 3,770,590 $ 354,353 $ 0 S/L 30 1972(C)
Stow, OH............... 3,022,034 18,507,217 0 S/L 30 1969(C)
Fern Park, FL
(Orlando)............ 278,698 576,257 0 S/L 30 1970(C)
Eastlake, OH........... 125,060 59,128 0 S/L 30 1971(C)
Highland Hts., OH...... 1,648,102 15,966,039 0 S/L 31.5 1995(C)
Westlake, OH........... 3,280,808 2,100,216 0 S/L30 1974(C)
Waterbury, CT.......... 2,704,229 449,872 0 S/L 30 1973(C)
Zanesville, OH......... 186,695 432,328 0 S/L 31.5 1990(C)
E. Norriton, PA........ 3,912,424 4,289,349 0 S/L 30 1975(C)
Palm Harbor, FL........ 647,220 4,656,075 0 S/L 31.5 1995(A)
Tarpon Springs, FL..... 6,353,074 4,995,454 0 S/L 30 1974(C)
Bayonet Pt., FL........ 4,044,102 6,615,122 5,327,208 S/L 30 1985(C)
Starkville, MS......... 1,537,199 9,223,246 0 S/L 31.5 1994(A)
Tupelo, MS............. 2,552,940 15,363,982 0 S/L 31.5 1994(A)
Jacksonville, FL....... 1,436,999 11,059,138 0 S/L 31.5 1995(A)
Stone Mountain, GA..... 2,719,972 804,373 0 S/L 30 1973(C)
Brunswick, MA.......... 1,345,335 20,293,182 0 S/L 30 1973(C)
Salisbury, MD.......... 49,615 7,238,989 0 S/L 31.5 1999(A)
Atlanta, GA............ 1,816,240 8,263,852 0 S/L 31.5 1994(A)
Erie, PA............... 4,323,324 42,893,986 0 S/L 31.5 1995(C)
Erie, PA............... 2,237,422 856,865 0 S/L 30 1973(C)
Chillicothe, OH........ 2,474,611 10,591,235 0 S/L 30 1974(C)
Ocala, FL.............. 327,594 81,535 0 S/L 30 1974(C)
Tampa, FL (Waters)..... 2,140,390 9,018,157 0 S/L 31.5 1990(C)
Macedonia, OH.......... 214,545 15,062,272 0 S/L 31.5 1998(C)
Winchester, VA......... 3,068,730 16,355,165 0 S/L 31.5 1993(A)
Huber Heights, OH...... 2,983,866 12,357,993 0 S/L 31.5 1993(A)
Lebanon, OH............ 303,208 1,397,123 0 S/L 31.5 1993(A)
Wilmington, OH......... 1,235,912 672,772 0 S/L 30 1977(C)
Hillsboro, OH.......... 1,356,786 709,237 0 S/L 30 1979(C)
Canton, OH Phase II.... 973,263 23,809,927 0 S/L 31.5 1995(A)
Xenia, OH.............. 918,242 5,807,587 0 S/L 31.5 1994(A)
Boardman, OH........... 2,148,843 33,986,250 0 S/L 31.5 1997(A)
Solon, OH.............. 429,063 25,792,439 0 S/L 31.5 1998(C)
Cincinnati, OH......... 2,595,297 12,216,685 0 S/L 31.5 1993(A)
</TABLE>
F-37
<PAGE> 90
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST(A)
----------------------------- ----------------------------------------------
BUILDINGS & BUILDINGS &
LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL
------------ -------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Bedford, IN............ $ 706,282 $ 8,424,532 $ 5,750 $ 1,066,656 $ 10,015,954 $ 11,082,610
Watertown, SD.......... 62,712 6,442,712 441,927 62,712 8,658,718 8,721,430
Connersville, IN....... 539,720 6,457,710 0 539,720 6,551,043 7,090,763
Ashland, OH............ 209,500 2,272,624 0 209,500 2,388,684 2,598,184
Pensacola, FL.......... 1,804,641 4,010,290 273,372 608,640 3,508,964 4,117,604
W. 65th Cleveland,
OH................... 90,120 1,463,076 15,000 90,120 1,541,540 1,631,660
Los Alamos, NM......... 725,000 3,499,950 30,336 725,000 4,608,662 5,333,662
North Olmsted, OH...... 12,209,206 45,008,616 13,971 12,209,206 60,214,909 72,424,115
Tampa, FL (Dale)....... 4,268,673 5,368,147 204,666 4,268,673 6,067,386 10,336,059
Waynesville, NC........ 431,910 8,088,668 131,096 431,910 8,155,867 8,587,777
Ahoskie, NC............ 269,530 7,775,856 3,168 269,530 7,803,524 8,073,054
Pulaski, VA............ 528,075 6,395,809 2,000 528,075 6,405,435 6,933,510
St. Louis, MO
(Sunset)............. 10,496,401 31,530,669 0 10,742,955 32,401,313 43,144,268
St. Louis, MO
(Sunset)............. 2,294,428 6,873,734 0 2,461,466 7,377,270 9,838,736
St. Louis, MO
(Brentwood).......... 10,627,899 32,053,255 0 10,018,174 31,561,791 41,579,965
Cedar Rapids, IA....... 4,219,246 12,697,187 0 4,219,246 12,943,354 17,162,600
St. Louis, MO
(Olympic)............ 2,775,280 8,369,712 0 2,775,280 8,392,525 11,167,805
St. Louis, MO
(Gravois)............ 1,336,311 4,049,826 0 1,524,602 4,705,118 6,229,720
St. Louis, MO
(Morris)............. 0 2,048,384 0 0 2,050,805 2,050,805
St. Louis, MO
(Keller)............. 1,632,451 4,936,304 0 1,632,451 4,938,725 6,571,176
St. Louis, MO
(Southtowne)......... 6,048,127 0 0 6,050,548 0 6,050,548
St. Louis, MO.......... 1,405,214 4,254,663 0 1,405,214 4,282,206 5,687,420
St. Louis, MO
(American)........... 243,968 770,897 0 514,311 555,530 1,069,841
Aurora, OH............. 832,436 7,560,047 0 832,436 7,560,047 8,392,483
Worthington, MN........ 373,943 6,404,291 440,740 373,943 7,762,132 8,136,075
Harrisburg, IL......... 550,100 7,619,281 0 550,100 7,891,169 8,441,269
Idaho Falls, ID........ 1,301,527 5,703,375 0 1,418,042 5,703,375 7,121,417
Mt. Vernon, IL......... 1,789,009 9,398,696 111,000 1,789,009 13,790,757 15,579,766
Fenton, MO............. 413,993 4,243,854 475,714 430,168 6,678,868 7,109,036
Melbourne, FL.......... 1 3,084,819 116,638 1 3,202,449 3,202,450
Simpsonville, SC....... 430,800 6,563,154 0 430,800 6,562,404 6,993,204
Camden, SC............. 627,100 7,519,161 6,500 2,917,286 16,920,666 19,837,952
Union, SC.............. 684,750 7,629,275 500 684,750 7,648,975 8,333,725
N. Charleston, SC...... 910,840 11,346,348 1,000 1,081,462 14,921,446 16,002,908
S. Anderson, SC........ 1,365,600 6,117,482 13,170 1,365,600 6,150,152 7,515,752
Anderson, SC........... 204,094 939,733 0 204,094 939,733 1,143,827
Orangeburg, SC......... 317,934 1,692,836 0 317,934 3,373,051 3,690,985
Mt. Pleasant, SC....... 2,583,887 10,469,891 0 2,589,300 10,447,517 13,036,817
Columbia, SC........... 600,000 3,262,624 0 600,000 3,262,624 3,862,624
Sault Ste. Marie, MI... 1,826,454 13,709,705 0 1,826,454 15,029,388 16,855,842
Cheboygan, MI.......... 126,670 3,612,242 0 126,670 3,771,874 3,898,544
Grand Rapids, MI....... 1,926,389 8,039,411 0 1,926,389 8,218,211 10,144,600
<CAPTION>
TOTAL COST, NET DEPRECIABLE DATE OF
ACCUMULATED OF ACCUMULATED LIVES CONSTRUCTION(C)
DEPRECIATION DEPRECIATION ENCUMBRANCES (YEARS)(1) ACQUISITION(A)
------------ --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Bedford, IN............ $ 1,795,692 $ 9,286,918 $ 0 S/L 31.5 1993(A)
Watertown, SD.......... 5,047,751 3,673,679 0 S/L 30 1977(C)
Connersville, IN....... 1,271,399 5,819,364 0 S/L 31.5 1993(A)
Ashland, OH............ 1,756,197 841,987 0 S/L 30 1977(C)
Pensacola, FL.......... 56,970 4,060,634 0 S/L 30 1988(C)
W. 65th Cleveland,
OH................... 1,121,389 510,271 0 S/L 30 1977(C)
Los Alamos, NM......... 1,607,212 3,726,450 0 S/L 30 1978(C)
North Olmsted, OH...... 4,806,468 67,617,647 0 S/L 31.5 1997(A)
Tampa, FL (Dale)....... 1,697,053 8,639,006 0 S/L 31.5 1990(C)
Waynesville, NC........ 1,774,358 6,813,419 0 S/L 31.5 1993(A)
Ahoskie, NC............ 1,459,105 6,613,949 0 S/L 31.5 1994(A)
Pulaski, VA............ 1,361,033 5,572,477 0 S/L 31.5 1993(A)
St. Louis, MO
(Sunset)............. 1,522,786 41,621,482 0 S/L 31.5 1998(A)
St. Louis, MO
(Sunset)............. 338,053 9,500,683 0 S/L 31.5 1998(A)
St. Louis, MO
(Brentwood).......... 1,543,623 40,036,342 0 S/L 31.5 1998(A)
Cedar Rapids, IA....... 613,301 16,549,299 11,268,121 S/L 31.5 1998(A)
St. Louis, MO
(Olympic)............ 401,770 10,766,035 4,814,955 S/L 31.5 1998(A)
St. Louis, MO
(Gravois)............ 206,016 6,023,704 2,927,061 S/L 31.5 1998(A)
St. Louis, MO
(Morris)............. 95,430 1,955,375 0 S/L 31.5 1998(A)
St. Louis, MO
(Keller)............. 234,745 6,336,431 2,650,554 S/L 31.5 1998(A)
St. Louis, MO
(Southtowne)......... 0 6,050,548 0 S/L 31.5 1998(A)
St. Louis, MO.......... 202,751 5,484,669 3,433,509 S/L 31.5 1998(A)
St. Louis, MO
(American)........... 31,608 1,038,233 0 S/L 31.5 1998(A)
Aurora, OH............. 582,482 7,810,001 0 S/L 31.5 1995(C)
Worthington, MN........ 4,581,038 3,555,037 0 S/L 30 1977(C)
Harrisburg, IL......... 1,440,315 7,000,954 0 S/L 31.5 1994(A)
Idaho Falls, ID........ 321,599 6,799,818 0 S/L 31.5 1998(A)
Mt. Vernon, IL......... 2,155,267 13,424,499 0 S/L 31.5 1993(A)
Fenton, MO............. 2,822,518 4,286,518 0 S/L 30 1983(A)
Melbourne, FL.......... 2,205,578 996,872 0 S/L 30 1978(C)
Simpsonville, SC....... 1,250,105 5,743,099 0 S/L 31.5 1994(A)
Camden, SC............. 1,673,826 18,164,126 0 S/L 31.5 1993(A)
Union, SC.............. 1,593,237 6,740,488 0 S/L 31.5 1993(A)
N. Charleston, SC...... 2,566,733 13,436,175 0 S/L 31.5 1993(A)
S. Anderson, SC........ 1,154,487 6,361,265 0 S/L 31.5 1994(A)
Anderson, SC........... 141,707 1,002,120 0 S/L 31.5 1995(A)
Orangeburg, SC......... 304,670 3,386,315 0 S/L 31.5 1995(A)
Mt. Pleasant, SC....... 1,578,047 11,458,770 6,542,612 S/L 31.5 1995(A)
Columbia, SC........... 431,564 3,431,060 0 S/L 31.5 1995(A)
Sault Ste. Marie, MI... 2,399,638 14,456,204 6,367,770 S/L 31.5 1994(A)
Cheboygan, MI.......... 700,893 3,197,651 0 S/L 31.5 1993(A)
Grand Rapids, MI....... 1,038,987 9,105,613 0 S/L 31.5 1995(A)
</TABLE>
F-38
<PAGE> 91
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST(A)
----------------------------- ----------------------------------------------
BUILDINGS & BUILDINGS &
LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL
------------ -------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Detroit, MI............ $ 6,737,895 $ 26,988,238 $ 27,131 $ 6,737,895 $ 27,021,955 $ 33,759,850
Houghton, MI........... 439,589 7,300,952 1,820,772 439,589 9,752,476 10,192,065
Bad Axe, MI............ 183,850 3,647,330 0 183,850 4,040,030 4,223,880
Gaylord, MI............ 269,900 8,727,812 2,250 269,900 9,092,177 9,362,077
Howell, MI............. 331,500 11,938,263 750 331,500 12,166,940 12,498,440
Mt. Pleasant, MI....... 766,950 7,768,538 20,340 766,950 11,490,772 12,257,722
Elyria, OH............. 352,295 5,692,642 0 352,295 5,692,642 6,044,937
Midvalley, UT.......... 25,661,553 56,759,311 0 25,661,601 58,084,327 83,745,928
Taylorsville, UT....... 24,327,057 53,686,013 0 24,327,057 53,824,030 78,151,087
Orem, UT............... 5,428,428 12,258,654 0 5,428,428 12,711,290 18,139,718
Logan, UT.............. 773,540 1,651,355 0 773,540 1,652,339 2,425,879
Salt Lake City, UT..... 986,363 2,132,099 0 986,363 2,133,467 3,119,830
Riverdale, UT.......... 15,845,056 36,478,636 0 15,845,056 41,899,259 57,744,315
Bemidji, MN............ 442,031 8,228,731 500,161 442,031 9,130,201 9,572,232
The Hermes Building.... 2,801,326 5,996,621 0 2,801,326 5,997,605 8,798,931
Ogden, UT.............. 3,619,570 7,715,892 0 3,619,570 7,730,243 11,349,813
Las Vegas, NV.......... 2,142,168 4,561,986 0 2,142,168 4,574,348 6,716,516
Rapid City, SD......... 757,928 1,624,575 0 757,928 1,636,955 2,394,883
Cape Coral, FL......... 1,286,628 2,548,149 149,507 1,286,628 5,236,935 6,523,563
Trindad, CO............ 411,329 2,578,930 197,546 411,329 2,741,678 3,153,007
Hazard, KY............. 402,563 3,271,343 296,745 402,563 3,573,888 3,976,451
Florence, KY........... 490,797 1,967,928 0 490,797 1,974,053 2,464,850
Birmingham, AL......... 3,726,122 13,973,590 0 3,726,122 16,237,170 19,963,292
Birmingham, AL......... 10,572,916 26,002,258 0 11,434,040 33,820,726 45,254,766
Huntsville, AL......... 600,000 3,058,100 0 600,000 3,070,253 3,670,253
Jacksonville, NC....... 521,111 3,998,798 172,993 390,833 6,974,766 7,365,599
Ormond Beach, FL....... 1,048,380 15,812,069 3,875 1,048,380 16,182,990 17,231,370
Alamosa, CO............ 161,479 1,034,465 210,958 161,479 1,224,493 1,385,972
Wilmington, NC......... 4,785,052 16,851,571 1,182,775 4,286,616 24,075,483 28,362,099
Berlin, VT............. 858,667 10,948,064 23,935 866,217 13,710,093 14,576,310
Brainerd, MN........... 703,410 9,104,117 271,802 1,182,018 13,340,649 14,522,667
Spring Hill, FL........ 1,083,851 4,816,166 265,762 2,095,974 8,012,882 10,108,856
Tiffin, OH............. 432,292 5,907,856 434,761 432,292 6,805,978 7,238,270
Toledo, OH............. 2,490,543 10,582,588 0 2,490,543 10,583,789 13,074,332
Toledo, OH............. 6,201,887 11,644,513 0 6,201,887 11,644,513 17,846,400
Denver, CO............. 7,833,069 35,550,405 0 7,833,069 49,698,754 57,531,823
Dickinson, ND.......... 57,470 6,864,237 354,820 51,148 7,561,167 7,612,315
West Pasco, FL......... 1,422,383 6,552,470 8,500 1,357,699 6,408,848 7,766,547
Marianna, FL........... 1,496,347 3,499,835 129,855 1,496,347 3,641,490 5,137,837
Hutchinson, MN......... 401,502 5,510,326 656,937 426,502 6,331,797 6,758,299
New Bern, NC........... 780,029 8,204,036 71,587 1,049,710 12,928,223 13,977,933
Highland, IN........... 4,003,400 20,101,245 0 4,003,400 22,943,287 26,946,687
<CAPTION>
TOTAL COST, NET DEPRECIABLE DATE OF
ACCUMULATED OF ACCUMULATED LIVES CONSTRUCTION(C)
DEPRECIATION DEPRECIATION ENCUMBRANCES (YEARS)(1) ACQUISITION(A)
------------ --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Detroit, MI............ $ 1,577,352 $ 32,182,498 $17,965,917 S/L 31.5 1998(A)
Houghton, MI........... 6,496,941 3,695,124 2,198,376 S/L 30 1980(C)
Bad Axe, MI............ 802,022 3,421,858 0 S/L 31.5 1993(A)
Gaylord, MI............ 1,837,924 7,524,153 0 S/L 31.5 1993(A)
Howell, MI............. 2,419,509 10,078,931 0 S/L 31.5 1993(A)
Mt. Pleasant, MI....... 2,066,930 10,190,792 0 S/L 31.5 1993(A)
Elyria, OH............. 2,596,055 3,448,882 0 S/L 30 1977(C)
Midvalley, UT.......... 2,710,259 81,035,669 0 S/L 31.5 1998(A)
Taylorsville, UT....... 2,531,016 75,620,071 0 S/L 31.5 1998(A)
Orem, UT............... 570,296 17,569,422 8,245,981 S/L 31.5 1998(A)
Logan, UT.............. 79,697 2,346,182 955,574 S/L 31.5 1998(A)
Salt Lake City, UT..... 106,088 3,013,742 0 S/L 31.5 1998(A)
Riverdale, UT.......... 1,703,017 56,041,298 9,978,095 S/L 31.5 1998(A)
Bemidji, MN............ 5,034,483 4,537,749 0 S/L 30 1977(C)
The Hermes Building.... 287,707 8,511,224 1,781,666 S/L 31.5 1998(A)
Ogden, UT.............. 365,402 10,984,411 0 S/L 31.5 1998(A)
Las Vegas, NV.......... 219,481 6,497,035 0 S/L 31.5 1998(A)
Rapid City, SD......... 81,388 2,313,495 539,480 S/L 31.5 1998(A)
Cape Coral, FL......... 1,515,063 5,008,500 0 S/L 30 1985(C)
Trindad, CO............ 1,229,894 1,923,113 0 S/L 30 1986(C)
Hazard, KY............. 2,360,961 1,615,490 0 S/L 30 1978(C)
Florence, KY........... 78,218 2,386,632 0 S/L 31.5 1998(A)
Birmingham, AL......... 1,985,736 17,977,556 0 S/L 31.5 1994(A)
Birmingham, AL......... 4,705,514 40,549,252 0 S/L 31.5 1995(A)
Huntsville, AL......... 394,564 3,275,689 0 S/L 31.5 1995(A)
Jacksonville, NC....... 1,042,921 6,322,678 0 S/L 31.5 1989(C)
Ormond Beach, FL....... 2,872,351 14,359,019 0 S/L 31.5 1994(A)
Alamosa, CO............ 634,810 751,162 0 S/L 30 1986(C)
Wilmington, NC......... 6,105,095 22,257,004 0 S/L 31.5 1989(C)
Berlin, VT............. 4,711,026 9,865,284 4,940,000 S/L 30 1986(C)
Brainerd, MN........... 2,662,977 11,859,690 695,000 S/L 31.5 1991(A)
Spring Hill, FL........ 2,090,316 8,018,540 5,953,433 S/L 30 1988(C)
Tiffin, OH............. 4,106,090 3,132,180 0 S/L 30 1980(C)
Toledo, OH............. 1,623,914 11,450,418 0 S/L 31.5 1995(A)
Toledo, OH............. 261,784 17,584,616 0 S/L 31.5 1997(C)
Denver, CO............. 2,864,948 54,666,875 0 S/L 31.5 1997(C)
Dickinson, ND.......... 5,375,859 2,236,456 0 S/L 30 1978(C)
West Pasco, FL......... 2,830,182 4,936,365 4,783,894 S/L 30 1986(C)
Marianna, FL........... 1,087,524 4,050,313 0 S/L 31.5 1990(C)
Hutchinson, MN......... 3,894,513 2,863,786 4,881,831 S/L 30 1981(C)
New Bern, NC........... 3,343,497 10,634,436 0 S/L 31.5 1989(C)
Highland, IN........... 2,312,820 24,633,867 0 S/L 31.5 1997(A)
</TABLE>
F-39
<PAGE> 92
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST(A)
----------------------------- ----------------------------------------------
BUILDINGS & BUILDINGS &
LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL
------------ -------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Phoenix, AZ (Deer
Valley).............. $ 7,264,481 $ 18,728,365 $ 0 $ 7,264,481 $ 18,728,365 $ 25,992,846
Princeton, NJ.......... 7,121,176 29,782,565 0 7,121,176 30,028,655 37,149,831
St. Paul, MN........... 4,467,901 18,084,446 0 4,469,511 19,407,169 23,876,680
Russellville, AR....... 624,100 13,391,122 0 624,100 13,494,276 14,118,376
N. Little Rock, AR..... 907,083 17,159,794 0 907,083 17,224,283 18,131,366
Fayetteville, AK....... 2,365,974 9,503,285 0 6,677,162 16,958,663 23,635,825
Ottumwa, IA............ 338,125 8,564,280 102,680 276,186 8,862,192 9,138,378
Washington, NC......... 990,780 3,118,121 33,690 2,250,459 12,635,230 14,885,689
Ovideo, FL............. 6,010,173 6,438,718 0 6,010,173 6,438,718 12,448,891
Orlando, FL............ 4,792,146 11,673,702 84,343 4,792,146 12,463,231 17,255,377
Durham, NC............. 2,210,222 11,671,268 277,631 2,210,222 12,685,980 14,896,202
Crystal River, FL...... 1,216,709 5,795,643 364,531 1,219,142 5,967,085 7,186,227
Bellefontaine, OH...... 997,584 3,220,998 0 997,584 3,220,998 4,218,582
Dublin, OH............. 3,609,345 11,546,009 0 3,609,345 11,661,339 15,270,684
Grove City, OH......... 2,847,868 9,132,150 0 2,847,868 9,132,150 11,980,018
Hamilton, OH........... 494,659 1,618,302 0 494,659 1,618,302 2,112,961
Gahanna, OH............ 1,028,931 3,319,584 0 1,028,931 3,319,584 4,348,515
Pataskala, OH.......... 513,731 1,679,038 0 513,731 1,679,038 2,192,769
Pickerington, OH....... 1,896,406 6,085,926 0 1,896,406 6,085,926 7,982,332
Barboursville, OH...... 431,487 1,416,640 2,466 431,487 1,419,106 1,850,593
Colombus, OH........... 11,087,204 44,493,622 0 11,865,579 47,254,763 59,120,342
Portfolio Balance
(DDR)................ 11,573,773 127,922,608 9,235,425 11,573,773 137,158,033 148,731,806
------------ -------------- ----------- ------------ -------------- --------------
$364,108,226 $1,459,650,371 $20,574,325 $370,689,348 $1,697,584,963 $2,068,274,311
============ ============== =========== ============ ============== ==============
<CAPTION>
TOTAL COST, NET DEPRECIABLE DATE OF
ACCUMULATED OF ACCUMULATED LIVES CONSTRUCTION(C)
DEPRECIATION DEPRECIATION ENCUMBRANCES (YEARS)(1) ACQUISITION(A)
------------ --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Phoenix, AZ (Deer
Valley).............. $ 309,263 $ 25,683,583 $18,000,000 S/L 31.5 1999(A)
Princeton, NJ.......... 1,664,034 35,485,797 27,450,298 S/L 31.5 1998(A)
St. Paul, MN........... 1,541,141 22,335,539 0 S/L 31.5 1997(A)
Russellville, AR....... 2,446,187 11,672,189 0 S/L 31.5 1994(A)
N. Little Rock, AR..... 3,139,095 14,992,271 0 S/L 31.5 1994(A)
Fayetteville, AK....... 822,349 22,813,476 0 S/L 31.5 1997(A)
Ottumwa, IA............ 3,061,750 6,076,628 0 S/L 31.5 1990(C)
Washington, NC......... 1,336,617 13,549,072 0 S/L 31.5 1990(C)
Ovideo, FL............. 50,347 12,398,544 0 S/L 31.5 1997(C)
Orlando, FL............ 4,240,137 13,015,240 0 S/L 31.5 1989(C)
Durham, NC............. 3,541,691 11,354,511 0 S/L 31.5 1990(C)
Crystal River, FL...... 2,670,704 4,515,523 0 S/L 30 1986(C)
Bellefontaine, OH...... 178,259 4,040,323 3,013,871 S/L 31.5 1998(A)
Dublin, OH............. 644,693 14,625,991 10,514,274 S/L 31.5 1998(A)
Grove City, OH......... 509,347 11,470,671 7,722,507 S/L 31.5 1998(A)
Hamilton, OH........... 89,215 2,023,746 0 S/L 31.5 1998(A)
Gahanna, OH............ 183,756 4,164,759 0 S/L 31.5 1998(A)
Pataskala, OH.......... 92,589 2,100,180 789,361 S/L 31.5 1998(A)
Pickerington, OH....... 337,425 7,644,907 5,159,713 S/L 31.5 1998(A)
Barboursville, OH...... 78,811 1,771,782 0 S/L 31.5 1998(A)
Colombus, OH........... 2,059,374 57,060,968 0 S/L 31.5 1998(A)
Portfolio Balance
(DDR)................ 2,289,063 146,442,743 38,063,720
------------ -------------- ------------
$249,911,824 $1,818,362,487 $216,964,781
============ ============== ============
</TABLE>
- ---------------
(1) S/L refers to straight-line depreciation.
F-40
<PAGE> 93
(A) The Aggregate Cost for Federal Income Tax purposes was approximately $2.1
billion at December 31, 1999.
The changes in Total Real Estate Assets for the three years ended December
31, 1999 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Balance, Beginning of Year.................. $1,896,763,215 $1,325,742,705 $ 991,646,960
Acquisitions................................ 78,317,980 688,431,449 267,868,208
Developments, Improvements and Expansions... 131,977,115 58,566,168 78,701,065
Changes in Land Under Development and
Construction in Progress.................. (1,168,869) 98,276,932 (3,871,141)
Sales and Retirements....................... (37,615,130) (274,254,039) (8,602,387)
-------------- -------------- --------------
Balance, End of Year........................ $2,068,274,311 $1,896,763,215 $1,325,742,705
============== ============== ==============
</TABLE>
The changes in Accumulated Depreciation and Amortization for the three
years ended December 31, 1999 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Balance, Beginning of Year.................. $ 203,097,126 $ 171,737,359 $ 142,039,284
Depreciation for Year....................... 49,997,762 42,952,125 32,208,290
Sales and Retirements....................... (3,183,064) (11,592,358) (2,510,215)
-------------- -------------- --------------
Balance, End of Year........................ $ 249,911,824 $ 203,097,126 $ 171,737,359
============== ============== ==============
</TABLE>
F-41
<PAGE> 1
EXHIBIT 4.7
----------------------------------------------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
TO
CHEMICAL BANK
Trustee
--------------------
Indenture
Dated as of May 1, 1994
--------------------
Subordinated Debt Securities
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
RECITALS..........................................................................................................1
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...........................................................1
SECTION 101. Definitions.................................................................................1
Act.............................................................................................2
Additional Amounts..............................................................................2
Affiliate.......................................................................................2
Authenticating Agent............................................................................2
Authorized Newspaper............................................................................2
Bankruptcy Law..................................................................................2
Bearer Security.................................................................................2
Board of Directors..............................................................................2
Board Resolution................................................................................2
Business Day....................................................................................2
CEDEL...........................................................................................3
Commission......................................................................................3
Common Shares...................................................................................3
Company.........................................................................................3
Company Request and Company Order...............................................................3
Conversion Event................................................................................3
Corporate Trust Office..........................................................................3
Corporation.....................................................................................3
Coupon..........................................................................................3
Defaulted Interest..............................................................................3
Dollar or $.....................................................................................3
ECU.............................................................................................3
Euroclear.......................................................................................4
European Communities............................................................................4
European Monetary System........................................................................4
Event of Default................................................................................4
Excess Proceeds.................................................................................4
Foreign Currency................................................................................4
GAAP............................................................................................4
Government Obligations..........................................................................4
Holder..........................................................................................4
Indenture.......................................................................................4
Indexed Security................................................................................5
Interest........................................................................................5
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Interest Payment Date...........................................................................5
Maturity........................................................................................5
Officers' Certificate...........................................................................5
Opinion of Counsel..............................................................................5
Original Issue Discount Security................................................................5
Outstanding.....................................................................................5
Paying Agent....................................................................................7
Person..........................................................................................7
Place of Payment................................................................................7
Predecessor Security............................................................................7
Preferred Shares................................................................................7
Redemption Date.................................................................................7
Redemption Price................................................................................7
Registered Security.............................................................................7
Regular Record Date.............................................................................7
Repayment Date..................................................................................7
Repayment Price.................................................................................7
Responsible Officer.............................................................................7
Security........................................................................................8
Security Register and Security Registrar........................................................8
Senior Indebtedness\............................................................................8
Significant Subsidiary..........................................................................8
Special Record Date.............................................................................8
Stated Maturity.................................................................................8
Subsidiary......................................................................................8
Trust Indenture Act or TIA......................................................................9
Trustee.........................................................................................9
United States...................................................................................9
United States person............................................................................9
Yield to Maturity...............................................................................9
SECTION 102. Compliance Certificates and Opinions........................................................9
SECTION 103. Form of Documents Delivered to Trustee.....................................................10
SECTION 104. Acts of Holders............................................................................10
SECTION 105. Notices, etc., to Trustee and Company......................................................12
SECTION 106. Notice to Holders; Waiver..................................................................12
SECTION 107. Effect of Headings and Table of Contents...................................................13
SECTION 108. Successors and Assigns.....................................................................13
SECTION 109. Separability Clause........................................................................13
SECTION 110. Benefits of Indenture......................................................................13
SECTION 111. Governing Law..............................................................................13
SECTION 112. Legal Holidays.............................................................................14
ARTICLE 2
SECURITIES FORMS.................................................................................................14
SECTION 201. Forms of Securities........................................................................14
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
SECTION 202. Form of Trustee's Certificate of Authentication............................................14
SECTION 203. Securities Issuable in Global Form.........................................................15
ARTICLE 3
THE SECURITIES...................................................................................................16
SECTION 301. Amount Unlimited; Issuable in Series.......................................................16
SECTION 302. Denominations..............................................................................19
SECTION 303. Execution, Authentication, Delivery and Dating.............................................19
SECTION 304. Temporary Securities.......................................................................22
SECTION 305. Registration, Registration of Transfer and Exchange........................................24
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities...........................................27
SECTION 307. Payment of Interest; Interest Rights Preserved.............................................28
SECTION 308. Persons Deemed Owners......................................................................30
SECTION 309. Cancellation...............................................................................31
SECTION 310. Computation of Interest....................................................................31
ARTICLE 4
SATISFACTION AND DISCHARGE.......................................................................................31
SECTION 401. Satisfaction and Discharge of Indenture....................................................31
SECTION 402. Application of Trust Funds.................................................................33
ARTICLE 5
REMEDIES.........................................................................................................33
SECTION 501. Events of Default..........................................................................33
SECTION 502. Acceleration of Maturity; Rescission and Annulment.........................................35
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee............................36
SECTION 504. Trustee May File Proofs of Claim...........................................................36
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or Coupons.....................37
SECTION 506. Application of Money Collected.............................................................37
SECTION 507. Limitation on Suits........................................................................38
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium, if
any, and Interest and Additional Amounts...................................................38
SECTION 509. Restoration of Rights and Remedies.........................................................39
SECTION 510. Rights and Remedies Cumulative.............................................................39
SECTION 511. Delay or Omission Not Waiver...............................................................39
SECTION 512. Control by Holders of Securities...........................................................39
SECTION 513. Waiver of Past Defaults....................................................................39
SECTION 514. Waiver of Usury, Stay or Extension Laws....................................................40
SECTION 515. Undertaking for Costs......................................................................40
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 6
THE TRUSTEE......................................................................................................40
SECTION 601. Notice of Defaults.........................................................................40
SECTION 602. Certain Rights of Trustee..................................................................41
SECTION 603. Not Responsible for Recitals or Issuance of Securities.....................................42
SECTION 604. May Hold Securities........................................................................42
SECTION 605. Money Held in Trust........................................................................42
SECTION 606. Compensation and Reimbursement.............................................................43
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting Interests.............................43
SECTION 608. Resignation and Removal; Appointment of Successor..........................................43
SECTION 609. Acceptance of Appointment by Successor.....................................................45
SECTION 610. Merger, Conversion, Consolidation or Succession to Business................................46
SECTION 611. Appointment of Authenticating Agent........................................................46
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY................................................................48
SECTION 701. Disclosure of Names and Addresses of Holders...............................................48
SECTION 702. Reports by Trustee.........................................................................48
SECTION 703. Reports by Company.........................................................................48
SECTION 704. Company to Furnish Trustee Names and Addresses of Holders..................................49
ARTICLE 8
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE.................................................................49
SECTION 801. Consolidations and Mergers of Company and Sales, Leases and
Conveyances Permitted Subject to Certain Conditions............................................49
SECTION 802. Rights and Duties of Successor Corporation.................................................49
SECTION 803. Officers' Certificate and Opinion of Counsel...............................................50
ARTICLE 9
SUPPLEMENTAL INDENTURES..........................................................................................50
SECTION 901. Supplemental Indentures Without Consent of Holders.........................................50
SECTION 902. Supplemental Indentures with Consent of Holders............................................52
SECTION 903. Execution of Supplemental Indentures.......................................................53
SECTION 904. Effect of Supplemental Indentures..........................................................53
SECTION 905. Conformity with Trust Indenture Act........................................................53
SECTION 906. Reference in Securities to Supplemental Indentures.........................................53
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 10
COVENANTS........................................................................................................53
SECTION 1001. Payment of Principal, Premium, if any, Interest and Additional Amounts....................53
SECTION 1002. Maintenance of Office or Agency...........................................................54
SECTION 1003. Money for Securities Payments to Be Held in Trust.........................................55
SECTION 1004. Statement as to Compliance................................................................57
SECTION 1005. Additional Amounts........................................................................57
ARTICLE 11
REDEMPTION OF SECURITIES.........................................................................................58
SECTION 1101. Applicability of Article..................................................................58
SECTION 1102. Election to Redeem; Notice to Trustee.....................................................58
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.........................................58
SECTION 1104. Notice of Redemption......................................................................59
SECTION 1105. Deposit of Redemption Price...............................................................60
SECTION 1106. Securities Payable on Redemption Date.....................................................60
SECTION 1107. Securities Redeemed in Part...............................................................61
SECTION 1108. Conversion Arrangement on Call for Redemption.............................................61
ARTICLE 12
SINKING FUNDS....................................................................................................62
SECTION 1201. Applicability of Article..................................................................62
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.....................................62
SECTION 1203. Redemption of Securities for Sinking Fund.................................................63
ARTICLE 13
REPAYMENT AT THE OPTION OF HOLDERS...............................................................................63
SECTION 1301. Applicability of Article..................................................................63
SECTION 1302. Repayment of Securities...................................................................63
SECTION 1303. Exercise of Option........................................................................63
SECTION 1304. When Securities Presented for Repayment Become Due and Payable............................64
SECTION 1305. Securities Repaid in Part.................................................................65
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 14
DEFEASANCE AND COVENANT DEFEASANCE...............................................................................65
SECTION 1401. Applicability of Article; Company's Option to Effect
Defeasance or Covenant Defeasance..............................................................65
SECTION 1402. Defeasance and Discharge..................................................................66
SECTION 1403. Covenant Defeasance.......................................................................66
SECTION 1404. Conditions to Defeasance or Covenant Defeasance...........................................67
ARTICLE 15
MEETINGS OF HOLDERS OF SECURITIES................................................................................69
SECTION 1501. Purposes for Which Meetings May Be Called.................................................69
SECTION 1502. Call, Notice and Place of Meetings........................................................69
SECTION 1503. Persons Entitled to Vote at Meetings......................................................70
SECTION 1504. Quorum; Action............................................................................70
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of Meetings.......................71
SECTION 1506. Counting Votes and Recording Action of Meetings...........................................72
ARTICLE 16
CONVERSION OF SECURITIES.........................................................................................72
SECTION 1601. Applicability of Article..................................................................72
SECTION 1602. Right of Holders to Convert Securities into Common Shares.................................73
SECTION 1603. Issuance of Common Shares on Conversions..................................................73
SECTION 1604. No Payment or Adjustment for Interest or Dividends........................................74
SECTION 1605. Adjustment of Conversion Price............................................................75
SECTION 1606. No Fractional Shares to be Issued.........................................................78
SECTION 1607. Preservation of Conversion Rights upon Consolidation, Merger,
Sale or Conveyance.....................................................................78
SECTION 1608. Notice to Holders of the Securities of a Series Prior to Taking
Certain Types of Action ...............................................................79
SECTION 1609. Covenants to Reserve Shares for Issuance on Conversion of Securities......................80
SECTION 1610. Compliance with Governmental Requirements.................................................80
SECTION 1611. Payment of Taxes upon Certificates for Shares Issued upon Conversion......................80
SECTION 1612. Trustee's Duties with Respect to Conversion Provisions....................................80
SECTION 1613. Conversion of Securities Into Preferred Stock.............................................81
</TABLE>
vi
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 17
SUBORDINATION OF SECURITIES......................................................................................81
SECTION 1701. Securities Subordinated to Senior Indebtedness............................................81
SECTION 1702. Subrogation...............................................................................82
SECTION 1703. Obligation of the Company Unconditional...................................................83
SECTION 1704. Payments on Securities Permitted..........................................................83
SECTION 1705. Effectuation of Subordination by Trustee..................................................83
SECTION 1706. Knowledge of Trustee......................................................................83
SECTION 1707. Trustee May Hold Senior Indebtedness......................................................84
SECTION 1708. Rights of Holders of Senior Indebtedness Not Impaired.....................................84
</TABLE>
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
EXHIBIT A - FORMS OF CERTIFICATION
vii
<PAGE> 9
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939 (the "1939
Act") and Indenture, dated as of May 1, 1994
1939 Act Section Indenture Section
Section 310(a)(1)................................... 607(a)
(a)(2)................................... 607(a)
(b)...................................... 607(b), 608
Section 312(c)...................................... 701
Section 314(a)...................................... 703
(a)(4)................................... 1006
(c)(1)................................... 102
(c)(2)................................... 102
(e)...................................... 102
Section 315(b)...................................... 601
Section 316(a) (last sentence)...................... 101 ("Outstanding")
(a)(1)(A)................................ 502, 512
(a)(1)(B)................................ 513
(b)...................................... 508
Section 317(a)(1)................................... 503
(a)(2)................................... 504
Section 318(a)...................................... 111
(c)...................................... 111
- ---------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
Attention should also be directed to Section 318(c) of the 1939 Act,
which provides that the provisions of Sections 310 to and including 317 of the
1939 Act are a part of and govern every qualified indenture, whether or not
physically contained therein.
viii
<PAGE> 10
INDENTURE, dated as of May 1, 1994, between DEVELOPERS
DIVERSIFIED REALTY CORPORATION, an Ohio corporation (hereinafter called the
"Company"), having its principal office at 34555 Chagrin Boulevard, Moreland
Hills, Ohio 44022, and CHEMICAL BANK, a corporation duly organized and existing
under the laws of the State of New York, as Trustee hereunder (hereinafter
called the "Trustee"), having its Corporate Trust Office at 450 West 33rd
Street, New York, New York 10001.
RECITALS OF THE COMPANY
The Company deems it necessary to issue from time to time for
its lawful purposes subordinated debt securities (hereinafter called the
"Securities") evidencing its unsecured and subordinated indebtedness, and has
duly authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of the Securities, unlimited as to principal amount,
to bear interest at the rates or formulas, to mature at such times and to have
such other provisions as shall be fixed as hereinafter provided.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, that are deemed to be incorporated into this
Indenture and shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the TIA,
either directly or by reference therein, have the meanings assigned to
them therein, and the terms "cash transaction" and "self-liquidating
paper", as used in TIA Section 311, shall have the meanings assigned to
them in the rules of the Commission adopted under the TIA;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
<PAGE> 11
(4) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms, used principally in Article Three, Article
Five, Article Six and Article Ten, are defined in those Articles.
"ACT", when used with respect to any Holder, has the meaning
specified in Section 104.
"ADDITIONAL AMOUNTS" means any additional amounts which are
required by a Security or by or pursuant to a Board Resolution, under
circumstances specified therein, to be paid by the Company in respect of certain
taxes imposed on certain Holders and which are owing to such Holders.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AUTHENTICATING AGENT" means any authenticating agent
appointed by the Trustee pursuant to Section 611.
"AUTHORIZED NEWSPAPER" means a newspaper, printed in the
English language or in an official language of the country of publication,
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in each place in
connection with which the term is used or in the financial community of each
such place. Whenever successive publications are required to be made in
Authorized Newspapers, the successive publications may be made in the same or in
different Authorized Newspapers in the same city meeting the foregoing
requirements and in each case on any Business Day.
"BANKRUPTCY LAW" has the meaning specified in Section 501.
"BEARER SECURITY" means any Security established pursuant to
Section 201 which is payable to bearer.
"BOARD OF DIRECTORS" means the board of directors of the
Company, the executive committee or any committee of that board duly authorized
to act hereunder.
"BOARD RESOLUTION" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS DAY", when used with respect to any Place of Payment
or any other particular location referred to in this Indenture or in the
Securities, means, unless otherwise specified with respect to any Securities
pursuant to Section 301, any day, other than a Saturday
2
<PAGE> 12
or Sunday, that is neither a legal holiday nor a day on which banking
institutions in that Place of Payment or particular location are authorized or
required by law, regulation or executive order to close.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres,
S.A., or its successor.
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after execution of this instrument such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"COMMON SHARES" means, with respect to any Person, capital
stock issued by such Person other than Preferred Shares.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"COMPANY REQUEST" and "COMPANY ORDER" mean, respectively, a
written request or order signed in the name of the Company by its Chairman of
the Board, the President or a Vice President, and by its Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, and
delivered to the Trustee.
"CONVERSION EVENT" means the cessation of use of (i) a Foreign
Currency both by the government of the country which issued such currency and
for the settlement of transactions by a central bank or other public
institutions of or within the international banking community, (ii) the ECU both
within the European Monetary System and for the settlement of transactions by
public institutions of or within the European Communities or (iii) any currency
unit (or composite currency) other than the ECU for the purposes for which it
was established.
"CORPORATE TRUST OFFICE" means the office of the Trustee at
which, at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at 450 West 33rd
Street, New York, New York 10001.
"CORPORATION" includes corporations, associations, companies
and business trusts.
"COUPON" means any interest coupon appertaining to a Bearer
Security.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DOLLAR" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States of America as at the time shall be
legal tender for the payment of public and private debts.
"ECU" means the European Currency Unit as defined and revised
from time to time by the Council of the European Communities.
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"EUROCLEAR" means Morgan Guaranty Trust Company of New York,
Brussels Office, or its successor as operator of the Euroclear System.
"EUROPEAN COMMUNITIES" means the European Economic Community,
the European Coal and Steel Community and the European Atomic Energy Community.
"EUROPEAN MONETARY SYSTEM" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the European
Communities.
"EVENT OF DEFAULT" has the meaning specified in Article Five.
"EXCESS PROCEEDS" has the meaning specified in Section 1609.
"FOREIGN CURRENCY" means any currency, currency unit or
composite currency, including, without limitation, the ECU, issued by the
government of one or more countries other than the United States of America or
by any recognized confederation or association of such governments.
"GAAP" means generally accepted accounting principles, as in
effect from time to time, as used in the United States applied on a consistent
basis.
"GOVERNMENT OBLIGATIONS" means securities which are (i) direct
obligations of the United States of America or the government which issued the
Foreign Currency in which the Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a 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.
"HOLDER" means, in the case of a Registered Security, the
Person in whose name a Security is registered in the Security Register and, in
the case of a Bearer Security, the bearer thereof and, when used with respect to
any coupon, shall mean the bearer thereof.
"INDENTURE" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms of particular series of Securities established as
contemplated by Section 301; PROVIDED, HOWEVER, that, if at any time more than
one Person is acting as Trustee under this instrument, "INDENTURE" shall mean,
with respect to any one or more series of Securities for which such Person is
Trustee, this instrument
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as originally executed or as it may from time to time be supplemented or amended
by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof and shall include the terms of the or those
particular series of Securities for which such Person is Trustee established as
contemplated by Section 301, exclusive, however, of any provisions or terms
which relate solely to other series of Securities for which such Person is
Trustee, regardless of when such terms or provisions were adopted, and exclusive
of any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become such
Trustee but to which such Person, as such Trustee, was not a party.
"INDEXED SECURITY" means a Security the terms of which provide
that the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"INTEREST", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after Maturity, shall
mean interest payable after Maturity, and, when used with respect to a Security
which provides for the payment of Additional Amounts pursuant to Section 1005,
includes such Additional Amounts.
"INTEREST PAYMENT DATE", when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
"MATURITY", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
"OFFICERS' CERTIFICATE" means a certificate signed by the
Chairman of the Board of Directors, the President or a Vice President and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who
may be counsel for the Company or who may be an employee of or other counsel for
the Company and who shall be satisfactory to the Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"OUTSTANDING", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, EXCEPT:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption or repayment at the option of the Holder money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in
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<PAGE> 15
trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such
Securities and any coupons appertaining thereto, PROVIDED that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to
the Trustee has been made;
(iii) Securities, except to the extent provided in Sections
1402 and 1403, with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article Fourteen;
(iv) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company; and
(v) Securities converted into Common Shares or Preferred
Shares in accordance with or as contemplated by this Indenture, if the
terms of such Securities provide for convertibility pursuant to Section
301;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be equal
to the Dollar equivalent, determined pursuant to Section 301 as of the date such
Security is originally issued by the Company, of the principal amount (or, in
the case of an Original Issue Discount Security, the Dollar equivalent as of
such date of original issuance of the amount determined as provided in clause
(i) above) of such Security, (iii) the principal amount of any Indexed Security
that may be counted in making such determination or calculation and that shall
be deemed outstanding for such purpose shall be equal to the principal face
amount of such Indexed Security at original issuance, unless otherwise provided
with respect to such Security pursuant to Section 301, and (iv) Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
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<PAGE> 16
"PAYING AGENT" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Securities or
coupons on behalf of the Company.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PLACE OF PAYMENT", when used with respect to the Securities
of or within any series, means the place or places where the principal of (and
premium, if any) and interest on such Securities are payable as specified as
contemplated by Sections 301 and 1002.
"PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains.
"PREFERRED SHARES" means, with respect to any Person, capital
stock issued by such Person that is entitled to a preference or priority over
any other capital stock issued by such Person upon any distribution of such
Person's assets, whether by dividend or upon liquidation.
"REDEMPTION DATE", when used with respect to any Security to
be redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"REDEMPTION PRICE", when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGISTERED SECURITY" shall mean any Security which is
registered in the Security Register.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 301, whether or not a
Business Day.
"REPAYMENT DATE" means, when used with respect to any Security
to be repaid at the option of the Holder, the date fixed for such repayment by
or pursuant to this Indenture.
"REPAYMENT PRICE" means, when used with respect to any
Security to be repaid at the option of the Holder, the price at which it is to
be repaid by or pursuant to this Indenture.
"RESPONSIBLE OFFICER", when used with respect to the Trustee,
means the chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president (whether or not designated by a number or a word
or words added before or after the title "vice president"), the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant
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<PAGE> 17
cashier, any trust officer or assistant trust officer, the controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers.
"SECURITY" has the meaning stated in the first recital of this
Indenture and, more particularly, means any Security or Securities authenticated
and delivered under this Indenture; PROVIDED, however, that, if at any time
there is more than one Person acting as Trustee under this Indenture,
"Securities" with respect to the Indenture as to which such Person is Trustee
shall have the meaning stated in the first recital of this Indenture and shall
more particularly mean Securities authenticated and delivered under this
Indenture, exclusive, however, of Securities of any series as to which such
Person is not Trustee.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the
respective meanings specified in Section 305.
"SENIOR INDEBTEDNESS" means (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) hereof expressly provides that such
indebtedness or obligation is subordinate or junior in right of payment to any
other indebtedness or obligations of the Company.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary which is a
"significant subsidiary" (as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated under the Securities Act of 1933) of the Company.
"SPECIAL RECORD DATE" for the payment of any Defaulted
Interest on the Registered Securities of or within any series means a date fixed
by the Trustee pursuant to Section 307.
"STATED MATURITY", when used with respect to any Security or
any installment of principal thereof or interest thereon, means the date
specified in such Security or a coupon representing such installment of interest
as the fixed date on which the principal of such Security or such installment of
principal or interest is due and payable, as such date may be extended pursuant
to the provisions of Section 308.
"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 the purposes of this definition,
"voting stock" means stock having voting
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<PAGE> 18
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.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act
of 1939, as amended and as in force at the date as of which this Indenture was
executed, except as provided in Section 905.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder;
PROVIDED, HOWEVER, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
"UNITED STATES" means, unless otherwise specified with respect
to any Securities pursuant to Section 301, the United States of America
(including the states and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"UNITED STATES PERSON" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source.
"YIELD TO MATURITY" means the yield to maturity, computed at
the time of issuance of a Security (or, if applicable, at the most recent
redetermination of interest on such Security) and as set forth in such Security
in accordance with generally accepted United States bond yield computation
principles.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant to
Section 1004) shall include:
(1) a statement that each individual signing such certificate
or opinion has read such condition or covenant and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such condition
or covenant has been satisfied or complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been satisfied or complied
with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion as to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 104. ACTS OF HOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders of the Outstanding Securities of
all series or one or more series, as the case may be, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agents duly appointed in writing. If Securities of
a series are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders of Securities of such series may, alternatively, be
embodied in and evidenced by the record of Holders of Securities of such series
voting in favor thereof, either in person or by proxies duly appointed in
writing, at any meeting of Holders of Securities of such series duly called and
held in accordance with the provisions of Article Fifteen, or a combination of
such instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
or record or both are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments and any such record
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments
or so voting at any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agent, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and
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<PAGE> 20
conclusive in favor of the Trustee and the Company and any agent of the Trustee
or the Company, if made in the manner provided in this Section. The record of
any meeting of Holders of Securities shall be proved in the manner provided in
Section 1506.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness
of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to
him the execution thereof. Where such execution is by a signer acting
in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The
fact and date of the execution of any such instrument or writing, or
the authority of the Person executing the same, may also be proved in
any other reasonable manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by
the Security Register.
(d) The ownership of Bearer Securities may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary,
wherever situated, if such certificate shall be deemed by the Trustee
to be satisfactory, showing that at the date therein mentioned such
Person had on deposit with such depositary, or exhibited to it, the
Bearer Securities therein described; or such facts may be proved by the
certificate or affidavit of the Person holding such Bearer Securities,
if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such
ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the
same Bearer Security is produced, or (2) such Bearer Security is
produced to the Trustee by some other Person, or (3) such Bearer
Security is surrendered in exchange for a Registered Security, or (4)
such Bearer Security is no longer Outstanding. The ownership of Bearer
Securities may also be proved in any other manner which the Trustee
deems sufficient.
(e) If the Company shall solicit from the Holders of
Registered Securities any request, demand, authorization, direction,
notice, consent, waiver or other Act, the Company may, at its option,
in or pursuant to a Board Resolution, fix in advance a record date for
the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not earlier
than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such
solicitation is completed. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or
other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of
the requisite proportion of Outstanding Securities have authorized or
agreed or consented to such request, demand, authorization, direction,
notice, consent, waiver or other Act, and for that purpose the
Outstanding
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<PAGE> 21
Securities shall be computed as of such record date; PROVIDED that no
such authorization, agreement or consent by the Holders on such record
date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven
months after the record date.
(f) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee, any Security Registrar,
any Paying Agent, any Authenticating Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such
Security.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this Indenture or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture
provides for notice of any event to Holders of Registered Securities by the
Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each such Holder affected by such event, at his address as
it appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders of Registered Securities is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders of Registered Securities or the sufficiency of any notice to
Holders of Bearer Securities given as provided herein. Any notice mailed to a
Holder in the manner herein prescribed shall be conclusively deemed to have been
received by such Holder, whether or not such Holder actually receives such
notice.
If by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause it shall be impracticable to give
such notice by mail, then such notification to Holders of Registered Securities
as shall be made with the approval of the Trustee shall constitute a sufficient
notification to such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise
specified with respect to any Securities pursuant to Section 301, where this
Indenture provides for notice to Holders of
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<PAGE> 22
Bearer Securities of any event, such notice shall be sufficiently given if
published in an Authorized Newspaper in The City of New York and in such other
city or cities as may be specified in such Securities on a Business Day, such
publication to be not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. Any such notice shall
be deemed to have been given on the date of such publication or, if published
more than once, on the date of the first such publication.
If by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause it
shall be impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as shall
be given with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. Neither the failure to give notice by
publication to any particular Holder of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of such
notice with respect to other Holders of Bearer Securities or the sufficiency of
any notice to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent
or waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE. In case any provision in
this Indenture or in any Security or coupon shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE. Nothing in this Indenture
or in the Securities or coupons, express or implied, shall give to any Person,
other than the parties hereto, any Security Registrar, any Paying Agent, any
Authenticating Agent and their successors hereunder and the Holders any benefit
or any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW. This Indenture and the Securities
and coupons shall be governed by and construed in accordance with the law of the
State of New York. This Indenture is subject to the provisions of the TIA that
are required to be part of this Indenture and shall, to the extent applicable,
be governed by such provisions.
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SECTION 112. LEGAL HOLIDAYS. In any case where any Interest
Payment Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or any
Security or coupon other than a provision in the Securities of any series which
specifically states that such provision shall apply in lieu hereof), payment of
interest or any Additional Amounts or principal (and premium, if any) need not
be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date, Redemption Date, Repayment Date or
sinking fund payment date, or at the Stated Maturity or Maturity, PROVIDED that
no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date, Repayment Date, sinking fund
payment date, Stated Maturity or Maturity, as the case may be.
ARTICLE 2
SECURITIES FORMS
SECTION 201. FORMS OF SECURITIES. The Registered Securities,
if any, of each series and the Bearer Securities, if any, of each series and
related coupons shall be in substantially the forms as shall be established in
one or more indentures supplemental hereto or approved from time to time by or
pursuant to a Board Resolution in accordance with Section 301, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Securities may be listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301,
Bearer Securities shall have interest coupons attached.
The definitive Securities and coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers executing such Securities or coupons,
as evidenced by their execution of such Securities or coupons.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Subject to Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:
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This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CHEMICAL BANK,
as Trustee
By
--------------------------------
Authorized Officer
SECTION 203. SECURITIES ISSUABLE IN GLOBAL FORM. If Securities
of or within a series are issuable in global form, as specified as contemplated
by Section 301, then, notwithstanding clause (8) of Section 301 and the
provisions of Section 302, any such Security shall represent such of the
Outstanding Securities of such series as shall be specified therein and may
provide that it shall represent the aggregate amount of Outstanding Securities
of such series from time to time endorsed thereon and that the aggregate amount
of Outstanding Securities of such series represented thereby may from time to
time be increased or decreased to reflect exchanges. Any endorsement of a
Security in global form to reflect the amount, or any increase or decrease in
the amount, of Outstanding Securities represented thereby shall be made by the
Trustee in such manner and upon instructions given by such Person or Persons as
shall be specified therein or in the Company Order to be delivered to the
Trustee pursuant to Section 303 or 304. Subject to the provisions of Section 303
and, if applicable, Section 304, the Trustee shall deliver and redeliver any
Security in permanent global form in the manner and upon instructions given by
the Person or Persons specified therein or in the applicable Company Order. If a
Company Order pursuant to Section 303 or 304 has been, or is, delivered, any
instructions by the Company with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not comply
with Section 102 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply
to any Security represented by a Security in global form if such Security was
never issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
Notwithstanding the provisions of Section 307, unless
otherwise specified as contemplated by Section 301, payment of principal of and
any premium and interest on any Security in permanent global form shall be made
to the Person or Persons specified therein.
Notwithstanding the provisions of Section 309 and except as
provided in the preceding paragraph, the Company, the Trustee and any agent of
the Company and the Trustee shall treat as the Holder of such principal amount
of Outstanding Securities represented by a permanent global Security (i) in the
case of a permanent global Security in registered form, the Holder of such
permanent global Security in registered form, or (ii) in the case of a permanent
global Security in bearer form, Euroclear or CEDEL.
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ARTICLE 3
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in one or more Board Resolutions or pursuant to authority
granted by one or more Board Resolutions and, subject to Section 303, set forth,
or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series, any or all of the following, as applicable (each of
which (except for the matters set forth in clauses (1), (2) and (15) below), if
so provided, may be determined from time to time by the Company with respect to
unissued Securities of the series when issued from time to time):
(1) the title of the Securities of the series (which shall
distinguish the Securities of such series from all other series of
Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906, 1107
or 1305);
(3) the date or dates, or the method by which such date or
dates will be determined or extended, on which the principal of the
Securities of the series shall be payable;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which such interest shall
accrue or the method by which such date or dates shall be determined,
the Interest Payment Dates on which such interest will be payable and
the Regular Record Date, if any, for the interest payable on any
Registered Security on any Interest Payment Date, or the method by
which such date shall be determined, and the basis upon which interest
shall be calculated if other than that of a 360-day year of twelve
30-day months;
(5) the place or places, if any, other than or in addition to
the Borough of Manhattan, The City of New York, where the principal of
(and premium, if any), interest, if any, on, and Additional Amounts, if
any, payable in respect of, Securities of the series shall be payable,
any Registered Securities of the series may be surrendered for
registration of transfer, Securities of the series may be surrendered
for transfer, exchange or conversion and notices or demands to or upon
the Company in respect of the Securities of the series and this
Indenture may be served;
(6) the period or periods within which, the price or prices at
which, the currency or currencies, currency unit or units or composite
currency or currencies in which, and other terms and conditions upon
which Securities of the series may be
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redeemed, in whole or in part, at the option of the Company, if the
Company is to have the option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the
period or periods within which or the date or dates on which, the price
or prices at which, the currency or currencies, currency unit or units
or composite currency or currencies in which, and other terms and
conditions upon which Securities of the series shall be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Registered Securities
of the series shall be issuable and, if other than the denomination of
$5,000, the denomination or denominations in which any Bearer
Securities of the series shall be issuable;
(9) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(10) if other than the principal amount thereof, the portion
of the principal amount of Securities of the series that shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502 or, if applicable, the portion of the principal
amount of Securities of the series that is convertible in accordance
with the provisions of this Indenture or the method by which such
portion shall be determined;
(11) if other than Dollars, the Foreign Currency or Foreign
Currencies in which payment of the principal of (and premium, if any)
or interest or Additional Amounts, if any, on the Securities of the
series shall be payable or in which the Securities of the series shall
be denominated;
(12) whether the amount of payments of principal of (and
premium, if any) or interest, if any, on the Securities of the series
may be determined with reference to an index, formula or other method
(which index, formula or method may be based, without limitation, on
one or more currencies, currency units, composite currencies,
commodities, equity indices or other indices), and the manner in which
such amounts shall be determined;
(13) whether the principal of (and premium, if any) or
interest or Additional Amounts, if any, on the Securities of the series
are to be payable, at the election of the Company or a Holder thereof,
in a currency or currencies, currency unit or units or composite
currency or currencies other than that in which such Securities are
denominated or stated to be payable, the period or periods within
which, and the terms and conditions upon which, such election may be
made, and the time and manner of, and the identity of the exchange rate
agent with responsibility for, determining the exchange rate between
the currency or currencies, currency unit or units or composite
currency or currencies in which such Securities are denominated or
stated to be payable and the
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currency or currencies, currency unit or units or composite currency or
currencies in which such Securities are to be so payable;
(14) provisions, if any, granting special rights to the
Holders of Securities of the series upon the occurrence of such events
as may be specified;
(15) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect to
Securities of the series, whether or not such Events of Default or
covenants are consistent with the Events of Default or covenants set
forth herein;
(16) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or
both, any restrictions applicable to the offer, sale or delivery of
Bearer Securities and the terms upon which Bearer Securities of the
series may be exchanged for Registered Securities of the series and
vice versa (if permitted by applicable laws and regulations), whether
any Securities of the series are to be issuable initially in temporary
global form and whether any Securities of the series are to be issuable
in permanent global form with or without coupons and, if so, whether
beneficial owners of interests in any such permanent global Security
may exchange such interests for Securities of such series and of like
tenor of any authorized form and denomination and the circumstances
under which any such exchanges may occur, if other than in the manner
provided in Section 305, and, if Registered Securities of the series
are to be issuable as a global Security, the identity of the depositary
for such series;
(17) the date as of which any Bearer Securities of the series
and any temporary global Security representing Outstanding Securities
of the series shall be dated if other than the date of original
issuance of the first Security of the series to be issued;
(18) the Person to whom any interest on any Registered
Security of the series shall be payable, if other than the Person in
whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, the manner in which, or the Person to whom, any interest on
any Bearer Security of the series shall be payable, if otherwise than
upon presentation and surrender of the coupons appertaining thereto as
they severally mature, and the extent to which, or the manner in which,
any interest payable on a temporary global Security on an Interest
Payment Date will be paid if other than in the manner provided in
Section 304;
(19) the applicability, if any, of Sections 1402 and/or 1403
to the Securities of the series and any provisions in modification of,
in addition to or in lieu of any of the provisions of Article Fourteen;
(20) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
then the form and/or terms of such certificates, documents or
conditions;
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(21) if the Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Securities to
be authenticated and delivered;
(22) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1005 on the Securities of
the series to any Holder who is not a United States person (including
any modification to the definition of such term) in respect of any tax,
assessment or governmental charge and, if so, whether the Company will
have the option to redeem such Securities rather than pay such
Additional Amounts (and the terms of any such option);
(23) the obligation, if any, of the Company to permit the
conversion of the Securities of such series into the Company's Common
Shares or Preferred Shares, (and the class thereof), as the case may
be, and the terms and conditions upon which such conversion shall be
effected (including, without limitation, the initial conversion price
or rate, the conversion period, any adjustment of the applicable
conversion price, and any requirements relative to reservation of
shares for purposes of conversion; and
(24) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and the coupons appertaining
to any Bearer Securities of such series shall be substantially identical except,
in the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in any such
indenture supplemental hereto. All Securities of any one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the Holders, for issuances of additional
Securities of such series.
If any of the terms of the Securities of any series are
established by action taken pursuant to one or more Board Resolutions, a copy of
an appropriate record of such action(s) shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Officers' Certificate setting forth the terms of the
Securities of such series.
SECTION 302. DENOMINATIONS. The Securities of each series
shall be issuable in such denominations as shall be specified as contemplated by
Section 301. With respect to Securities of any series denominated in Dollars, in
the absence of any such provisions with respect to the Securities of any series,
the Registered Securities of such series, other than Registered Securities
issued in global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than Bearer Securities issued in global form
(which may be of any denomination), shall be issuable in denominations of
$5,000.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities and any coupons appertaining thereto shall be executed on behalf
of the Company by its Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal
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reproduced thereon, and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities and
coupons may be manual or facsimile signatures of the present or any future such
authorized officer and may be imprinted or otherwise reproduced on the
Securities.
Securities or coupons bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities
or coupons.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series,
together with any coupon appertaining thereto, executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities; PROVIDED, HOWEVER, that,
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and PROVIDED FURTHER
that, unless otherwise specified with respect to any series of Securities
pursuant to Section 301, a Bearer Security may be delivered in connection with
its original issuance only if the Person entitled to receive such Bearer
Security shall have furnished a certificate to Euroclear or CEDEL, as the case
may be, in the form set forth in Exhibit A-1 to this Indenture or such other
certificate as may be specified with respect to any series of Securities
pursuant to Section 301, dated no earlier than 15 days prior to the earlier of
the date on which such Bearer Security is delivered and the date on which any
temporary Security first becomes exchangeable for such Bearer Security in
accordance with the terms of such temporary Security and this Indenture. If any
Security shall be represented by a permanent global Bearer Security, then, for
purposes of this Section and Section 304, the notation of a beneficial owner's
interest therein upon original issuance of such Security or upon exchange of a
portion of a temporary global Security shall be deemed to be delivery in
connection with its original issuance of such beneficial owner's interest in
such permanent global Security. Except as permitted by Section 306, the Trustee
shall not authenticate and deliver any Bearer Security unless all appurtenant
coupons for interest then matured have been detached and cancelled.
If all the Securities of any series are not to be issued at
one time and if the Board Resolution or supplemental indenture establishing such
series shall so permit, such Company Order may set forth procedures acceptable
to the Trustee for the issuance of such Securities and determining the terms of
particular Securities of such series, such as interest rate or formula, maturity
date, date of issuance and date from which interest shall accrue. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to TIA Section 315(a) through 315(d)) shall be
fully protected in relying upon,
(i) an Opinion of Counsel stating that
(a) the form or forms of such Securities and any
coupons have been established in conformity with the
provisions of this Indenture;
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(b) the terms of such Securities and any coupons have
been established in conformity with the provisions of this
Indenture; and
(c) such Securities, together with any coupons
appertaining thereto, when completed by appropriate insertions
and executed and delivered by the Company to the Trustee for
authentication in accordance with this Indenture,
authenticated and delivered by the Trustee in accordance with
this Indenture and issued by the Company in the manner and
subject to any conditions specified in such Opinion of
Counsel, will constitute legal, valid and binding obligations
of the Company, enforceable in accordance with their terms,
except as limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
affecting the enforcement of creditors' rights generally and
general equitable principles; and
(ii) an Officers' Certificate stating that all conditions
precedent provided for in this Indenture relating to the issuance of
the Securities have been complied with and that, to the best of the
knowledge of the signers of such certificate, that no Event of Default
with respect to any of the Securities shall have occurred and be
continuing.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties,
obligations or immunities under the Securities and this Indenture or otherwise
in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Officers' Certificate
otherwise required pursuant to Section 301 or a Company Order, or an Opinion of
Counsel or an Officers' Certificate otherwise required pursuant to the preceding
paragraph at the time of issuance of each Security of such series, but such
order, opinion and certificates, with appropriate modifications to cover such
future issuances, shall be delivered at or before the time of issuance of the
first Security of such series.
Each Registered Security shall be dated the date of its
authentication and each Bearer Security shall be dated as of the date specified
as contemplated by Section 301.
No Security or coupon shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Security or Security to which such coupon appertains a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of an authorized officer, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 310 together with a written statement (which
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Company, for all
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purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES. (a) Pending the preparation
of definitive Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary Securities
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued, in registered form, or,
if authorized, in bearer form with one or more coupons or without coupons, and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as conclusively
evidenced by their execution of such Securities. In the case of Securities of
any series, such temporary Securities may be in global form.
Except in the case of temporary Securities in global form
(which shall be exchanged in accordance with Section 304(b) or as otherwise
provided in or pursuant to a Board Resolution), if temporary Securities of any
series are issued, the Company will cause definitive Securities of that series
to be prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company in a
Place of Payment for that series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities of any series
(accompanied by any non-matured coupons appertaining thereto), the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Securities of the same series of authorized
denominations; PROVIDED, HOWEVER, that no definitive Bearer Security shall be
delivered in exchange for a temporary Registered Security; and PROVIDED FURTHER
that a definitive Bearer Security shall be delivered in exchange for a temporary
Bearer Security only in compliance with the conditions set forth in Section 303.
Until so exchanged, the temporary Securities of any series shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities
of such series.
(b) Unless otherwise provided in or pursuant to a Board
Resolution, this Section 304(b) shall govern the exchange of temporary
Securities issued in global form other than through the facilities of The
Depositary Trust Company. If any such temporary Securities of any series are
issued in global form, then such temporary global Security shall, unless
otherwise provided therein, be delivered to the London office of a depositary or
common depositary (the "Common Depositary"), for the benefit of Euroclear and
CEDEL, for credit to the respective accounts of the beneficial owners of such
Securities (or to such other accounts as they may direct).
Without unnecessary delay but in any event not later than the
date specified in, or determined pursuant to the terms of, any such temporary
global Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Company. On or after
the Exchange Date, such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge, and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary global Security, an
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<PAGE> 32
equal aggregate principal amount of definitive Securities of the same series of
authorized denominations and of like tenor as the portion of such temporary
global Security to be exchanged. The definitive Securities to be delivered in
exchange for any such temporary global Security shall be in bearer form,
registered form, permanent global bearer form or permanent global registered
form, or any combination thereof, as specified as contemplated by Section 301,
and, if any combination thereof is so specified, as requested by the beneficial
owner thereof; PROVIDED, HOWEVER, that, unless otherwise specified in such
temporary global Security, upon such presentation by the Common Depositary, such
temporary global Security is accompanied by a certificate dated the Exchange
Date or a subsequent date and signed by Euroclear as to the portion of such
temporary global Security held for its account then to be exchanged and a
certificate dated the Exchange Date or a subsequent date and signed by CEDEL as
to the portion of such temporary global Security held for its account then to be
exchanged, each in the form set forth in Exhibit A-2 to this Indenture or in
such other form as may be established pursuant to Section 301; and PROVIDED
FURTHER that definitive Bearer Securities shall be delivered in exchange for a
portion of a temporary global Security only in compliance with the requirements
of Section 303.
Unless otherwise specified in such temporary global Security,
the interest of a beneficial owner of Securities of a series in a temporary
global Security shall be exchanged for definitive Securities of the same series
and of like tenor following the Exchange Date when the account holder instructs
Euroclear or CEDEL, as the case may be, to request such exchange on his behalf
and delivers to Euroclear or CEDEL, as the case may be, a certificate in the
form set forth in Exhibit A-1 to this Indenture (or in such other form as may be
established pursuant to Section 301), dated no earlier than 15 days prior to the
Exchange Date, copies of which certificate shall be available from the offices
of Euroclear and CEDEL, the Trustee, any Authenticating Agent appointed for such
series of Securities and each Paying Agent. Unless otherwise specified in such
temporary global Security, any such exchange shall be made free of charge to the
beneficial owners of such temporary global Security, except that a Person
receiving definitive Securities must bear the cost of insurance, postage,
transportation and the like unless such Person takes delivery of such definitive
Securities in person at the offices of Euroclear or CEDEL. Definitive Securities
in bearer form to be delivered in exchange for any portion of a temporary global
Security shall be delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary global
Security on an Interest Payment Date for Securities of such series occurring
prior to the applicable Exchange Date shall be payable to Euroclear and CEDEL on
such Interest Payment Date upon delivery by Euroclear and CEDEL to the Trustee
of a certificate or certificates in the form set forth in Exhibit A-2 to this
Indenture (or in such other forms as may be established pursuant to Section
301), for credit without further interest on or after such Interest Payment Date
to the respective accounts of Persons who are the beneficial owners of such
temporary global Security on such Interest Payment Date and who have each
delivered to Euroclear or CEDEL, as the case may be, a certificate dated no
earlier than 15 days prior to the Interest Payment Date occurring prior to such
Exchange Date in the form set forth as Exhibit A-1 to this Indenture (or in such
other forms as may be established pursuant to Section 301). Notwith-
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standing anything to the contrary herein contained, the certifications made
pursuant to this paragraph shall satisfy the certification requirements of the
preceding two paragraphs of this Section 304(b) and of the third paragraph of
Section 303 of this Indenture and the interests of the Persons who are the
beneficial owners of the temporary global Security with respect to which such
certification was made will be exchanged for definitive Securities of the same
series and of like tenor on the Exchange Date or the date of certification if
such date occurs after the Exchange Date, without further act or deed by such
beneficial owners. Except as otherwise provided in this paragraph, no payments
of principal or interest owing with respect to a beneficial interest in a
temporary global Security will be made unless and until such interest in such
temporary global Security shall have been exchanged for an interest in a
definitive Security. Any interest so received by Euroclear and CEDEL and not
paid as herein provided shall be returned, prior to the expiration of two years
after such Interest Payment Date, (i) to the Trustee, in order to be repaid to
the Company, if originally paid by the Trustee, and (ii) to the Company, if
originally paid by the Company. The Trustee shall be under no duty to make any
inquiry of either Euroclear or CEDEL as to whether any such interests remains
unpaid.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND
EXCHANGE. The Company shall cause to be kept at the Corporate Trust Office of
the Trustee or in any office or agency of the Company in a Place of Payment a
register for each series of Securities (the registers maintained in such office
or in any such office or agency of the Company in a Place of Payment being
herein sometimes referred to collectively as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Registered Securities and of transfers of
Registered Securities. The Security Register shall be in written form or any
other form capable of being converted into written form within a reasonable
time. The Trustee, at its Corporate Trust Office, is hereby initially appointed
"Security Registrar" for the purpose of registering Registered Securities and
transfers of Registered Securities on such Security Register as herein provided.
In the event that the Trustee shall cease to be Security Registrar, it shall
have the right to examine the Security Register at all reasonable times.
Subject to the provisions of this Section 305, upon surrender
for registration of transfer of any Registered Security of any series at any
office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Registered
Securities of the same series, of any authorized denominations and of a like
aggregate principal amount, bearing a number not contemporaneously outstanding,
and containing identical terms and provisions.
Subject to the provisions of this Section 305, at the option
of the Holder, Registered Securities of any series may be exchanged for other
Registered Securities of the same series, of any authorized denomination or
denominations and of a like aggregate principal amount, containing identical
terms and provisions, upon surrender of the Registered Securities to be
exchanged at any such office or agency. Whenever any such Registered Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Registered Securities which the Holder
making the exchange is entitled to receive. Unless otherwise specified with
respect to any series of Securities as contemplated by Section 301, Bearer
Securities may not be issued in exchange for Registered Securities.
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If (but only if) permitted by the applicable Board Resolution
and (subject to Section 303) set forth in the applicable Officers' Certificate,
or in any indenture supplemental hereto, delivered as contemplated by Section
301, at the option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the Bearer Securities to be exchanged at any such office or agency, with all
unmatured coupons and all matured coupons in default thereto appertaining. If
the Holder of a Bearer Security is unable to produce any such unmatured coupon
or coupons or matured coupon or coupons in default, any such permitted exchange
may be effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company in an amount equal to the face amount of such missing
coupon or coupons, or the surrender of such missing coupon or coupons may be
waived by the Company and the Trustee if there is furnished to them such
security or indemnity as they may require to save each of them and any Paying
Agent harmless. If thereafter the Holder of such Security shall surrender to any
Paying Agent any such missing coupon in respect of which such a payment shall
have been made, such Holder shall be entitled to receive the portion of such
payment equal to the face amount of such surrendered coupon; PROVIDED, HOWEVER,
that, except as otherwise provided in Section 1002, interest represented by
coupons shall be payable only upon presentation and surrender of those coupons
at an office or agency located outside the United States. Notwithstanding the
foregoing, in case a Bearer Security of any series is surrendered at any such
office or agency in a permitted exchange for a Registered Security of the same
series and like tenor after the close of business at such office or agency on
(i) any Regular Record Date and before the opening of business at such office or
agency on the relevant Interest Payment Date, or (ii) any Special Record Date
and before the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such Interest Payment Date or
proposed date for payment, as the case may be, and interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such coupon when due in accordance with the provisions of this
Indenture.
Notwithstanding the foregoing, except as otherwise specified
as contemplated by Section 301, any permanent global Security shall be
exchangeable only as provided in this paragraph. If the depositary for any
permanent global Security is the Depository Trust Company ("DTC"), then, unless
the terms of such global Security expressly permit such global Security to be
exchanged in whole or in part for definitive Securities, a global Security may
be transferred, in whole but not in part, only to a nominee of DTC, or by a
nominee of DTC to DTC, or to a successor to DTC for such global Security
selected or approved by the Company or to a nominee of such successor to DTC. If
at any time DTC notifies the Company that it is unwilling or unable to continue
as depositary for the applicable global Security or Securities or if at any time
DTC ceases to be a clearing agency registered under the Securities Exchange Act
of 1934 if so required by applicable law or regulation, the Company shall
appoint a successor depositary with respect to such global Security or
Securities. If (x) a successor depositary for such global Security or Securities
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such unwillingness, inability or ineligibility, (y)
an Event of Default has occurred and is continuing and the beneficial owners
representing a majority in principal amount of the applicable series of
Securities represented by such global
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Security or Securities advise DTC to cease acting as depository for such global
Security or Securities, or (z) the Company, in its sole discretion, determines
at any time that all Outstanding Securities (but not less than all) of any
series issued or issuable in the form of one or more global Securities shall no
longer be represented by such global Security or Securities, then the Company
shall execute, and the Trustee shall authenticate and deliver, definitive
Securities of like series, rank, tenor and terms in definitive form in an
aggregate principal amount equal to the principal amount of such global Security
or Securities. If any beneficial owner of an interest in a permanent global
Security is otherwise entitled to exchange such interest for Securities of such
series and of like tenor and principal amount of another authorized form and
denomination, as specified as contemplated by Section 301 and provided that any
applicable notice provided in the permanent global Security shall have been
given, then without unnecessary delay but in any event not later than the
earliest date on which such interest may be so exchanged, the Company shall
execute, and the Trustee shall authenticate and deliver, definitive Securities
in aggregate principal amount equal to the principal amount of such beneficial
owner's interest in such permanent global Security. On or after the earliest
date on which such interests may be so exchanged, such permanent global Security
shall be surrendered for exchange by DTC or such other depositary as shall be
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose; PROVIDED, HOWEVER, that no such exchanges may
occur during a period beginning at the opening of business 15 days before any
selection of Securities to be redeemed and ending on the relevant Redemption
Date if the Security for which exchange is requested may be among those selected
for redemption; and PROVIDED FURTHER that no Bearer Security delivered in
exchange for a portion of a permanent global Security shall be mailed or
otherwise delivered to any location in the United States. If a Registered
Security is issued in exchange for any portion of a permanent global Security
after the close of business at the office or agency where such exchange occurs
on (i) any Regular Record Date and before the opening of business at such office
or agency on the relevant Interest Payment Date, or (ii) any Special Record Date
and the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, interest or Defaulted Interest, as the
case may be, will not be payable on such Interest Payment Date or proposed date
for payment, as the case may be, in respect of such Registered Security, but
will be payable on such Interest Payment Date or proposed date for payment, as
the case may be, only to the Person to whom interest in respect of such portion
of such permanent global Security is payable in accordance with the provisions
of this Indenture.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange or redemption shall (if so required by
the Company or the Security Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company may require
payment of a sum sufficient to cover any
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tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 304, 906, 1107 or 1305 not involving any transfer.
The Company or the Trustee, as applicable, shall not be
required (i) to issue, register the transfer of or exchange any Security if such
Security may be among those selected for redemption during a period beginning at
the opening of business 15 days before selection of the Securities to be
redeemed under Section 1103 and ending at the close of business on (A) if such
Securities are issuable only as Registered Securities, the day of the mailing of
the relevant notice of redemption and (B) if such Securities are issuable as
Bearer Securities, the day of the first publication of the relevant notice of
redemption or, if such Securities are also issuable as Registered Securities and
there is no publication, the mailing of the relevant notice of redemption, or
(ii) to register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except, in the case of any Registered
Security to be redeemed in part, the portion thereof not to be redeemed, or
(iii) to exchange any Bearer Security so selected for redemption except that
such a Bearer Security may be exchanged for a Registered Security of that series
and like tenor, PROVIDED that such Registered Security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Security not to be so repaid.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any mutilated
Security or a Security with a mutilated coupon appertaining to it is surrendered
to the Trustee or the Company, together with, in proper cases, such security or
indemnity as may be required by the Company or the Trustee to save each of them
or any agent of either of them harmless, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security of
the same series and principal amount, containing identical terms and provisions
and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security.
If there shall be delivered to the Company and to the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security or coupon, and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security or coupon has
been acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security or in exchange for the Security to which a
destroyed, lost or stolen coupon appertains (with all appurtenant coupons not
destroyed, lost or stolen), a new Security of the same series and principal
amount, containing identical terms and provisions and bearing a number not
contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen coupon appertains.
Notwithstanding the provisions of the previous two paragraphs,
in case any such mutilated, destroyed, lost or stolen Security or coupon has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, with coupons corresponding to the coupons, if
any, appertaining to such destroyed, lost or stolen Security or to
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the Security to which such destroyed, lost or stolen coupon appertains, pay such
Security or coupon; PROVIDED, HOWEVER, that payment of principal of (and
premium, if any), any interest on and any Additional Amounts with respect to,
Bearer Securities shall, except as otherwise provided in Section 1002, be
payable only at an office or agency located outside the United States and,
unless otherwise specified as contemplated by Section 301, any interest on
Bearer Securities shall be payable only upon presentation and surrender of the
coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series with its coupons, if any,
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
and its coupons, if any, or the destroyed, lost or stolen coupon shall be at any
time enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of that
series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities or
coupons.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301 or as provided in Article XVI with
respect to Securities convertible into Common Shares or Preferred Shares,
interest on any Registered Security that is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest at the
office or agency of the Company maintained for such purpose pursuant to Section
1002; PROVIDED, HOWEVER, that each installment of interest on any Registered
Security may at the Company's option be paid by (i) mailing a check for such
interest, payable to or upon the written order of the Person entitled thereto
pursuant to Section 308, to the address of such Person as it appears on the
Security Register or (ii) transfer to an account maintained by the payee located
inside the United States.
Unless otherwise provided as contemplated by Section 301 with
respect to the Securities of any series, payment of interest may be made, in the
case of a Bearer Security, by transfer to an account maintained by the payee
with a bank located outside the United States.
Unless otherwise provided as contemplated by Section 301,
every permanent global Security will provide that interest, if any, payable on
any Interest Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the
case may be, with respect to that portion of such permanent global Security held
for its account by Cede & Co. or the Common Depositary, as the
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case may be, for the purpose of permitting such party to credit the interest
received by it in respect of such permanent global Security to the accounts of
the beneficial owners thereof.
In case a Bearer Security of any series is surrendered in
exchange for a Registered Security of such series after the close of business
(at an office or agency in a Place of Payment for such series) on any Regular
Record Date and before the opening of business (at such office or agency) on the
next succeeding Interest Payment Date, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date and interest will not
be payable on such Interest Payment Date in respect of the Registered Security
issued in exchange for such Bearer Security, but will be payable only to the
Holder of such coupon when due in accordance with the provisions of this
Indenture.
Except as otherwise specified with respect to a series of
Securities in accordance with the provisions of Section 301, any interest on any
Registered Security of any series that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder thereof
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of
such series (or their respective Predecessor Securities) are registered
at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Registered Security of
such series and the date of the proposed payment (which shall not be
less than 20 days after such notice is received by the Trustee), and at
the same time the Company shall deposit with the Trustee an amount of
money in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for
the Securities of such series) equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior
to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder of Registered Securities of such series at his address as it
appears in the Security Register not less than 10 days prior to such
Special Record Date. The Trustee may, in its discretion, in the name
and at the expense of the Company, cause a similar notice to be
published at least once in an Authorized Newspaper in each Place of
Payment, but such publications shall not be a condition precedent to
the establishment of such Special Record Date. Notice of the
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proposed payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest shall
be paid to the Persons in whose names the Registered Securities of such
series (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer
be payable pursuant to the following clause (2). In case a Bearer
Security of any series is surrendered at the office or agency in a
Place of Payment for such series in exchange for a Registered Security
of such series after the close of business at such office or agency on
any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of Defaulted
Interest, such Bearer Security shall be surrendered without the coupon
relating to such proposed date of payment and Defaulted Interest will
not be payable on such proposed date of payment in respect of the
Registered Security issued in exchange for such Bearer Security, but
will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on
the Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment
of a Registered Security for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name
such Registered Security is registered as the owner of such Security for the
purpose of receiving payment of principal of (and premium, if any), and (subject
to Sections 305 and 307) interest on, such Registered Security and for all other
purposes whatsoever, whether or not such Registered Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
Title to any Bearer Security and any coupons appertaining
thereto shall pass by delivery. The Company, the Trustee and any agent of the
Company or the Trustee may treat the Holder of any Bearer Security and the
Holder of any coupon as the absolute owner of such Security or coupon for the
purpose of receiving payment thereof or on account thereof and for all other
purposes whatsoever, whether or not such Security or coupon be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or liability for any aspect of
the records relating to or payments
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made on account of beneficial ownership interests of a Security in global form
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global
Security, nothing herein shall prevent the Company, the Trustee, or any agent of
the Company or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by any depositary, as a Holder, with
respect to such global Security or impair, as between such depositary and owners
of beneficial interests in such global Security, the operation of customary
practices governing the exercise of the rights of such depositary (or its
nominee) as Holder of such global Security.
SECTION 309. CANCELLATION. All Securities and coupons
surrendered for payment, redemption, repayment at the option of the Holder,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee, and any such Securities and coupons surrendered directly to the
Trustee for any such purpose shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly cancelled by the Trustee. If the
Company shall so acquire any of the Securities, however, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Securities unless and until the same are surrendered to the Trustee for
cancellation. No Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. Cancelled Securities and coupons held by the
Trustee shall be destroyed by the Trustee and the Trustee shall deliver a
certificate of such destruction to the Company, unless by a Company Order the
Company directs their return to it.
SECTION 310. COMPUTATION OF INTEREST. Except as otherwise
specified as contemplated by Section 301 with respect to Securities of any
series, interest on the Securities of each series shall be computed on the basis
of a 360-day year consisting of twelve 30-day months.
ARTICLE 4
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall upon Company Request cease to be of further effect with respect
to any series of Securities specified in such Company Request (except as to any
surviving rights of registration of transfer or exchange of Securities of such
series herein expressly provided for and any right to receive Additional
Amounts, as provided in Section 1005), and the Trustee, upon receipt of a
Company Order, and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture as to
such series when
(1) either
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(A) all Securities of such series theretofore
authenticated and delivered and all coupons, if any,
appertaining thereto (other than (i) coupons appertaining to
Bearer Securities surrendered for exchange for Registered
Securities and maturing after such exchange, whose surrender
is not required or has been waived as provided in Section 305,
(ii) Securities and coupons of such series which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 306, (iii) coupons appertaining to
Securities called for redemption and maturing after the
relevant Redemption Date, whose surrender has been waived as
provided in Section 1106, and (iv) Securities and coupons of
such series for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all Securities of such series and, in the case of
(i) or (ii) below, any coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount in
the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of
such series are payable, sufficient to pay and discharge the
entire indebtedness on such Securities and such coupons not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest, and any
Additional Amounts with respect thereto, to the date of such
deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee and any predecessor
Trustee under Section 606, the obligations of the Company to any Authenticating
Agent under Section 611 and, if money shall have been
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deposited with and held by the Trustee pursuant to subclause (B) of clause (1)
of this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST FUNDS. Subject to the
provisions of the last paragraph of Section 1003, all money deposited with the
Trustee pursuant to Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities, the coupons and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any), and any interest and Additional Amounts for whose payment such money has
been deposited with or received by the Trustee, but such money need not be
segregated from other funds except to the extent required by law.
ARTICLE 5
REMEDIES
SECTION 501. EVENTS OF DEFAULT. "Event of Default", wherever
used herein with respect to any particular series of Securities, means any one
of the following events (whatever the reason for such Event of Default and
whether or not it shall be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon or any
Additional Amounts payable in respect of any Security of that series or
of any coupon appertaining thereto, when such interest, Additional
Amounts or coupon becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series when it becomes due and payable at
its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of any Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture with respect to any Security
of that series (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
60 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding
Securities of that series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(5) if any event of default under any bond, debenture, note or
other evidence of indebtedness of the Company (including an event of
default with respect to any other series of Securities), or under any
mortgage, indenture or other instrument of the
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Company under which there may be issued or by which there may be
secured or evidenced any indebtedness of the Company (or by any
Subsidiary, the repayment of which the Company has guaranteed or for
which the Company is directly responsible or liable as obligor or
guarantor), whether such indebtedness now exists or shall hereafter be
created, shall happen and shall result in an aggregate principal amount
exceeding $10,000,000 becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable,
without such indebtedness having been discharged, or such acceleration
having been waived, rescinded or annulled, within a period of 10 days
after there shall have been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 10% in principal amount of the Outstanding
Securities of that series a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or
cause such acceleration to be rescinded or annulled and stating that
such notice is a "Notice of Default" hereunder. Subject to the
provisions of Section 601, the Trustee shall not be deemed to have
knowledge of such default unless either (A) a Responsible Officer of
the Trustee shall have actual knowledge of such default or (B) the
Trustee shall have received written notice thereof from the Company,
from any Holder, from the holder of any such indebtedness or from the
trustee under any such mortgage, indenture or other instrument; or
(6) the Company or any Significant Subsidiary of the Company
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary of the Company in an involuntary case,
(B) appoints a Custodian of the Company or any
Significant Subsidiary of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company or any
Significant Subsidiary of the Company,
and the order or decree remains unstayed and in effect for 90 days; or
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(8) any other Event of Default provided with respect to
Securities of that series.
As used in this Section 501, the term "Bankruptcy Law" means title 11, U.S. Code
or any similar Federal or State law for the relief of debtors and the term
"Custodian" means any receiver, trustee, assignee, liquidator or other similar
official under any Bankruptcy Law.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. If an Event of Default with respect to Securities of any series at
the time Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal (or, if any
Securities are Original Issue Discount Securities or Indexed Securities, such
portion of the principal as may be specified in the terms thereof) of all the
Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal or specified portion thereof shall become
immediately due and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in principal
amount of the Outstanding Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay in the currency, currency unit or composite currency
in which the Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such series):
(A) all overdue installments of interest on and any
Additional Amounts payable in respect of all Outstanding
Securities of that series and any related coupons,
(B) the principal of (and premium, if any, on) any
Outstanding Securities of that series which have become due
otherwise than by such declaration of acceleration and
interest thereon at the rate or rates borne by or provided for
in such Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest and any
Additional Amounts at the rate or rates borne by or provided
for in such Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the nonpayment of the principal of (or premium, if any) or interest
on Securities of that series
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which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. The Company covenants that if:
(1) default is made in the payment of any installment of
interest or Additional Amounts, if any, on any Security of any series
and any related coupon when such interest or Additional Amount becomes
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security of any series at its Maturity,
then the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities of such series and coupons, the whole
amount then due and payable on such Securities and coupons for principal (and
premium, if any) and interest and Additional Amounts, with interest upon any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installments of interest
or Additional Amounts, if any, at the rate or rates borne by or provided for in
such Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
of such series and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon such Securities of such series, wherever situated.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series and any related coupons by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities of any series
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall
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have made any demand on the Company for the payment of overdue principal,
premium, if any, or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Securities of such series,
of principal (and premium, if any) and interest and Additional Amounts,
if any, owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder of Securities of such series and coupons to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee and any predecessor Trustee, their agents and counsel, and any other
amounts due the Trustee or any predecessor Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder of
a Security or coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or coupon in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES OR COUPONS. All rights of action and claims under this Indenture or
any of the Securities or coupons may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or coupons or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities and coupons in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED. Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest and any Additional Amounts, upon presentation of the Securities or
coupons, or both, as the case may be, and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
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SECOND: To the payment of amounts then due and unpaid to the
holders of Senior Indebtedness, to the extent required by Article XVII;
THIRD: To the payment of the amounts then due and unpaid upon
the Securities and coupons for principal (and premium, if any) and
interest and any Additional Amounts payable, in respect of which or for
the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the aggregate amounts
due and payable on such Securities and coupons for principal (and
premium, if any), interest and Additional Amounts, respectively; and
FOURTH: To the payment of the remainder, if any, to the
Company.
SECTION 507. LIMITATION ON SUITS. No Holder of any Security of
any series or any related coupon shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities
of that series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM, IF ANY, AND INTEREST AND ADDITIONAL AMOUNTS. Notwithstanding
any other provision in this Indenture, the Holder of any Security or coupon
shall have the right which is absolute and unconditional to receive payment of
the principal of (and premium, if any) and (subject to Sections 305 and 307)
interest on, and any Additional Amounts in respect of, such Security or payment
of such coupon on the respective due dates expressed in such Security or coupon
(or, in
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the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the
Trustee or any Holder of a Security or coupon has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders of Securities and coupons shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities or coupons in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders of Securities or coupons is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or
omission of the Trustee or of any Holder of any Security or coupon to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders of Securities or
coupons, as the case may be.
SECTION 512. CONTROL BY HOLDERS OF SECURITIES. The Holders of
a majority in principal amount of the Outstanding Securities of any series shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to the Securities of such series, PROVIDED
that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve
it in personal liability or be unduly prejudicial to the Holders of
Securities of such series not joining therein.
SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less
than a majority in principal amount of the Outstanding Securities of any series
may on behalf of the Holders of
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all the Securities of such series and any related coupons waive any past default
hereunder with respect to such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on or Additional Amounts payable in respect of any Security of
such series or any related coupons, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS. The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 515. UNDERTAKING FOR COSTS. All parties to this
Indenture agree, and each Holder of any Security by his acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of any undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable cost,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date.
ARTICLE 6
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS. Within 90 days after the
occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall transmit in the
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manner and to the extent provided in TIA Section 313(c), notice of such default
hereunder known to the Trustee, unless such default shall have been cured or
waived; PROVIDED, HOWEVER, that, except in the case of a default in the payment
of the principal of (or premium, if any) or interest on or any Additional
Amounts with respect to any Security of such series, or in the payment of any
sinking or purchase fund installment with respect to the Securities of such
series, the Trustee shall be protected in withholding such notice if and so long
as Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the Holders of the Securities
and coupons of such series; and PROVIDED FURTHER that in the case of any default
or breach of the character specified in Section 501(4) with respect to the
Securities and coupons of such series, no such notice to Holders shall be given
until at least 60 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default with respect to the Securities
of such series.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE. Subject to the
provisions of TIA Section 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
(other than delivery of any Security, together with any coupons
appertaining thereto, to the Trustee for authentication and delivery
pursuant to Section 303 which shall be sufficiently evidenced as
provided therein) and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(4) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders of Securities of any series or any
related coupons pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
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(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, coupon or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
Except during the continuance of an Event of Default, the
Trustee undertakes to perform only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, and in any coupons shall be taken as
the statements of the Company, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 604. MAY HOLD SECURITIES. The Trustee, any Paying
Agent, Security Registrar, Authenticating Agent or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and coupons and, subject to TIA Sections 310(b) and 311,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Paying Agent, Security Registrar, Authenticating Agent or such
other agent.
SECTION 605. MONEY HELD IN TRUST. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company.
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SECTION 606. COMPENSATION AND REIMBURSEMENT. The Company
agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse each of the Trustee and any predecessor Trustee upon its
request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify each of the Trustee and any predecessor
Trustee for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its own part,
arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(6) or Section
501(7), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (or premium, if any)
or interest on particular Securities or any coupons.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY;
CONFLICTING INTERESTS. There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under TIA Section 310(a)(1) and shall have a
combined capital and surplus of at least $50,000,000. If such corporation
publishes reports of condition at least annually, pursuant to law or the
requirements of Federal, State, Territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
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(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
TIA Section 310(b) after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security
for at least six months, or
(2) the Trustee shall cease to be eligible under Section
607(a) and shall fail to resign after written request therefor by the
Company or by any Holder of a Security who has been a bona fide Holder
of a Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by or pursuant to a Board Resolution may
remove the Trustee and appoint a successor Trustee with respect to all
Securities, or (ii) subject to TIA Section 315(e), any Holder of a Security who
has been a bona fide Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause with respect to the Securities of one or more series, the Company, by
or pursuant to a Board Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there shall
be only one Trustee with respect to the Securities of any particular series).
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders of Securities and accepted appointment in the manner hereinafter
provided, any Holder of a
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Security who has been a bona fide Holder of a Security of such series for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
in the manner provided for notices to the Holders of Securities in Section 106.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In
case of the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder, subject nevertheless to its lien and claim, if any, provided
for in Section 606.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all)
series, the Company, the retiring Trustee and each successor Trustee
with respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto, pursuant to Article Nine
hereof, wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor
Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Securities, shall contain
such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series as to which the
retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it
being understood that nothing herein or in such supplemental indenture
shall constitute such Trustees co-trustees of the same trust and that
each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring
Trustee shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates; but,
on request of the Company or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such
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successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in paragraph (a) or (b) of this Section,
as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
PROVIDED such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities or coupons shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities or coupons so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities or coupons. In case any Securities or coupons
shall not have been authenticated by such predecessor Trustee, any such
successor Trustee may authenticate and deliver such Securities or coupons, in
either its own name or that of its predecessor Trustee, with the full force and
effect which this Indenture provides for the certificate of authentication of
the Trustee.
SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT. At any time
when any of the Securities remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents with respect to one or more series of Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities of such series issued upon exchange, registration of transfer or
partial redemption thereof, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Any such appointment
shall be evidenced by an instrument in writing signed by a Responsible Officer
of the Trustee, a copy of which instrument shall be promptly furnished to the
Company. Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and, except as may
otherwise be provided pursuant to Section 301, shall at all times be a bank or
trust company or corporation organized and doing business and in good standing
under the laws of the United States of America or of any State or the District
of Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or State authorities. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or the requirements of the
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aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at
any time resign by giving written notice of resignation to the Trustee for such
series and to the Company. The Trustee for any series of Securities may at any
time terminate the agency of an Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve in the manner set forth in
Section 106. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation including reimbursement of its reasonable
expenses for its services under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to or in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication substantially in the
following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CHEMICAL BANK, as Trustee
By______________________________
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as Authenticating Agent
By______________________________
Authorized Signature
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Securities or coupons, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any Authenticating Agent nor any Paying Agent nor any Security Registrar shall
be held accountable by reason of the disclosure of any information as to the
names and addresses of the Holders of Securities in accordance with TIA Section
312, regardless of the source from which such information was derived, and that
the Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under TIA Section 312(b).
SECTION 702. REPORTS BY TRUSTEE. Within 60 days after May 15
of each year commencing with the first May 15 after the first issuance of
Securities pursuant to this Indenture, the Trustee shall transmit by mail to all
Holders of Securities as provided in TIA Section 313(c) a brief report dated as
of such May 15 if required by TIA Section 313(a).
SECTION 703. REPORTS BY COMPANY. The Company will:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents, and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of such Sections, then it will file with the Trustee
and the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission, such of the supplementary and
periodic information, documents and reports which may be required
pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
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(3) transmit by mail to the Holders of Securities, within 30
days after the filing thereof with the Trustee, in the manner and to
the extent provided in TIA Section 313(c), such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required
by rules and regulations prescribed from time to time by the
Commission.
SECTION 704. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS. The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after the Regular
Record Date for interest for each series of Securities, a list, in such
form as the Trustee may reasonably require, of the names and addresses
of the Holders of Registered Securities of such series as of such
Regular Record Date, or if there is no Regular Record Date for interest
for such series of Securities, semi-annually, upon such dates as are
set forth in the Board Resolution or indenture supplemental hereto
authorizing such series, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished,
PROVIDED, HOWEVER, that, so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.
ARTICLE 8
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES,
LEASES AND CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS. 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 in any
such case, (i) either the Company shall be the continuing corporation, or the
successor corporation shall be a corporation organized and existing under the
laws of the United States or a State thereof and such successor corporation
shall expressly assume the due and punctual payment of the principal of (and
premium, if any) and any interest on and all Additional Amounts, if any, payable
in respect of, all the Securities, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by the Company by supplemental indenture,
complying with Article Nine hereof, satisfactory to the Trustee, executed and
delivered to the Trustee by such corporation, and (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, and no event which, after notice or the lapse of time, or
both, would become an Event of Default, shall have occurred and be continuing.
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In
case of any such consolidation, merger, sale, lease or conveyance and upon any
such assumption by the successor
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corporation, such successor corporation shall succeed to and be substituted for
the Company, with the same effect as if it had been named herein as the party of
the first part, and the predecessor corporation, except in the event of a lease,
shall be relieved of any further obligation under this Indenture and the
Securities. Such successor corporation thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee; and, upon the order of such successor
corporation, instead of the Company, and subject to all the terms, conditions
and limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication, and
any Securities which such successor corporation thereafter shall cause to be
signed and delivered to the Trustee for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Securities had been issued at
the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or
conveyance, such changes in phraseology and form (but not in substance) may be
made in the Securities thereafter to be issued as may be appropriate.
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL. Any
consolidation, merger, sale, lease or conveyance permitted under Section 801 is
also subject to the condition that the Trustee receive an Officers' Certificate
and an Opinion of Counsel to the effect that any such consolidation, merger,
sale, lease or conveyance, and the assumption by any successor corporation,
complies with the provisions of this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS. Without the consent of any Holders of Securities or coupons, the
Company, when authorized by or pursuant to a Board Resolution, and the Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities contained; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein
conferred upon the Company; or
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(3) to add any additional Events of Default for the benefit of
the Holders of all or any series of Securities (and if such Events of
Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are expressly being
included solely for the benefit of such series); PROVIDED, HOWEVER,
that in respect of any such additional Events of Default such
supplemental indenture may provide for a particular period of grace
after default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to
the Trustee upon such default or may limit the right of the Holders of
a majority in aggregate principal amount of that or those series of
Securities to which such additional Events of Default apply to waive
such default; or
(4) to add to or change any of the provisions of this
Indenture to provide that Bearer Securities may be registrable as to
principal, to change or eliminate any restrictions on the payment of
principal of or any premium or interest on Bearer Securities, to permit
Bearer Securities to be issued in exchange for Registered Securities,
to permit Bearer Securities to be issued in exchange for Bearer
Securities of other authorized denominations or to permit or facilitate
the issuance of Securities in uncertificated form, PROVIDED that any
such action shall not adversely affect the interests of the Holders of
Securities of any series or any related coupons in any material
respect; or
(5) to change or eliminate any of the provisions of this
Indenture, PROVIDED that any such change or elimination shall become
effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series
and any related coupons as permitted by Sections 201 and 301, including
the provisions and procedures providing for the adjustment of
conversion rights pursuant to Section 1607 with respect to Securities
convertible into Common Shares and as otherwise contemplated by Section
1613 with respect to Securities convertible into Preferred Shares; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee; or
(9) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture, PROVIDED such
provisions shall not adversely affect the interests of the Holders of
Securities of any series or any related coupons in any material
respect; or
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(10) to supplement any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Sections 401, 1402 and 1403; PROVIDED that any such action shall not
adversely affect the interests of the Holders of Securities of such
series and any related coupons or any other series of Securities in any
material respect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal amount
of all Outstanding Securities affected by such supplemental indenture, by Act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities and any related coupons under this Indenture; PROVIDED, HOWEVER, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of (or
premium, if any, on) or any installment of principal of or interest on,
any Security; or reduce the principal amount thereof or the rate or
amount of interest thereon or any Additional Amounts payable in respect
thereof, or any premium payable upon the redemption thereof, or change
any obligation of the Company to pay Additional Amounts pursuant to
Section 1005 (except as contemplated by Section 801 and permitted by
Section 901), or reduce the amount of the principal of an Original
Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
502 or the amount thereof provable in bankruptcy pursuant to Section
504, or adversely affect any right of repayment at the option of the
Holder of any Security, or change any Place of Payment where, or the
currency or currencies, currency unit or units or composite currency or
currencies in which, any Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption or repayment at the option of the
Holder, on or after the Redemption Date or the Repayment Date, as the
case may be), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver with respect to such series (or
compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1504 for quorum or
voting, or
(3) modify any of the provisions of this Section, Section 513,
except to increase the percentage required to effect such action or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby; or
(4) subordinate the indebtedness evidenced by the Securities
to any indebtedness of the Company other than Senior Indebtedness.
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It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modification thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder and of any
coupon appertaining thereto shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL
INDENTURES. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall,
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE 10
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST
AND ADDITIONAL AMOUNTS. The Company covenants and agrees for the benefit of the
Holders of each series of Securities that it will duly and punctually pay the
principal of (and premium, if any) and interest on and any Additional Amounts
payable in respect of the Securities of that series in accordance with the terms
of such series of Securities, any coupons appertaining thereto and this
Indenture.
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Unless otherwise specified as contemplated by Section 301 with respect to any
series of Securities, any interest due on and any Additional Amounts payable in
respect of Bearer Securities on or before Maturity, other than Additional
Amounts, if any, payable as provided in Section 1005 in respect of principal of
(or premium, if any, on) such a Security, shall be payable only upon
presentation and surrender of the several coupons for such interest installments
as are evidenced thereby as they severally mature. Unless otherwise specified
with respect to Securities of any series pursuant to Section 301, at the option
of the Company, all payments of principal may be paid by check to the registered
Holder of the Registered Security or other person entitled thereto against
surrender of such Security.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. If Securities
of a series are issuable only as Registered Securities, the Company shall
maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for
payment or conversion, where Securities of that series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities of that series and this Indenture may
be served. If Securities of a series are issuable as Bearer Securities, the
Company will maintain: (A) in the Borough of Manhattan, The City of New York, an
office or agency where any Registered Securities of that series may be presented
or surrendered for payment or conversion, where any Registered Securities of
that series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange, where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served and where Bearer Securities of that series and related coupons may
be presented or surrendered for payment in the circumstances described in the
following paragraph (and not otherwise); (B) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series which is located
outside the United States, an office or agency where Securities of that series
and related coupons may be presented and surrendered for payment (including
payment of any Additional Amounts payable on Securities of that series pursuant
to Section 1005) or conversion; PROVIDED, HOWEVER, that if the Securities of
that series are listed on the Luxembourg Stock Exchange or any other stock
exchange located outside the United States and such stock exchange shall so
require, the Company will maintain a Paying Agent for the Securities of that
series in Luxembourg or any other required city located outside the United
States, as the case may be, so long as the Securities of that series are listed
on such exchange; and (C) subject to any laws or regulations applicable thereto,
in a Place of Payment for that series located outside the United States an
office or agency where any Registered Securities of that series may be
surrendered for registration of transfer, where Securities of that series may be
surrendered for exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of each such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, except that Bearer Securities of that series and the related coupons
may be presented and surrendered for payment (including payment of any
Additional Amounts payable on Bearer Securities of that series pursuant to
Section 1005) at the offices specified in the Security, in London, England, and
the Company hereby appoints the same as its agent to receive such respective
presentations, surrenders, notices and demands, and the
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Company hereby appoints the Trustee its agent to receive all such presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, no payment of principal, premium or interest on or
Additional Amounts in respect of Bearer Securities shall be made at any office
or agency of the Company in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank located
in the United States; PROVIDED, HOWEVER, that, if the Securities of a series are
payable in Dollars, payment of principal of and any premium and interest on any
Bearer Security (including any Additional Amounts payable in respect of
Securities of such series pursuant to Section 1005) shall be made at the office
of the Company's Paying Agent in the Borough of Manhattan, The City of New York,
if (but only if) payment in Dollars of the full amount of such principal,
premium, interest or Additional Amounts, as the case may be, at all offices or
agencies outside the United States maintained for the purpose by the Company in
accordance with this Indenture, is illegal or effectively precluded by exchange
controls or other similar restrictions.
The Company may from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all of such purposes, and may from time to time
rescind such designations; PROVIDED, HOWEVER, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. Unless otherwise specified with
respect to any Securities pursuant to Section 301 with respect to a series of
Securities, the Company hereby designates as a Place of Payment for each series
of Securities the office or agency of the Company in the Borough of Manhattan,
The City of New York, and initially appoints the Trustee at its Corporate Trust
Office as Paying Agent in such city and as its agent to receive all such
presentations, surrenders, notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, if and so long as the Securities of any series (i) are
denominated in a Foreign Currency or (ii) may be payable in a Foreign Currency
other than Dollars, or so long as it is required under any other provision of
the Indenture, then the Company will maintain with respect to each such series
of Securities, or as so required, at least one exchange rate agent.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN
TRUST. If the Company shall at any time act as its own Paying Agent with respect
to any series of any Securities and any related coupons, it will, on or before
each due date of the principal of (and premium, if any), or interest on or
Additional Amounts in respect of, any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum in the currency or currencies, currency unit or units or composite currency
or currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series)
sufficient to pay the principal (and premium, if any) or interest or Additional
Amounts so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
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Whenever the Company shall have one or more Paying Agents for
any series of Securities and any related coupons, it will, on or before each due
date of the principal of (and premium, if any), or interest on or Additional
Amounts in respect of, any Securities of that series, deposit with a Paying
Agent a sum (in the currency or currencies, currency unit or units or composite
currency or currencies described in the preceding paragraph) sufficient to pay
the principal (and premium, if any) or interest or Additional Amounts, so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest or Additional Amounts and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will
(1) hold all sums held by it for the payment of principal of
(and premium, if any) or interest on Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities) in the making of any such
payment of principal (and premium, if any) or interest; and
(3) at any time during the continuance of any such default
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Except as otherwise provided in the Securities of any series,
any money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of (and premium, if any) or
interest on, or any Additional Amounts in respect of, any Security of any series
and remaining unclaimed for two years after such principal (and premium, if
any), interest or Additional Amounts has become due and payable shall be paid to
the Company upon Company Request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment of such
principal of (and premium, if any) or interest on, or any Additional Amounts in
respect of, any Security, without interest thereon, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause notice to be mailed to the
holders of such Securities or published once, in an Authorized Newspaper, to the
effect that such money remains unclaimed and that, after a date
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specified therein, which shall not be less than 30 days from the date of such
mailing or publication, any unclaimed balance of such money then remaining will
be repaid to the Company.
SECTION 1004. STATEMENT AS TO COMPLIANCE. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year (which
as of the date hereof is December 31), a brief certificate from the principal
executive officer, principal financial officer or principal accounting officer
as to his or her knowledge of the Company's compliance with all conditions and
covenants under this Indenture and, in the event of any noncompliance,
specifying such noncompliance and the nature and status thereof. For purposes of
this Section 1006, such compliance shall be determined without regard to any
period of grace or requirement of notice under this Indenture.
SECTION 1005. ADDITIONAL AMOUNTS. If any Securities of a
series provide for the payment of Additional Amounts, the Company will pay to
the Holder of any Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301. Whenever
in this Indenture there is mentioned, in any context except in the case of
Section 502(1), the payment of the principal of or any premium or interest on,
or in respect of, any Security of any series or payment of any related coupon or
the net proceeds received on the sale or exchange of any Security of any series,
such mention shall be deemed to include mention of the payment of Additional
Amounts provided by the terms of such series established pursuant to Section 301
to the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof pursuant to such terms and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall not
be construed as excluding Additional Amounts in those provisions hereof where
such express mention is not made.
Except as otherwise specified as contemplated by Section 301,
if the Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest Payment Date with respect to that
series of Securities (or if the Securities of that series will not bear interest
prior to Maturity, the first day on which a payment of principal and any premium
is made), and at least 10 days prior to each date of payment of principal and
any premium or interest if there has been any change with respect to the matters
set forth in the below-mentioned Officers' Certificate, the Company will furnish
the Trustee and the Company's principal Paying Agent or Paying Agents, if other
than the Trustee, with an Officers' Certificate instructing the Trustee and such
Paying Agent or Paying Agents whether such payment of principal of and any
premium or interest on the Securities of that series shall be made to Holders of
Securities of that series or any related coupons who are not United States
persons without withholding for or on account of any tax, assessment or other
governmental charge described in the Securities of the series. If any such
withholding shall be required, then such Officers' Certificate shall specify by
country the amount, if any, required to be withheld on such payments to such
Holders of Securities of that series or related coupons and the Company will pay
to the Trustee or such Paying Agent the Additional Amounts required by the terms
of such Securities. In the event that the Trustee or any Paying Agent, as the
case may be, shall not so receive the above-mentioned certificate, then the
Trustee or such Paying Agent shall be entitled (i) to assume that no such
withholding or deduction is required with respect to any payment of principal or
interest with respect to any Securities of a series or related coupons until it
shall have received a certificate
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advising otherwise and (ii) to make all payments of principal and interest with
respect to the Securities of a series or related coupons without withholding or
deductions until otherwise advised. The Company covenants to indemnify the
Trustee and any Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by any
of them or in reliance on any Officers' Certificate furnished pursuant to this
Section or in reliance on the Company's not furnishing such an Officers'
Certificate.
ARTICLE 11
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE. Securities of any
series which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 301 for Securities of any series) in accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The
election of the Company to redeem any Securities shall be evidenced by or
pursuant to a Board Resolution. In case of any redemption at the election of the
Company of less than all of the Securities of any series, the Company shall, at
least 45 days prior to the giving of the notice of redemption referred to in
Section 1104 (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of
Securities of such series to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE
REDEEMED. If less than all the Securities of any series issued on the same day
with the same terms are to be redeemed, the particular Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Securities of such series issued on such date with
the same terms not previously called for redemption (excluding any such
Outstanding Securities held by the Company or any of its Subsidiaries), by such
method as the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Security
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redeemed or to be redeemed only in part, to the portion of the principal amount
of such Security which has been or is to be redeemed.
SECTION 1104. NOTICE OF REDEMPTION. Notice of redemption shall
be given in the manner provided in Section 106, not less than 30 days nor more
than 60 days prior to the Redemption Date, unless a shorter period is specified
by the terms of such series established pursuant to Section 301, to each Holder
of Securities to be redeemed, but failure to give such notice in the manner
herein provided to the Holder of any Security designated for redemption as a
whole or in part, or any defect in the notice to any such Holder, shall not
affect the validity of the proceedings for the redemption of any other such
Security or portion thereof.
Any notice that is mailed to the Holders of Registered
Securities in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, accrued interest to the Redemption
Date payable as provided in Section 1106, if any, and Additional
Amounts, if any,
(3) if less than all Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial
redemption, the principal amount) of the particular Security or
Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the holder will
receive, without a charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price and
accrued interest to the Redemption Date payable as provided in Section
1106, if any, will become due and payable upon each such Security, or
the portion thereof, to be redeemed and, if applicable, that interest
thereon shall cease to accrue on and after said date,
(6) the Place or Places of Payment where such Securities,
together in the case of Bearer Securities with all coupons appertaining
thereto, if any, maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price and accrued interest,
if any, or for conversion,
(7) that the redemption is for a sinking fund, if such is the
case,
(8) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be
accompanied by all coupons maturing subsequent to the date fixed for
redemption or the amount of any such missing coupon or coupons will be
deducted from the Redemption Price, unless security or indemnity
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satisfactory to the Company, the Trustee for such series and any Paying
Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed and
any Registered Securities of such series are not to be redeemed, and if
such Bearer Securities may be exchanged for Registered Securities not
subject to redemption on this Redemption Date pursuant to Section 305
or otherwise, the last date, as determined by the Company, on which
such exchanges may be made,
(10) the CUSIP number of such Security, if any, and
(11) if applicable, that a Holder of Securities who desires to
convert Securities for redemption must satisfy the requirements for
conversion contained in such Securities, the then existing conversion
price or rate, and the date and time when the option to convert shall
expire.
Notice of redemption of Securities to be redeemed shall be
given by the Company or, at the Company's request, by the Trustee in the name
and at the expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE. At or prior to
10:00 a.m. on any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent, which
it may not do in the case of a sinking fund payment under Article Twelve,
segregate and hold in trust as provided in Section 1003) an amount of money in
the currency or currencies, currency unit or units or composite currency or
currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series)
sufficient to pay on the Redemption Date the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date) accrued interest on, all
the Securities or portions thereof which are to be redeemed on that date.
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued interest) such Securities
shall, if the same were interest-bearing, cease to bear interest and the coupons
for such interest appertaining to any Bearer Securities so to be redeemed,
except to the extent provided below, shall be void. Upon surrender of any such
Security for redemption in accordance with said notice, together with all
coupons, if any, appertaining thereto maturing after the Redemption Date, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest, if any, to the Redemption Date; PROVIDED, HOWEVER, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section 1002)
and, unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of coupons for such interest; and PROVIDED
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FURTHER that, except as otherwise provided with respect to Securities
convertible into Common Shares or Preferred Shares, installments of interest on
Registered Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; PROVIDED,
HOWEVER, that interest represented by coupons shall be payable only at an office
or agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified as contemplated by Section 301,
only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate borne by
the Security.
SECTION 1107. SECURITIES REDEEMED IN PART. Any Registered
Security which is to be redeemed only in part (pursuant to the provisions of
this Article or of Article Twelve) shall be surrendered at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing) and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge a new Security or
Securities of the same series, of any authorized denomination as requested by
such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
SECTION 1108. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of Securities, the Company may arrange for the
purchase and conversion of any Securities called for redemption by an agreement
with one or more investment bankers or other purchasers to purchase such
Securities by paying to the Trustee or the Paying Agent in trust for the Holders
of Securities, on or before 10:00 a.m. New York time on the Redemption Date, an
amount not less than the Redemption Price, together with interest, if any,
accrued to the Redemption Date of such Securities, in immediately available
funds. Notwithstanding anything to the contrary contained in this Article
Eleven, the obligation of the Company to pay the Redemption Price of such
Securities, including all accrued interest, if any, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, any Securities not duly
surrendered for conversion by the Holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such Holders and surrendered by such purchasers for conversion,
all as of immediately prior to the close of business on the last day on
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which Securities of such series called for redemption may be converted in
accordance with this Indenture and the terms of such Securities, subject to
payment to the Trustee or Paying Agent of the above-described amount. The
Trustee or the Paying Agent shall hold and pay to the Holders whose Securities
are selected for redemption any such amount paid to it in the same manner as it
would pay moneys deposited with it by the Company for the redemption of
Securities. Without the Trustee's and the Paying Agent's prior written consent,
no arrangement between the Company and such purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee and the Paying
Agent as set forth in this Indenture, and the Company agrees to indemnify the
Trustee and the Paying Agent from, and hold them harmless against, any loss,
liability or expense arising out of or in connection with any such arrangement
for the purpose and conversion of any Securities between the Company and such
purchasers, including the costs and expenses incurred by the Trustee and the
Paying Agent (including the fees and expenses of their agents and counsel) in
the defense of any claim or liability arising out of or in connection with the
exercise or performance of any of their powers, duties, responsibilities or
obligations under this Indenture.
ARTICLE 12
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this
Article shall be applicable to any sinking fund for the retirement of Securities
of a series except as otherwise specified as contemplated by Section 301 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of such Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of any Securities
of any series, the cash amount of any mandatory sinking fund payment may be
subject to reduction as provided in Section 1202. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of Securities of such series.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH
SECURITIES. The Company may, in satisfaction of all or any part of any mandatory
sinking fund payment with respect to the Securities of a series, (1) deliver
Outstanding Securities of such series (other than any previously called for
redemption) together in the case of any Bearer Securities of such series with
all unmatured coupons appertaining thereto and (2) apply as a credit Securities
of such series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, as
provided for by the terms of such Securities; PROVIDED that such Securities so
delivered or applied as a credit have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
applicable Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such mandatory sinking fund
payment shall be reduced accordingly.
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SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND. Not
less than 60 days prior to each sinking fund payment date for Securities of any
series, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202, and the optional amount, if any, to be added in cash
to the next ensuing mandatory sinking fund payment, and will also deliver to the
Trustee any Securities to be so delivered and credited. If such Officers'
Certificate shall specify an optional amount to be added in cash to the next
ensuing mandatory sinking fund payment, the Company shall thereupon be obligated
to pay the amount therein specified. Not less than 30 days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1106 and 1107.
ARTICLE 13
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. APPLICABILITY OF ARTICLE. Repayment of
Securities of any series before their Stated Maturity at the option of Holders
thereof shall be made in accordance with the terms of such Securities, if any,
and (except as otherwise specified by the terms of such series established
pursuant to Section 301) in accordance with this Article.
SECTION 1302. REPAYMENT OF SECURITIES. Securities of any
series subject to repayment in whole or in part at the option of the Holders
thereof will, unless otherwise provided in the terms of such Securities, be
repaid at a price equal to the principal amount thereof, together with interest,
if any, thereon accrued to the Repayment Date specified in or pursuant to the
terms of such Securities. The Company covenants that at or prior to 10:00 a.m.
on the Repayment Date it will deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 1003) an amount of money in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay the
principal (or, if so provided by the terms of the Securities of any series, a
percentage of the principal) of, and (except if the Repayment Date shall be an
Interest Payment Date) accrued interest on, all the Securities or portions
thereof, as the case may be, to be repaid on such date.
SECTION 1303. EXERCISE OF OPTION. Securities of any series
subject to repayment at the option of the Holders thereof will contain an
"Option to Elect Repayment" form
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on the reverse of such Securities. In order for any Security to be repaid at the
option of the Holder, the Trustee must receive at the Place of Payment therefor
specified in the terms of such Security (or at such other place or places of
which the Company shall from time to time notify the Holders of such Securities)
not earlier than 60 days nor later than 30 days prior to the Repayment Date (1)
the Security so providing for such repayment together with the "Option to Elect
Repayment" form on the reverse thereof duly completed by the Holder (or by the
Holder's attorney duly authorized in writing) or (2) a telegram, facsimile
transmission or a letter from a member of a national securities exchange, or the
National Association of Securities Dealers, Inc. ("NASD"), or a commercial bank
or trust company in the United States setting forth the name of the Holder of
the Security, the principal amount of the Security, the principal amount of the
Security to be repaid, the CUSIP number, if any, or a description of the tenor
and terms of the Security, a statement that the option to elect repayment is
being exercised thereby and a guarantee that the Security to be repaid, together
with the duly completed form entitled "Option to Elect Repayment" on the reverse
of the Security, will be received by the Trustee not later than the fifth
Business Day after the date of such telegram, facsimile transmission or letter;
PROVIDED, HOWEVER, that such telegram, facsimile transmission or letter shall
only be effective if such Security and form duly completed are received by the
Trustee by such fifth Business Day. If less than the entire principal amount of
such Security is to be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of the minimum
denomination for Securities of such series, and the denomination or
denominations of the Security or Securities to be issued to the Holder for the
portion of the principal amount of such Security surrendered that is not to be
repaid, must be specified. The principal amount of any Security providing for
repayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would be
less than the minimum authorized denomination of Securities of the series of
which such Security to be repaid is a part. Except as otherwise may be provided
by the terms of any Security providing for repayment at the option of the Holder
thereof, exercise of the repayment option by the Holder shall be irrevocable
unless waived by the Company.
SECTION 1304. WHEN SECURITIES PRESENTED FOR REPAYMENT BECOME
DUE AND PAYABLE. If Securities of any series providing for repayment at the
option of the Holders thereof shall have been surrendered as provided in this
Article and as provided by or pursuant to the terms of such Securities, such
Securities or the portions thereof, as the case may be, to be repaid shall
become due and payable and shall be paid by the Company on the Repayment Date
therein specified, and on and after such Repayment Date (unless the Company
shall default in the payment of such Securities on such Repayment Date) such
Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with all coupons, if any, appertaining thereto maturing after the Repayment
Date, the principal amount of such Security so to be repaid shall be paid by the
Company, together with accrued interest, if any, to the Repayment Date;
PROVIDED, HOWEVER, that coupons whose Stated Maturity is on or prior to the
Repayment Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified pursuant to Section 301, only upon presentation and
surrender of such coupons; and PROVIDED FURTHER that, in the case of Registered
Securities, installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall be payable (but without interest thereon,
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unless the Company shall default in the payment thereof) to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repayment Date, such
Security may be paid after deducting from the amount payable therefor as
provided in Section 1302 an amount equal to the face amount of all such missing
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to the Trustee or any
Paying Agent any such missing coupon in respect of which a deduction shall have
been made as provided in the preceding sentence, such Holder shall be entitled
to receive the amount so deducted; PROVIDED, HOWEVER, that interest represented
by coupons shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon presentation and
surrender of those coupons.
If the principal amount of any Security surrendered for
repayment shall not be so repaid upon surrender thereof, such principal amount
(together with interest, if any, thereon accrued to such Repayment Date) shall,
until paid, bear interest from the Repayment Date at the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) set forth
in such Security.
SECTION 1305. SECURITIES REPAID IN PART. Upon surrender of any
Registered Security which is to be repaid in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of such
Security, without service charge and at the expense of the Company, a new
Registered Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount equal to
and in exchange for the portion of the principal of such Security so surrendered
which is not to be repaid.
ARTICLE 14
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO
EFFECT DEFEASANCE OR COVENANT DEFEASANCE. If, pursuant to Section 301, provision
is made for either or both of (a) defeasance of the Securities of or within a
series under Section 1402 or (b) covenant defeasance of the Securities of or
within a series under Section 1403, then the provisions of such Section or
Sections, as the case may be, together with the other provisions of this Article
(with such modifications thereto as may be specified pursuant to Section 301
with respect to any Securities), shall be applicable to such Securities and any
coupons appertaining thereto, and the Company may at its option by Board
Resolution, at any time, with respect to such Securities and any coupons
appertaining thereto, elect to have Section 1402 (if applicable) or Section 1403
(if
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applicable) be applied to such Outstanding Securities and any coupons
appertaining thereto upon compliance with the conditions set forth below in this
Article.
SECTION 1402. DEFEASANCE AND DISCHARGE. Upon the Company's
exercise of the above option applicable to this Section with respect to any
Securities of or within a series, the Company shall be deemed to have been
discharged from its obligations with respect to such Outstanding Securities and
any coupons appertaining thereto on the date the conditions set forth in Section
1404 are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by such Outstanding Securities and any
coupons appertaining thereto, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 1405 and the other Sections of
this Indenture referred to in clauses (A) and (B) of this Section, and to have
satisfied all its other obligations under such Securities and any coupons
appertaining thereto and this Indenture insofar as such Securities and any
coupons appertaining thereto are concerned (and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of such Outstanding Securities and any
coupons appertaining thereto to receive, solely from the trust fund described in
Section 1404 and as more fully set forth in such Section, payments in respect of
the principal of (and premium, if any) and interest, if any, on such Securities
and any coupons appertaining thereto when such payments are due, (B) the
Company's obligations with respect to such Securities under Sections 305, 306,
1002 and 1003 and with respect to the payment of Additional Amounts, if any, on
such Securities as contemplated by Section 1005, (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (D) this Article. Subject to
compliance with this Article Fourteen, the Company may exercise its option under
this Section notwithstanding the prior exercise of its option under Section 1403
with respect to such Securities and any coupons appertaining thereto.
SECTION 1403. COVENANT DEFEASANCE. If specified pursuant to
Section 301, upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the Company shall
be released from its obligations under any covenant contained herein with
respect to such Outstanding Securities and any coupons appertaining thereto on
and after the date the conditions set forth in Section 1404 are satisfied
(hereinafter, "covenant defeasance"), and such Securities and any coupons
appertaining thereto shall thereafter be deemed to be not "Outstanding" for the
purposes of any direction, waiver, consent or declaration or Act of Holders (and
the consequences of any thereof) in connection with any such other covenant, but
shall continue to be deemed "Outstanding" for all other purposes hereunder. For
this purpose, such covenant defeasance means that, with respect to such
Outstanding Securities and any coupons appertaining thereto, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such Section or
such other covenant or by reason of reference in any such Section or such other
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a default or an Event of Default under
Section 501(4) or 501(7) or otherwise, as the case may be, but, except as
specified above, the remainder of this Indenture and such Securities and any
coupons appertaining thereto shall be unaffected thereby.
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SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of Section 1402 or Section
1403 to any Outstanding Securities of or within a series and any coupons
appertaining thereto:
(a) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 607 who shall agree to comply with the
provisions of this Article Fourteen applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities and any coupons appertaining thereto, (1) an
amount in such currency, currencies or currency unit in which such
Securities and any coupons appertaining thereto are then specified as
payable at Stated Maturity, or (2) Government Obligations applicable to
such Securities and coupons appertaining thereto (determined on the
basis of the currency, currencies or currency unit in which such
Securities and coupons appertaining thereto are then specified as
payable at Stated Maturity) which through the scheduled payment of
principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any
payment of principal of (and premium, if any) and interest, if any, on
such Securities and any coupons appertaining thereto, money in an
amount, or (3) a combination thereof, in any case, in an amount,
sufficient, without consideration of any reinvestment of such principal
and interest, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall
be applied by the Trustee (or other qualifying trustee) to pay and
discharge, (i) the principal of (and premium, if any) and interest, if
any, on such Outstanding Securities and any coupons appertaining
thereto on the Stated Maturity of such principal or installment of
principal or interest and (ii) any mandatory sinking fund payments or
analogous payments applicable to such Outstanding Securities and any
coupons appertaining thereto on the day on which such payments are due
and payable in accordance with the terms of this Indenture and of such
Securities and any coupons appertaining thereto.
(b) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under, this Indenture
or any other material agreement or instrument to which the Company is a
party or by which it is bound.
(c) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default with respect to such
Securities and any coupons appertaining thereto shall have occurred and
be continuing on the date of such deposit or, insofar as Sections
501(6) and 501(7) are concerned, at any time during the period ending
on the 91st day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until the expiration
of such period).
(d) In the case of an election under Section 1402, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of execution
of this Indenture, there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of such Outstanding
Securities and any coupons appertaining
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thereto will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred.
(e) In the case of an election under Section 1403, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of such Outstanding Securities and any coupons
appertaining thereto will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred.
(f) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance under Section 1402 or the
covenant defeasance under Section 1403 (as the case may be) have been
complied with and an Opinion of Counsel to the effect that either (i)
as a result of a deposit pursuant to subsection (a) above and the
related exercise of the Company's option under Section 1402 or Section
1403 (as the case may be), registration is not required under the
Investment Company Act of 1940, as amended, by the Company, with
respect to the trust funds representing such deposit or by the trustee
for such trust funds or (ii) all necessary registrations under said Act
have been effected.
(g) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with
any additional or substitute terms, conditions or limitations which may
be imposed on the Company in connection therewith pursuant to Section
301.
SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS
. Subject to the provisions of the last paragraph of Section
1003, all money and Government Obligations (or other property as may be provided
pursuant to Section 301) (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
1405, the "Trustee") pursuant to Section 1404 in respect of any Outstanding
Securities of any series and any coupons appertaining thereto shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Securities and any coupons appertaining thereto and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities and any coupons appertaining thereto of all sums due and to
become due thereon in respect of principal (and premium, if any) and interest
and Additional Amounts, if any, but such money need not be segregated from other
funds except to the extent required by law.
Unless otherwise specified with respect to any Security
pursuant to Section 301, if, after a deposit referred to in Section 1404(a) has
been made, (a) the Holder of a Security in respect of which such deposit was
made is entitled to, and does, elect pursuant to Section 301 or the terms of
such Security to receive payment in a currency or currency unit other than that
in
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which the deposit pursuant to Section 1404(a) has been made in respect of such
Security, or (b) a Conversion Event occurs in respect of the currency or
currency unit in which the deposit pursuant to Section 1404(a) has been made,
the indebtedness represented by such Security and any coupons appertaining
thereto 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, if any, on such Security as the same becomes due out of the proceeds
yielded by converting (from time to time as specified below in the case of any
such election) the amount or other property deposited in respect of such
Security into the currency or currency unit in which such Security becomes
payable as a result of such election or Conversion Event based on the applicable
market exchange rate for such currency or currency unit in effect on the second
Business Day prior to each payment date, except, with respect to a Conversion
Event, for such currency or currency unit in effect (as nearly as feasible) at
the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the Government
Obligations deposited pursuant to Section 1404 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of such Outstanding Securities and any
coupons appertaining thereto.
Anything in this Article to the contrary notwithstanding,
subject to Section 606, the Trustee shall deliver or pay to the Company from
time to time upon Company Request any money or Government Obligations (or other
property and any proceeds therefrom) held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect a defeasance or covenant defeasance, as applicable, in
accordance with this Article.
ARTICLE 15
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A
meeting of Holders of Securities of any series may be called at any time and
from time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Securities
of such series.
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS. (a) The
Trustee may at any time call a meeting of Holders of Securities of any series
for any purpose specified in Section 1501, to be held at such time and at such
place in the Borough of Manhattan, the City of New York, or in London as the
Trustee shall determine. Notice of every meeting of Holders of Securities of any
series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 106, not less than 21 nor more than 180 days prior to
the date fixed for the meeting.
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(h) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee
to call a meeting of the Holders of Securities of such series for any
purpose specified in Section 1501, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and
the Trustee shall not have made the first publication of the notice of
such meeting within 21 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein,
then the Company or the Holders of Securities of such series in the
amount above specified, as the case may be, may determine the time and
the place in the Borough of Manhattan, the City of New York, or in
London for such meeting and may call such meeting for such purposes by
giving notice thereof as provided in subsection (a) of this Section.
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS. To be
entitled to vote at any meeting of Holders of Securities of any series, a Person
shall be (1) a Holder of one or more Outstanding Securities of such series, or
(2) a Person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Securities of such series by such Holder or
Holders. The only Persons who shall be entitled to be present or to speak at any
meeting of Holders of Securities of any series shall be the Persons entitled to
vote at such meeting and their counsel, any representatives of the Trustee and
its counsel and any representatives of the Company and its counsel.
SECTION 1504. QUORUM; ACTION. The Persons entitled to vote a
majority in principal amount of the Outstanding Securities of a series shall
constitute a quorum for a meeting of Holders of Securities of such series;
PROVIDED, HOWEVER, that if any action is to be taken at such meeting with
respect to a consent or waiver which this Indenture expressly provides may be
given by the Holders of not less than a specified percentage in principal amount
of the Outstanding Securities of a series, the Persons entitled to vote such
specified percentage in principal amount of the Outstanding Securities of such
series shall constitute a quorum. In the absence of a quorum within 30 minutes
after the time appointed for any such meeting, the meeting shall, if convened at
the request of Holders of Securities of such series, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 1502(a), except that such notice need be given only
once not less than five days prior to the date on which the meeting is scheduled
to be reconvened. Notice of the reconvening of any adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as aforesaid may be adopted by the affirmative vote of the
Holders of a majority in principal amount of the Outstanding Securities of that
series; PROVIDED, HOWEVER, that, except as limited by the proviso to Section
902, any resolution with respect to any request, demand, authorization,
direction, notice,
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consent, waiver or other action which this Indenture expressly provides may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Securities of a series
may be adopted at a meeting or an adjourned meeting duly reconvened and at which
a quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Securities of that
series.
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
shall be binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504,
if any action is to be taken at a meeting of Holders of Securities of any series
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage in principal amount of all
Outstanding Securities affected thereby, or of the Holders of such series and
one or more additional series:
(i) there shall be no minimum quorum requirement for such
meeting; and
(ii) the principal amount of the Outstanding Securities of
such series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into
account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given
or taken under this Indenture.
SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND
ADJOURNMENT OF MEETINGS. (a) Notwithstanding any provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Securities of a series in regard to proof of the
holding of Securities of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Securities shall be proved in the manner specified in Section 104
and the appointment of any proxy shall be proved in the manner specified in
Section 104 or by having the signature of the Person executing the proxy
witnessed or guaranteed by any trust company, bank or banker authorized by
Section 104 to certify to the holding of Bearer Securities. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Section 104 or
other proof.
(b) The Trustee shall, by an instrument in writing appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in
Section 1502(b), in which case the Company or the Holders of Securities
of the series calling the meeting, as the case may be, shall in like
manner appoint a temporary chairman. A permanent chairman and a
permanent secretary
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of the meeting shall be elected by vote of the Persons entitled to vote
a majority in principal amount of the Outstanding Securities of such
series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount of
the Outstanding Securities of such series held or represented by him;
provided, HOWEVER, that no vote shall be cast or counted at any meeting
in respect of any Security challenged as not Outstanding and ruled by
the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security
of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 1502 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a majority in
principal amount of the Outstanding Securities of such series
represented at the meeting, and the meeting may be held as so adjourned
without further notice.
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of Securities
of any series shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities of such series or of their
representatives by proxy and the principal amounts and serial numbers of the
Outstanding Securities of such series held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record, at least in duplicate, of
the proceedings of each meeting of Holders of Securities of any Series shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
fact, setting forth a copy of the notice of the meeting and showing that said
notice was given as provided in Section 1502 and, if applicable, Section 1504.
Each copy shall be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one such copy shall be delivered to
the Company and another to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting. Any record so
signed and verified shall be conclusive evidence of the matters therein stated.
ARTICLE 16
CONVERSION OF SECURITIES
SECTION 1601. APPLICABILITY OF ARTICLE. Securities of any
series which are convertible into Common Stock at the option of the Holder of
such Securities shall be convertible in accordance with their terms and (unless
otherwise specified as contemplated by Section 301 for the Securities of any
series) in accordance with this Article. Each reference in this Article Sixteen
to "a Security" or "the Securities" refers to the Securities of the particular
series that is convertible into Common Shares. If more than one series of
Securities with
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conversion privileges are Outstanding at any time, the provisions of
this Article Sixteen shall be applied separately to each such series.
SECTION 1602. RIGHT OF HOLDERS TO CONVERT SECURITIES INTO
COMMON SHARES. Subject to and upon compliance with the terms of the Securities
and the provisions of Section 1108 and this Article Sixteen, at the option of
the Holder thereof, any Security of any series of any authorized denomination
which is convertible into Common Shares, or any portion of the principal amount
thereof which is $1,000 or any integral multiple of $1,000, may, at any time
during the period specified in the Securities of such series, or in case such
Security of portion thereof shall have been called for redemption, then in
respect of such Security or portion thereof until and including, but not after
(unless the Company shall default in payment due upon the redemption thereof)
the close of business on the Redemption Date (except that in the case of
repayment at the option of the Holder, if specified in the terms of the relevant
Security, such right shall terminate upon the Company's receipt of written
notice of the exercise of such option), be converted into duly authorized,
validly issued, fully paid and nonassessable Common Shares, as specified in such
Security, at the conversion price or conversion rate for each $1,000 principal
amount of Securities (such initial conversion rate reflecting an initial
conversion price specified in such Security) in effect on the conversion date,
or, in case an adjustment in the conversion price has taken place pursuant to
the provisions of this Article Sixteen, then at the applicable conversion price
as so adjusted, upon surrender of the Security or Securities, the principal
amount of which is so to be converted, to the Company at any time during usual
business hours at the office or agency to be maintained by it in accordance with
the provisions of Section 1002, accompanied by a written notice of election to
convert as provided in Section 1603 and, if so required by the Company and/or
the Trustee, by a written instrument or instruments of transfer in form
satisfactory to the Company and/or the Trustee, as applicable, duly executed by
the Holder thereof or his attorney duly authorized in writing. All Securities
surrendered for conversion shall, if surrendered to the Company or any
conversion agent, be delivered to the Trustee for cancellation and cancelled by
it, or shall, if surrendered to the Trustee, be cancelled by it, as provided in
Section 310.
The initial conversion price or conversion rate in respect of
a series of Securities shall be as specified in the Securities of such series.
The conversion price or conversion rate will be subject to adjustment on the
terms set forth in Section 1605 or such other or different terms, if any, as may
be specified by Section 301 for Securities of such series. Provisions of this
Indenture that apply to conversion of all of a Security also apply to conversion
of any portion of it.
SECTION 1603. ISSUANCE OF COMMON SHARES ON CONVERSIONS. As
promptly as practicable after the surrender, as herein provided, of any Security
or Securities for conversion into Common Shares, the Company shall deliver or
cause to be delivered at its said office or agency to or upon the written order
of the Holder of the Security or Securities so surrendered a certificate or
certificates representing the number of duly authorized, validly issued, fully
paid and nonassessable Common Shares into which such Security or Securities may
be converted in accordance with the terms thereof and the provisions of this
Article Sixteen. Prior to delivery of such certificate or certificates, the
Company shall require written notice at its said office or agency from the
Holder of the Security or Securities so surrendered stating that the Holder
irrevocably elects to convert such Security or Securities, or, if less than the
entire principal
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amount thereof is to be converted, stating the portion thereof to be converted.
Such notice shall also state the name or names (with address and social security
or other taxpayer identification number) in which said certificate or
certificates are to be issued. Such conversion shall be deemed to have been made
at the time that such Security or Securities shall have been surrendered for
conversion and such notice shall have been received by the Company or the
Trustee, the rights of the Holder of such Security or Securities as a Holder
shall cease at such time, the Person or Persons entitled to receive the Common
Shares upon conversion of such Security or Securities shall be treated for all
purposes as having become either record holder or holders of such Common Shares
at such time and such conversion shall be at the conversion price in effect at
such time. In the case of any Security of any series which is converted in part
only, upon such conversion, the Company shall execute and, upon the Company's
request and at the Company's expense, the Trustee or an Authenticating Agent
shall authenticate and deliver to the Holder thereof, as requested by such
Holder, a new Security or Securities of such series of authorized denominations
in aggregate principal amount equal to the unconverted portion of such Security.
If the last day on which such Security may be converted is not
a Business Day in a place where the conversion agent for that Security is
located, such Security may be surrendered to that conversion agent on the next
succeeding day that is a Business Day.
The Company shall not be required to deliver certificates for
Common Shares upon conversion while its stock transfer books are closed for a
meeting of shareholders or for the payment of dividends or for any other
purpose, but certificates for Common Shares shall be delivered as soon as the
stock transfer books shall again be opened.
SECTION 1604. NO PAYMENT OR ADJUSTMENT FOR INTEREST OR
DIVIDENDS. Unless otherwise specified as contemplated by Section 301 for
Securities of such series, Securities surrendered for conversion into Common
Shares during the period from the close of business on any Regular Record Date
(or Special Record Date) next preceding any Interest Payment Date to the opening
of business on such Interest Payment Date (except Securities called for
redemption on a Redemption Date within such period) when surrendered for
conversion must be accompanied by payment (by certified or official bank check
to the order of the Company payable in clearing house funds at the location
where the Securities are surrendered) of an amount equal to the interest thereon
which the Holder is entitled to receive on such Interest Payment Date. Payment
of interest shall be made, on such Interest Payment Date or such other payment
date (as set forth in Section 307), as the case may be, to the Holder of the
Securities as of such Regular Record Date or Special Record Date, as applicable.
Except where Securities surrendered for conversion must be accompanied by
payment as described above, no interest on converted Securities will be payable
by the Company on any Interest Payment Date subsequent to the date of
conversion. No other payment or adjustment for interest or dividends is to be
made upon conversion. Notwithstanding the foregoing, upon conversion of any
Original Issue Discount Security, the fixed number of Common Shares into which
such Security is convertible delivered by the Company to the Holder thereof
shall be applied, first, to the portion attributable to the accrued original
issue discount relating to the period from the date of issuance to the date of
conversion of such Security, and, second, to the portion attributable to the
balance of the principal amount of such Security.
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SECTION 1605. ADJUSTMENT OF CONVERSION PRICE. Unless otherwise
specified as contemplated by Section 301 for Securities of such series, the
conversion price for Securities convertible into Common Shares shall be adjusted
from time to time as follows:
(a) In case the Company shall (x) pay a dividend or make a
distribution on Common Shares in Common Shares, (y) subdivide the
outstanding Common Shares into a greater number of shares or (z)
combine the outstanding Common Shares into a smaller number of shares,
the conversion price for the Securities of such series shall be
adjusted so that the Holder of any such Security thereafter surrendered
for conversion shall be entitled to receive the number of Common Shares
which he would have owned or have been entitled to receive after the
happening of any of the events described above had such Security been
converted immediately prior to the record date in the case of a
dividend or the effective date in the case of subdivision or
combination. An adjustment made pursuant to this subsection (a) shall
become effective immediately after the record date in the case of a
dividend, except as provided in subsection (h) below, and shall become
effective immediately after the effective date in the case of a
subdivision or combination.
(b) In case the Company shall issue rights or warrants to all
holders of Common Shares entitling them (for a period expiring within
45 days after the record date mentioned below) to subscribe for or
purchase Common Shares at a price per share less than the current
market price per share of Common Shares (as defined for purposes of
this subsection (b) in subsection (e) below), at the record date for
the determination of stockholders entitled to receive such rights or
warrants, the conversion price in effect immediately prior thereto
shall be adjusted so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the
date of issuance of such rights or warrants by a fraction, the
numerator of which shall be the number of Common Shares outstanding on
the date of issuance of such rights or warrants plus the number of
Common Shares which the aggregate offering price of the total number of
Common Shares so offered would purchase at such current market price,
and the denominator of which shall be the number of Common Shares
outstanding on the date of issuance of such rights or warrants plus the
number of additional Common Shares receivable upon exercise of such
rights or warrants. Such adjustment shall be made successively whenever
any such rights or warrants are issued, and shall become effective
immediately, except as provided in subsection (h) below, after such
record date. In determining whether any rights or warrants entitle the
Holders of the Securities of such series to subscribe for or purchase
Common Shares at less than such current market price, and in
determining the aggregate offering price of such Common Shares, there
shall be taken into account any consideration received by the Company
for such rights or warrants plus the exercise price thereof, the value
of such consideration or exercise price, as the case may be, if other
than cash, to be determined by the Board of Directors.
(c) In case the Company shall distribute to all holders of
Common Shares any shares of capital stock of the Company (other than
Common Shares) or evidences of its indebtedness or assets (excluding
cash dividends or distributions paid from retained earnings of the
Company) or rights or warrants to subscribe for or purchase any of its
securities (excluding those rights or warrants referred to in
subsection (b) above) (any of the foregoing being herein in this
subsection (c) called the "Special Securities"), then, in
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each such case, unless the Company elects to reserve such Special
Securities for distribution to the Holders of Securities of such series
upon the conversion so that any such Holder converting such Securities
will receive upon such conversion, in addition to the Common Shares to
which such Holder is entitled, the amount and kind of Special
Securities which such Holder would have received if such Holder had,
immediately prior to the record date for the distribution of the
Special Securities, converted Securities into Common Shares, the
conversion price shall be adjusted so that the same shall equal the
price determined by multiplying the conversion price in effect
immediately prior to the date of such distribution by a fraction the
numerator of which shall be the current market price per share (as
defined for purposes of this subsection (c) in subsection (e) below) of
Common Shares on the record date mentioned above less the then fair
market value (as determined by the Board of Directors, whose
determination shall, if made in good faith, be conclusive) of the
portion of the Special Securities so distributed applicable to one
Common Share, and the denominator of which shall be the current market
price per Common Shares (as defined in subsection (e) below); PROVIDED,
HOWEVER, that in the event the then fair market value (as so
determined) of the portion of the Special Securities so distributed
applicable to one Common Shares is equal to or greater than the current
market price per Common Shares (as defined in subsection (e) below) on
the record date mentioned above, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder of Securities of
such series shall have the right to receive the amount and kind of
Special Securities such holder would have received had he converted
such Securities immediately prior to the record date for the
distribution of the Special Securities. Such adjustment shall become
effective immediately, except as provided in subsection (h) below,
after the record date for the determination of stockholders entitled to
receive such distribution.
(d) If, pursuant to subsection (b) or (c) above, the number of
Common Shares shall have been adjusted because the Company has declared
a dividend, or made a distribution, on the outstanding Common Shares in
the form of any right or warrant to purchase securities of the Company,
or the Company has issued any such right or warrant, then, upon the
expiration of any such unexercised right or unexercised warrant, the
conversion price shall forthwith be adjusted to equal the conversion
price that would have applied had such right or warrant never been
declared, distributed or issued.
(e) For the purpose of any computation under subsection (b)
above, the current market price per Common Share on any date shall be
deemed to be the average of the reported last sales prices for the
thirty consecutive Trading Days (as defined below) commencing
forty-five Trading Days before the date in question. For the purpose of
any computation under subsection (c) above, the current market price
per Common Share on any date shall be deemed to be the average of the
reported last sales prices for the ten consecutive Trading Days before
the date in question. The reported last sales price for each day
(whether for purposes of subsection (b) or subsection (c)) shall be the
reported last sales price, regular way, or, in case no sale takes place
on such day, the average of the reported closing bid and asked prices,
regular way, in either case as reported on the New York Shares Exchange
Composite Tape or, if the Common Shares are not listed or admitted to
trading on the New York Shares Exchange, on the principal national
securities exchange on which the Common Shares are listed or admitted
to trading or, if
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not listed or admitted to trading on any national securities exchange,
on the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotations System (NASDAQ") or, if the Common
Shares are not quoted on such National Market System, the average of
the closing bid and asked prices on such day in the over-the-counter
market as reported by NASDAQ or, if bid and asked prices for the Common
Shares on each such day shall not have been reported through NASDAQ,
the average of the bid and asked prices for such day as furnished by
any New York Shares Exchange member firm regularly making a market in
the Common Shares selected for such purpose by the Board of Directors
or a committee thereof or, if no such quotations are available, the
fair market value of the Common Shares as determined by a New York
Shares Exchange Member firm regularly making a market in the Common
Shares selected for such purpose by the Board of Directors or a
committee thereof or, if no such quotations are available, the fair
market value of the Common Shares as determined by a New York Shares
Exchange member firm regularly making a market in the Common Shares
selected for such purpose by the Board of Directors or a committee
thereof. As used herein, the term "Trading Day" with respect to the
Common Shares means (x) if the Common Shares are listed or admitted for
trading on the New York Shares Exchange or another national securities
exchange, a day on which the New York Stock Exchange or such other
national securities exchange is open for business or (y) if the Common
Shares are quoted on the National Market System of the NASDAQ, a day on
which trades may be made on such National Market System or (z)
otherwise, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(f) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in such price; PROVIDED, HOWEVER, that any adjustments which
by reason of this subsection (f) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment;
and, PROVIDED, FURTHER, that adjustment shall be required and made in
accordance with the provisions of this Article Sixteen (other than this
subsection (f)) not later than such time as may be required in order to
preserve the tax free nature of a distribution to the holders of Common
Shares. All calculations under this Article Sixteen shall be made to
the nearest cent or to the nearest 1/100 of a share, as the case may
be, with one-half cent and 1/200 of a share, respectively, being
rounded upward. Anything in this Section 1605 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the conversion price, in addition to those required by this Section
1605, as it in its discretion shall determine to be advisable in order
that any stock dividend, subdivision of shares, distribution of rights
or warrants to purchase stock or securities, or distribution of other
assets (other than cash dividends) hereafter made by the Company to its
shareholders shall not be taxable.
(g) Whenever the conversion price is adjusted, as herein
provided, the Company shall promptly file with the Trustee, at the
corporate trust office of the Trustee, and with the office or agency
maintained by the Company for the conversion of Securities of such
series pursuant to Section 1002, an Officers' Certificate, setting
forth the conversion price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment, which
certificate shall be conclusive evidence of the
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correctness of such adjustment. Neither the Trustee nor any conversion
agent shall be under any duty or responsibility with respect to any
such certificate or any facts or computations set forth therein, except
to exhibit said certificate from time to time to any Holder of a
Security of such series desiring to inspect the same. The Company shall
promptly cause a notice setting forth the adjusted conversion price to
be mailed to the Holders of Securities of such series, as their names
and addresses appear upon the Security Register of the Company.
(h) In any case in which this Section 1605 provides that an
adjustment shall become effective immediately after a record date for
an event, the Company may defer until the occurrence of such event (y)
issuing to the Holder of any Security of such series converted after
such record date and before the occurrence of such event the additional
Common Shares issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Shares issuable upon
such conversion before giving effect to such adjustment and (z) paying
to such holder any amount in cash in lieu of any fractional Common
Shares pursuant to Section 1606 hereof.
SECTION 1606. NO FRACTIONAL SHARES TO BE ISSUED. No fractional
Common Shares shall be issued upon any conversion of Securities. If more than
one Security of any series shall be surrendered for conversion at one time by
the same Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of the Securities of such series (or specified portions thereof to the
extent permitted hereby) so surrendered. Instead of a fraction of a share of
Common Stock which would otherwise be issuable upon conversion of any Security
or Securities (or specified portions thereof), the Company shall pay a cash
adjustment (computed to the nearest cent, with one-half cent being rounded
upward) in respect of such fraction of a share in an amount equal to the same
fractional interest of the reported last sales price (as defined in Section
1605(e)) of the Common Shares on the Trading Day (as defined in Section 1605(e))
next preceding the day of conversion.
SECTION 1607. PRESERVATION OF CONVERSION RIGHTS UPON
CONSOLIDATION, MERGER, SALE OR CONVEYANCE. In case of any consolidation of the
Company with, or merger of the Company into, any other corporation (other than a
consolidation or merger in which the Company is the continuing corporation), or
in the case of any sale or transfer of all or substantially all of the assets of
the Company, the corporation formed by such consolidation or the corporation
into which the Company shall have been merged or the corporation which shall
have acquired such assets, as the case may be, shall execute and deliver to the
Trustee, a supplemental indenture, in accordance with the provisions of Articles
Eight and Nine as they relate to supplemental indentures, providing that the
Holder of each Security then Outstanding of a series which was convertible into
Common Shares shall have the right thereafter to convert such Security into the
kind and amount of shares of stock and other securities and property, including
cash, receivable upon such consolidation, merger, sale or transfer by a holder
of the number of Common Shares of the Company into which such Securities might
have been converted immediately prior to such consolidation, merger, sale or
transfer. Such supplemental indenture shall conform to the provisions of the
Trust Indenture Act as then in effect and shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article Sixteen. Neither the Trustee nor any conversion agent shall
have any liability or responsibility for determining the correctness of any
provision
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contained in any such supplemental indenture relating either to the kind or
amount of shares of stock or other securities or property receivable by Holders
of the Securities upon the conversion of their Securities after any such
consolidation, merger, sale or transfer, or to any adjustment to be made with
respect thereto and, subject to the provisions of Section 313 of the Trust
Indenture Act, may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, an Officers' Certificate
with respect thereto and an Opinion of Counsel with respect to legal matters
related thereto. If in the case of any such consolidation, merger, sale or
transfer, the stock or other securities and property receivable by a Holder of
the Securities includes stock or other securities and property of a corporation
other than the successor or purchasing corporation, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the Holders of the
Securities as the Board of Directors shall reasonably consider necessary. The
above provisions of this Section 1607 shall similarly apply to successive
consolidations, mergers, sales or transfers.
SECTION 1608. NOTICE TO HOLDERS OF THE SECURITIES OF A SERIES
PRIOR TO TAKING CERTAIN TYPES OF ACTION. With respect to the Securities of any
series, in case:
(a) the Company shall authorize the issuance to all holders of
Common Shares of rights or warrants to subscribe for or purchase shares
of its capital stock or of any other right;
(b) the Company shall authorize the distribution to all
holders of Common Shares of evidences of indebtedness or assets (except
for cash dividends or distributions paid from retained earnings of the
Company);
(c) of any subdivision or combination of Common Shares or of
any consolidation or merger to which the Company is a party and for
which approval by the shareholders of the Company is required, or of
the sale or transfer of all or substantially all of the assets of the
Company; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed with the Trustee and at the office or
agency maintained for the purpose of conversion of Securities of such series
pursuant to Section 1002, and shall cause to be mailed to the Holders of
Securities of such series, at their last addresses as they shall appear on the
Security Register of the Company, at least ten days prior to the applicable
record date hereinafter specified, a notice stating (i) the date as of which the
holders of Common Shares to be entitled to receive any such rights, warrants or
distribution are to be determined, or (ii) the date on which any such
subdivision, combination, consolidation, merger, sale, transfer, dissolution,
liquidation, winding up or other action is expected to become effective, and the
date as of which it is expected that holders of record of Common Shares shall be
entitled to exchange their Common Shares for securities or other property, if
any, deliverable upon such subdivision, combination,
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consolidation, merger, sale, transfer, dissolution, liquidation, winding up or
other action. The failure to give the notice required by this Section 1608 or
any defect therein shall not affect the legality or validity of any
distribution, right, warrant, subdivision, combination, consolidation, merger,
sale, transfer, dissolution, liquidation, winding up or other action, or the
vote upon any of the foregoing. Such notice shall also be published by and at
the expense of the Company not later than the aforesaid filing date at least
once in an Authorized Newspaper.
SECTION 1609. COVENANTS TO RESERVE SHARES FOR ISSUANCE ON
CONVERSION OF SECURITIES. The Company covenants that at all times it will
reserve and keep available out of each class of its authorized Common Shares,
free from preemptive rights, solely for the purpose of issue upon conversion of
Securities of any series as herein provided, such number of Common Shares as
shall then be issuable upon the conversion of all Outstanding Securities of such
series. The Company covenants that all Common Shares which shall be so issuable
shall, when issued or delivered, be duly and validly issued Common Shares into
which Securities of such series are convertible, and shall be fully paid and
nonassessable, free of all liens and charges and not subject to preemptive
rights and that, upon conversion, the appropriate capital stock accounts of the
Company will be duly credited.
SECTION 1610. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. The
Company covenants that if any Common Shares required to be reserved for purposes
of conversion of Securities hereunder require registration or listing with or
approval of any governmental authority under any Federal or State law, pursuant
to the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, or any national or regional securities exchange on which the
Common Shares are listed at the time of delivery of any Common Shares, before
such shares may be issued upon conversion, the Company will use its best efforts
to cause such shares to be duly registered, listed or approved, as the case may
be.
SECTION 1611. PAYMENT OF TAXES UPON CERTIFICATES FOR SHARES
ISSUED UPON CONVERSION. The issuance of certificates for Common Shares upon the
conversion of Securities shall be made without charge to the converting Holders
for any tax (including, without limitation, all documentary and stamp taxes) in
respect of the issuance and delivery of such certificates, and such certificates
shall be issued in the respective names of, or in such names as may be directed
by, the holders of the Securities converted; provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate in a name
other than that of the Holder of the Security converted, and the Company shall
not be required to issue or deliver such certificate unless or until the Person
or Persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
SECTION 1612. TRUSTEE'S DUTIES WITH RESPECT TO CONVERSION
PROVISIONS. The Trustee and any conversion agent shall have no duty,
responsibility or liability to any Holder to determine whether any facts exist
which may require any adjustment of the conversion rate, or with respect to the
nature or extent of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. Neither the Trustee nor any conversion
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agent shall be accountable with respect to the registration under securities
laws, listing, validity or value (or the kind or amount) of any Common Shares,
or of any other securities or property, which may at any time be issued or
delivered upon the conversion of any Security, and neither the Trustee nor any
conversion agent makes any representation with respect thereto. Neither the
Trustee nor any conversion agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
stock or stock certificates or other securities or property upon the surrender
of any Security for the purpose of conversion; and the Trustee and any
conversion agent, subject to the provisions of Section 313 of the Trust
Indenture Act, shall not be responsible for any failure of the Company to comply
with any of the covenants of the Company contained in this Article Sixteen.
SECTION 1613. CONVERSION OF SECURITIES INTO PREFERRED STOCK.
Notwithstanding any thing to the contrary in this Article Sixteen, the Company
may issue Securities that are convertible into Preferred Shares, including
Preferred Shares convertible into Common Shares, in which case all terms and
conditions relating to the conversion of Securities into Preferred Shares,
including any terms similar to those provided in Sections 1601 through 1612,
shall be as provided in or pursuant to an appropriate Board Resolution or in any
indenture supplemental hereto or as otherwise contemplated by Section 301.
ARTICLE 17
SUBORDINATION OF SECURITIES
SECTION 1701. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of Securities, by his
acceptance thereof, likewise covenants and agrees, that the indebtedness
represented by the Securities and the payment of the principal of (and premium,
if any) and interest and any Additional Amounts payable in respect of each and
all of the Securities is hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full
of Senior Indebtedness.
In the event (a) 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 marshalling 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, or (b) that a default shall have occurred and be
continuing with respect to the payment of principal of (or premium, if any) or
interest on or any Additional Amounts payable in respect of any Senior
Indebtedness, or (c) that the principal of the Securities of any series (or in
the case of Original Issue Discount Securities, the portion of the principal
amount thereof referred to in Section 502) shall have been declared due and
payable pursuant to Section 502 and such declaration shall not have been
rescinded and annulled as provided in Section 502, then:
(1) in a circumstance described in the foregoing clause (a) or
(b) the holders of all Senior Indebtedness, and in the circumstance
described in the foregoing clause (c) the holders of all Senior
Indebtedness (other than Other Obligations) outstanding at the time the
principal of such Securities (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,
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premium (if any), Interest and Additional Amounts, or provision shall
be made for such payment in money or money's worth, before the Holders
of any of the Securities are entitled to receive any payment on account
of the principal of (or premium, if any) or interest on or any
Additional Amounts in respect of the indebtedness evidenced by the
Securities;
(2) any payment by, or distribution of assets of, the Company
of any kind or character, whether in cash, property or securities
(other than securities of the Company as reorganized or readjusted or
securities of the Company or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with
respect to the securities, to the payment of all Senior Indebtedness,
provided that the rights of the holders of the Senior Indebtedness are
not altered by such reorganization or readjustment), to which the
Holders of any of the Securities would be entitled except for the
provisions of this Article shall be paid or delivered by the person
making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the holders
of such Senior Indebtedness or their representative or representatives
or to the trustee or trustees under any indenture under which any
instrument evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate amounts remaining unpaid on
account of such Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid after giving effect to any concurrent payment or
distribution (or provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders
of the indebtedness evidenced by the Securities under this Indenture;
and
(3) in the event that, notwithstanding the foregoing, any
payment by, or distribution of assets of, the Company of any kind or
character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted or securities of
the Company or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in this Article with respect to the
Securities, to the payment of all Senior Indebtedness, provided that
the rights of the holders of Senior Indebtedness are not altered by
such reorganization or readjustment), shall be received by the Holders
of any of the Securities before all Senior Indebtedness is paid in
full, such payment or distribution shall be paid over to the holders of
such Senior Indebtedness is paid in full, such payment or distribution
shall be paid over to the holders of such Senior Indebtedness or their
representative or representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably as aforesaid, for
application to the payment of all 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 provision
therefor) to the holders of such Senior Indebtedness.
SECTION 1702. SUBROGATION. Subject to the payment in full of
all Senior Indebtedness to which the indebtedness evidenced by the
Securities is in the circumstances subordinated as provided in Section
1701, the Holders of the Securities shall be subrogated to the rights
of the holders of such Senior Indebtedness to receive payments or
distributions of cash,
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property or securities of the Company applicable to such Senior
Indebtedness until all amounts owing on the Securities shall be paid in
full, and, as between the Company, its creditors other than holders of
such Senior Indebtedness, and the Holders of the Securities, no such
payment or distribution made to the holders of such Senior Indebtedness
by virtue of this Article which otherwise would have been made to the
Holders of the Securities shall be deemed to be a payment by the
Company on account of such Senior Indebtedness, it being understood
that the provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of Senior Indebtedness.
SECTION 1703. OBLIGATION OF THE COMPANY UNCONDITIONAL. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall impair, as between the Company, its creditors other than
the holders of Senior Indebtedness, and the Holders of the Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of (and premium, if any) and interest on
and any Additional Amounts in respect of the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of Senior Indebtedness nor shall
anything herein or therein prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee and the Holders of the Securities shall
be entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Company is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or agent or other person making any
payment or distribution, delivered to the Trustee or to the Holders of the
Securities, for the purpose of ascertaining the persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount paid or distributed thereon and all other facts pertinent thereto or to
this Article.
SECTION 1704. PAYMENTS ON SECURITIES PERMITTED. Nothing
contained in this Article or elsewhere in this Indenture, or in any of the
Securities, shall affect the obligation of the Company to make, or prevent the
Company from making, payment of the principal of (or premium, if any) or
interest on or any Additional Amounts in respect of the Securities in accordance
with the provisions hereof and thereof, except as otherwise provided in this
Article.
SECTION 1705. EFFECTUATION OF SUBORDINATION BY TRUSTEE. Each
Holder of Securities, by his acceptance thereof, authorizes and directs the
Trustee in his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
SECTION 1706. KNOWLEDGE OF TRUSTEE. Notwithstanding the
provisions of this Article or any other provisions of this Indenture, the
Trustee shall not be deemed to owe any
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fiduciary duty to the holders of Senior Indebtedness and shall not be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment of moneys to or by the Trustee, or the taking of any other action by
the Trustee, unless and until the Trustee shall have received written notice
thereof from the Company, any Holder of Securities, any paying or conversion
agent of the Company or the holder or representative of any class of Senior
Indebtedness; provided, however, that if the Trustee shall not have received the
notice provided for in this Section at least 3 Business Days prior to the date
upon which, by the terms hereof, any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on, or Additional Amounts in respect of, any Security) then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have all power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it during or after such 3
Business Day period.
SECTION 1707. TRUSTEE MAY HOLD SENIOR INDEBTEDNESS. The
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article with respect to any Senior Indebtedness at the time held by it,
to the same extent as any other holder of Senior Indebtedness, and nothing in
Section 313 of the Trust Indenture Act or elsewhere in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall subordinate any claims of, or
payments to, the Trustee (under or pursuant to Section 606) to Senior
Indebtedness.
SECTION 1708. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT
IMPAIRED. No right of any present or future holder of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
* * * * *
This Indenture may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Indenture.
84
<PAGE> 94
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
DEVELOPERS DIVERSIFIED
REALTY CORPORATION
By /s/ Bert L. Wolstein
Bert L. Wolstein, Chairman
Attest:
/s/ Joan U. Allgood
Title: Secretary CHEMICAL BANK, as Trustee
By /s/ T.C. Monahan
[SEAL]
Attest:
/s/ Glenn G. McKeene
Title: Assistant Secretary
85
<PAGE> 95
STATE OF OHIO )
) ss:
COUNTY OF OHIO )
On the 1st day of August , 1994, before me personally came
Bert L. Wolstein , to me known, who, being by me duly sworn, did depose and say
that he/she resides at Pepper Pike, Ohio, that he/she is Chairman of DEVELOPERS
DIVERSIFIED REALTY CORPORATION, one of the corporations described in and which
executed the foregoing instrument and that he/she signed his/her name thereto by
authority of the Board of Directors of said corporation.
[Notarial Seal]
/s/ Elizabeth A. Berry
Notary Public
COMMISSION EXPIRES
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 1st day of August, 1994, before me personally came T.C.
Monahan, to me known, who, being by me duly sworn, did depose and say that
he/she resides at 20-12 42nd Ave, Bayside, NY 11361, that he/she is Asst. Vice
President of CHEMICAL BANK, one of the corporations described in and which
executed the foregoing instrument and that he/she signed his/her name thereto by
authority of the Board of Directors of said corporation.
[Notarial Seal]
/s/ James Foley
Notary Public
COMMISSION EXPIRES
86
<PAGE> 96
EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, as of the date hereof, and except as
set forth below, the above-captioned Securities held by you for our account (i)
are owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States federal income taxation regardless of its
source ("United States person(s)"), (ii) are owned by United States person(s)
that are (a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section
2.165-12(c)(1)(v) are herein referred to as "financial institutions") purchasing
for their own account or for resale, or (b) United States person(s) who acquired
the Securities through foreign branches of United States financial institutions
and who hold the Securities through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United States
financial institution hereby agrees, on its own behalf or through its agent,
that you may advise Developers Diversified Realty Corporation or its agent that
such financial institution will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) are owned by United States or
foreign financial institution(s) for purposes of resale during the restricted
period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a United States or
foreign financial institution described in clause (iii) above (whether or not
also described in clause (i) or (ii)), this is to further certify that such
financial institution has not acquired the Securities for purposes of resale
directly or indirectly to a United States person or to a person within the
United States or its possessions.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and its
"possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the above-captioned Securities held by you for our account in accordance with
your Operating Procedures if any applicable statement herein is not correct on
such date, and in the absence of any such notification it may be assumed that
this certification applies as of such date.
A-1
87
<PAGE> 97
This certificate excepts and does not relate to [U.S.$]___ of
such interest in the above-captioned Securities in respect of which we are not
able to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.
We understand that this certificate may be required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: , 19
------------------ --
[To be dated no earlier than the 15th day prior
to (i) the Exchange Date or (ii) the relevant
Interest Payment Date occurring prior to the
Exchange Date, as applicable]
[Name of Person Making
Certification]
-----------------------------
(Authorized Signator)
Name:
Title:
A-2
<PAGE> 98
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, based solely on written
certifications that we have received in writing, by tested telex or by
electronic transmission from each of the persons appearing in our records as
persons entitled to a portion of the principal amount set forth below (our
"Member Organizations") substantially in the form attached hereto, as of the
date hereof, [U.S.$] principal amount of the above-captioned Securities (i) is
owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States Federal income taxation regardless of its
source ("United States person(s)"), (ii) is owned by United States person(s)
that are (a) foreign branches of United States financial institutions (financial
institutions, as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
are herein referred to as "financial institutions") purchasing for their own
account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on the
date hereof (and in either case (a) or (b), each such financial institution has
agreed, on its own behalf or through its agent, that we may advise Developers
Diversified Realty Corporation or its agent that such financial institution will
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is
owned by United States or foreign financial institution(s) for purposes of
resale during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that
financial institutions described in clause (iii) above (whether or not also
described in clause (i) or (ii)) have certified that they have not acquired the
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and its
"possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We further certify that (i) we are not making available
herewith for exchange (or, if relevant, collection of any interest) any portion
of the temporary global Security representing the above-captioned Securities
excepted in the above referenced certificates of Member Organizations and (ii)
as of the date hereof we have not received any notification from any of our
Member Organizations to the effect that the statements made by such Member
Organizations
A-3
P
with respect to any portion of the part submitted herewith for exchange (or, if
relevant, collection of any interest) are no longer true and cannot be relied
upon as of the date hereof.
We understand that this certification is required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: 19
------------- --
[To be dated no earlier than the Exchange Date or the relevant Interest Payment
Date occurring prior to the Exchange Date, as applicable]
[Morgan Guaranty Trust
Company of New York,
Brussels Office,] as
Operator of the Euroclear
System [Cedel S.A.]
By
--------------------
A-4
<PAGE> 99
with respect to any portion of the part submitted herewith for exchange (or, if
relevant, collection of any interest) are no longer true and cannot be relied
upon as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: ___________ 19__
[To be dated no earlier than the Exchange Date
or the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]
[Morgan Guaranty Trust
Company of New York,
Brussels Office,] as
Operator of the
Euroclear System
[Cedel S.A.]
By __________________________
<PAGE> 1
EXHIBIT 4.8
-----------------------------------------------------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
TO
NATIONAL CITY BANK
Trustee
-------------------------
Indenture
Dated as of May 1, 1994
-------------------------
Senior Debt Securities
-----------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS OF THE COMPANY.................................................................................1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.....................................1
SECTION 101. Definitions................................................................................1
Act............................................................................................2
Additional Amounts.............................................................................2
Affiliate......................................................................................2
Authenticating Agent...........................................................................2
Authorized Newspaper...........................................................................2
Bankruptcy Law.................................................................................2
Bearer Security................................................................................2
Board of Directors.............................................................................2
Board Resolution...............................................................................2
Business Day...................................................................................2
CEDEL..........................................................................................3
Commission.....................................................................................3
Common Shares..................................................................................3
Company........................................................................................3
Company Request and Company Order..............................................................3
Consolidated Income Available for Debt Service.................................................3
Consolidated Net Income........................................................................3
Conversion Event...............................................................................3
Corporate Trust Office.........................................................................4
Corporation....................................................................................4
Coupon.........................................................................................4
Custodian......................................................................................4
Debt...........................................................................................4
Defaulted Interest.............................................................................4
Dollar or $....................................................................................4
ECU............................................................................................4
Euroclear......................................................................................4
European Communities...........................................................................4
European Monetary System.......................................................................4
Event of Default...............................................................................4
Foreign Currency...............................................................................4
Funds from Operations..........................................................................5
GAAP...........................................................................................5
Government Obligations.........................................................................5
Holder.........................................................................................5
Indenture......................................................................................5
Indexed Security...............................................................................6
Interest.......................................................................................6
Interest Payment Date..........................................................................6
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Maturity.......................................................................................6
Maximum Annual Service Charge..................................................................6
Officers' Certificate..........................................................................6
Opinion of Counsel.............................................................................6
Original Issue Discount Security...............................................................6
Outstanding....................................................................................6
Paying Agent...................................................................................8
Person.........................................................................................8
Place of Payment...............................................................................8
Predecessor Security...........................................................................8
Preferred Shares...............................................................................8
Redemption Date................................................................................8
Redemption Price...............................................................................8
Registered Security............................................................................8
Regular Record Date............................................................................8
Repayment Date.................................................................................8
Repayment Price................................................................................8
Responsible Officer............................................................................8
Security.......................................................................................9
Security Register and Security Registrar.......................................................9
Significant Subsidiary.........................................................................9
Special Record Date............................................................................9
Stated Maturity................................................................................9
Subsidiary.....................................................................................9
Trust Indenture Act or TIA.....................................................................9
Trustee........................................................................................9
Undepreciated Real Estate Assets...............................................................9
Unencumbered Real Estate Asset Value..........................................................10
United States.................................................................................10
United States person..........................................................................10
Yield to Maturity.............................................................................10
SECTION 102. Compliance Certificates and Opinions......................................................10
SECTION 103. Form of Documents Delivered to Trustee....................................................11
SECTION 104. Acts of Holders...........................................................................11
SECTION 105. Notices, Etc., to Trustee and Company.....................................................13
SECTION 106. Notice to Holders; Waiver.................................................................13
SECTION 107. Effect of Headings and Table of Contents..................................................14
SECTION 108. Successors and Assigns....................................................................14
SECTION 109. Separability Clause.......................................................................14
SECTION 110. Benefits of Indenture.....................................................................14
SECTION 111. Governing Law.............................................................................14
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
SECTION 112. Legal Holidays............................................................................14
ARTICLE TWO SECURITIES FORMS...........................................................................15
SECTION 201. Forms of Securities.......................................................................15
SECTION 202. Form of Trustee's Certificate of Authentication...........................................15
SECTION 203. Securities Issuable in Global Form........................................................15
ARTICLE THREE THE SECURITIES...........................................................................16
SECTION 301. Amount Unlimited; Issuable in Series......................................................16
SECTION 302. Denominations.............................................................................20
SECTION 303. Execution, Authentication, Delivery and Dating............................................20
SECTION 304. Temporary Securities......................................................................22
SECTION 305. Registration, Registration of Transfer and Exchange.......................................24
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities..........................................28
SECTION 307. Payment of Interest; Interest Rights Preserved............................................29
SECTION 308. Persons Deemed Owners.....................................................................31
SECTION 309. Cancellation..............................................................................31
SECTION 310. Computation of Interest...................................................................32
ARTICLE FOUR SATISFACTION AND DISCHARGE................................................................32
SECTION 401. Satisfaction and Discharge of Indenture...................................................32
SECTION 402. Application of Trust Funds................................................................33
ARTICLE FIVE REMEDIES..................................................................................33
SECTION 501. Events of Default.........................................................................33
SECTION 502. Acceleration of Maturity; Rescission and Annulment........................................35
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee...........................36
SECTION 504. Trustee May File Proofs of Claim..........................................................37
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or Coupons....................38
SECTION 506. Application of Money Collected............................................................38
SECTION 507. Limitation on Suits.......................................................................38
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium, if any, Interest and
Additional Amounts............................................................................39
SECTION 509. Restoration of Rights and Remedies........................................................39
SECTION 510. Rights and Remedies Cumulative............................................................39
SECTION 511. Delay or Omission Not Waiver..............................................................39
SECTION 512. Control by Holders of Securities..........................................................40
SECTION 513. Waiver of Past Defaults...................................................................40
SECTION 514. Waiver of Usury, Stay or Extension Laws...................................................40
SECTION 515. Undertaking for Costs.....................................................................41
ARTICLE SIX THE TRUSTEE................................................................................41
SECTION 601. Notice of Defaults........................................................................41
SECTION 602. Certain Rights of Trustee.................................................................41
SECTION 603. Not Responsible for Recitals or Issuance of Securities....................................43
SECTION 604. May Hold Securities.......................................................................43
SECTION 605. Money Held in Trust.......................................................................43
SECTION 606. Compensation and Reimbursement............................................................43
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting Interests............................44
SECTION 608. Resignation and Removal; Appointment of Successor.........................................44
SECTION 609. Acceptance of Appointment by Successor....................................................45
SECTION 610. Merger, Conversion, Consolidation or Succession to Business...............................46
SECTION 611. Appointment of Authenticating Agent.......................................................47
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY........................................49
SECTION 701. Disclosure of Names and Addresses of Holders..............................................49
SECTION 702. Reports by Trustee........................................................................49
SECTION 703. Reports by Company........................................................................49
SECTION 704. Company to Furnish Trustee Names and Addresses of Holders.................................50
ARTICLE EIGHT CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE.........................................50
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
SECTION 801. Consolidations and Mergers of Company and Sales, Leases and Conveyances Permitted
Subject to Certain Conditions.................................................................50
SECTION 802. Rights and Duties of Successor Corporation................................................51
SECTION 803. Officers' Certificate and Opinion of Counsel..............................................51
ARTICLE NINE SUPPLEMENTAL INDENTURES...................................................................51
SECTION 901. Supplemental Indentures Without Consent of Holders........................................51
SECTION 902. Supplemental Indentures with Consent of Holders...........................................53
SECTION 903. Execution of Supplemental Indentures......................................................54
SECTION 904. Effect of Supplemental Indentures.........................................................54
SECTION 905. Conformity with Trust Indenture Act.......................................................54
SECTION 906. Reference in Securities to Supplemental Indentures........................................54
ARTICLE TEN COVENANTS..................................................................................54
SECTION 1001. Payment of Principal, Premium, if any, Interest and Additional Amounts...................54
SECTION 1002. Maintenance of Office or Agency..........................................................55
SECTION 1003. Money for Securities Payments to Be Held in Trust........................................56
SECTION 1004. Limitations on Incurrence of Debt........................................................58
SECTION 1005. Restrictions on Dividends and Other Distributions........................................58
SECTION 1006. Existence................................................................................59
SECTION 1007. Maintenance of Properties................................................................59
SECTION 1008. Insurance................................................................................59
SECTION 1009. Payment of Taxes and Other Claims........................................................59
SECTION 1010. Provision of Financial Information.......................................................59
SECTION 1011. Maintenance of Unencumbered Real Estate Assets...........................................60
SECTION 1012. Statement as to Compliance...............................................................60
SECTION 1013. Additional Amounts.......................................................................60
SECTION 1014. Waiver of Certain Covenants..............................................................61
ARTICLE ELEVEN REDEMPTION OF SECURITIES................................................................61
SECTION 1101. Applicability of Article.................................................................61
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
<S> <C>
SECTION 1102. Election to Redeem; Notice to Trustee....................................................61
SECTION 1103. Selection by Trustee of Securities to Be Redeemed........................................62
SECTION 1104. Notice of Redemption.....................................................................62
SECTION 1105. Deposit of Redemption Price..............................................................63
SECTION 1106. Securities Payable on Redemption Date....................................................64
SECTION 1107. Securities Redeemed in Part..............................................................65
SECTION 1108. Conversion Arrangement on Call for Redemption............................................65
ARTICLE TWELVE SINKING FUNDS...........................................................................65
SECTION 1201. Applicability of Article.................................................................65
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities....................................66
SECTION 1203. Redemption of Securities for Sinking Fund................................................66
ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS....................................................67
SECTION 1301. Applicability of Article.................................................................67
SECTION 1302. Repayment of Securities..................................................................67
SECTION 1303. Exercise of Option.......................................................................67
SECTION 1304. When Securities Presented for Repayment Become Due and Payable...........................68
SECTION 1305. Securities Repaid in Part................................................................69
ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE....................................................69
SECTION 1401. Applicability of Article; Company's Option to Effect Defeasance or Covenant
Defeasance....................................................................................69
SECTION 1402. Defeasance and Discharge.................................................................69
SECTION 1403. Covenant Defeasance......................................................................70
SECTION 1404. Conditions to Defeasance or Covenant Defeasance..........................................70
SECTION 1405. Deposited Money and Government Obligations to Be Held in Trust; Other
Miscellaneous Provisions......................................................................72
ARTICLE FIFTEEN MEETINGS OF HOLDERS OF SECURITIES......................................................73
SECTION 1501. Purposes for Which Meetings May Be Called................................................73
SECTION 1502. Call, Notice and Place of Meetings.......................................................73
SECTION 1503. Persons Entitled to Vote at Meetings.....................................................73
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
<S> <C>
SECTION 1504. Quorum; Action...........................................................................74
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of Meetings......................75
SECTION 1506. Counting Votes and Recording Action of Meetings..........................................75
</TABLE>
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
EXHIBIT A - FORMS OF CERTIFICATION
-vii-
<PAGE> 9
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939
(the "1939 Act") and Indenture, dated as of May 1, 1994
1939 Act Section Indenture Section
Section 310(a)(1).................................... 607
(a)(2).................................... 607
(b)....................................... 607, 608
Section 312(c)....................................... 701
Section 313(a)....................................... 702
(c)....................................... 702
Section 314(a)....................................... 703
(a)(4).................................... 1012
(c)(1).................................... 102
(c)(2).................................... 102
(e)....................................... 102
Section 315(b)....................................... 601
Section 316(a) (last sentence)....................... 101 ("Outstanding")
(a)(1)(A)................................. 502, 512
(a)(1)(B)................................. 513
(b)....................................... 508
Section 317(a)(1).................................... 503
(a)(2).................................... 504
Section 318(a)....................................... 111
(c)....................................... 111
- -----------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
Attention should also be directed to Section 318(c) of the 1939 Act,
which provides that the provisions of Sections 310 to and including 317 of the
1939 Act are a part of and govern every qualified indenture, whether or not
physically contained therein.
-viii-
<PAGE> 10
INDENTURE, dated as of May 1, 1994, between DEVELOPERS
DIVERSIFIED REALTY CORPORATION, an Ohio corporation (hereinafter called the
"Company"), having its principal office at 34555 Chagrin Boulevard, Moreland
Hills, Ohio 44022, and National City Bank,a national banking association
organized and existing under the laws of the United States of America, as
Trustee hereunder (hereinafter called the "Trustee"), having its Corporate Trust
Office at 1900 East Ninth Street, Cleveland, Ohio 44114.
RECITALS OF THE COMPANY
The Company deems it necessary to issue from time to time for
its lawful purposes senior debt securities (hereinafter called the "Securities")
evidencing its unsecured and unsubordinated indebtedness, and has duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of the Securities, unlimited as to principal amount,
to bear interest at the rates or formulas, to mature at such times and to have
such other provisions as shall be fixed as hereinafter provided.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, that are deemed to be incorporated into this
Indenture and shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the TIA,
either directly or by reference therein, have the meanings assigned to
them therein, and the terms "cash transaction" and "self-liquidating
paper", as used in TIA Section 311, shall have the meanings assigned to
them in the rules of the Commission adopted under the TIA;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
<PAGE> 11
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms used principally in Article Three, Article Five,
Article Six and Article Ten are defined in those Articles.
"ACT", when used with respect to any Holder, has the meaning
specified in Section 104.
"ADDITIONAL AMOUNTS" means any additional amounts which are
required by a Security or by or pursuant to a Board Resolution, under
circumstances specified therein, to be paid by the Company in respect of certain
taxes imposed on certain Holders and which are owing to such Holders.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AUTHENTICATING AGENT" means any authenticating agent
appointed by the Trustee pursuant to Section 611.
"AUTHORIZED NEWSPAPER" means a newspaper, printed in the
English language or in an official language of the country of publication,
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in each place in
connection with which the term is used or in the financial community of each
such place. Whenever successive publications are required to be made in
Authorized Newspapers, the successive publications may be made in the same or in
different Authorized Newspapers in the same city meeting the foregoing
requirements and in each case on any Business Day.
"BANKRUPTCY LAW" has the meaning specified in Section 501.
"BEARER SECURITY" means any Security established pursuant to
Section 201 which is payable to bearer.
"BOARD OF DIRECTORS" means the board of directors of the
Company, the executive committee or any committee of that board duly authorized
to act hereunder.
"BOARD RESOLUTION" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS DAY", when used with respect to any Place of Payment
or any other particular location referred to in this Indenture or in the
Securities, means, unless otherwise specified with respect to any Securities
pursuant to Section 301, any day, other than a Saturday
-2-
<PAGE> 12
or Sunday, that is neither a legal holiday nor a day on which banking
institutions in that Place of Payment or particular location are authorized or
required by law, regulation or executive order to close.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres,
S.A., or its successor.
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at any time after execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties on such date.
"COMMON SHARES" means, with respect to any Person, capital
stock issued by such Person other than Preferred Shares.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"COMPANY REQUEST" and "COMPANY ORDER" mean, respectively, a
written request or order signed in the name of the Company by its Chairman of
the Board, the President or a Vice President, and by its Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, and
delivered to the Trustee.
"CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE" "Consolidated
Income Available for Debt Service" for any period means Consolidated Net Income
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.
"CONSOLIDATED NET INCOME" for any period means the amount of
consolidated net income (or loss) of the Company and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.
"CONVERSION EVENT" means the cessation of use of (i) a Foreign
Currency both by the government of the country which issued such currency and
for the settlement of transactions by a central bank or other public
institutions of or within the international banking community, (ii) the ECU both
within the European Monetary System and for the settlement of transactions by
public institutions of or within the European Communities or (iii) any currency
unit (or composite currency) other than the ECU for the purposes for which it
was established.
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"CORPORATE TRUST OFFICE" means the office of the Trustee at
which, at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at 1900 East Ninth
Street, Cleveland, Ohio 44114.
"CORPORATION" includes corporations, associations, companies
and business trusts.
"COUPON" means any interest coupon appertaining to a Bearer
Security.
"CUSTODIAN" has the meaning specified in Section 501.
"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 as 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
GAAP, 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 GAAP,
and also includes, to the extent not otherwise included, any obligation by the
Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), indebtedness of another person (other than the Company or any
Subsidiary).
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DOLLAR" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States of America as at the time shall be
legal tender for the payment of public and private debts.
"ECU" means the European Currency Unit as defined and revised
from time to time by the Council of the European Communities.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York,
Brussels Office, or its successor as operator of the Euroclear System.
"EUROPEAN COMMUNITIES" means the European Economic Community,
the European Coal and Steel Community and the European Atomic Energy Community.
"EUROPEAN MONETARY SYSTEM" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the European
Communities.
"EVENT OF DEFAULT" has the meaning specified in Article Five.
"FOREIGN CURRENCY" means any currency, currency unit or
composite currency, including, without limitation, the ECU, issued by the
government of one or more countries other
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<PAGE> 14
than the United States of America or by any recognized confederation or
association of such governments.
"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, gains or losses from extraordinary
items, gains or losses on sales of real estate, gains or losses on investments
in marketable securities and any provision/benefit for income taxes for such
period, plus funds from operations of unconsolidated joint ventures, all
determined on a consistent basis in accordance with GAAP.
"GAAP" means generally accepted accounting principles, as in
effect from time to time, as used in the United States applied on a consistent
basis.
"GOVERNMENT OBLIGATIONS "means securities which are (i) direct
obligations of the United States of America or the government which issued the
Foreign Currency in which the Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a 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.
"HOLDER" means, in the case of a Registered Security, the
Person in whose name a Security is registered in the Security Register and, in
the case of a Bearer Security, the bearer thereof and, when used with respect to
any coupon, shall mean the bearer thereof.
"INDENTURE" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms of particular series of Securities established as
contemplated by Section 301; PROVIDED, HOWEVER, that, if at any time more than
one Person is acting as Trustee under this instrument, "INDENTURE" shall mean,
with respect to any one or more series of Securities for which such Person is
Trustee, this instrument as originally executed or as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall include the terms of
the or those particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for which
such Person is Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or
more indentures supplemental hereto executed and delivered
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<PAGE> 15
after such Person had become such Trustee but to which such Person, as such
Trustee, was not a party.
"INDEXED SECURITY" means a Security the terms of which provide
that the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"INTEREST", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after Maturity, shall
mean interest payable after Maturity, and, when used with respect to a Security
which provides for the payment of Additional Amounts pursuant to Section 1012,
includes such Additional Amounts.
"INTEREST PAYMENT DATE", when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
"MATURITY", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
"MAXIMUM ANNUAL SERVICE CHARGE" as of any date means the
maximum amount which may become payable in any period of 12 consecutive calendar
months from such date for interest on, and required amortization of, Debt. The
amount payable for amortization shall include the amount of any sinking fund or
other analogous fund for the retirement of Debt and the amount payable on
account of principal on any such Debt which matures serially other than at the
final maturity date of such Debt.
"OFFICERS' CERTIFICATE" means a certificate signed by the
Chairman of the Board of Directors, the President or a Vice President and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who
may be counsel for the Company or who may be an employee of or other counsel for
the Company and who shall be satisfactory to the Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"OUTSTANDING", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, EXCEPT:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption or repayment at the option of the Holder money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in
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<PAGE> 16
trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such
Securities and any coupons appertaining thereto, PROVIDED that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to
the Trustee has been made;
(iii) Securities, except to the extent provided in Sections
1402 and 1403, with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article Fourteen;
(iv) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company; and
(v) Securities converted into Common Shares or Preferred
Shares pursuant to or in accordance with this Indenture if the terms of
such Securities provide for convertibility pursuant to Section 301;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be equal
to the Dollar equivalent, determined pursuant to Section 301 as of the date such
Security is originally issued by the Company, of the principal amount (or, in
the case of an Original Issue Discount Security, the Dollar equivalent as of
such date of original issuance of the amount determined as provided in clause
(i) above) of such Security, (iii) the principal amount of any Indexed Security
that may be counted in making such determination or calculation and that shall
be deemed outstanding for such purpose shall be equal to the principal face
amount of such Indexed Security at original issuance, unless otherwise provided
with respect to such Security pursuant to Section 301, and (iv) Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
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<PAGE> 17
"PAYING AGENT" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Securities or
coupons on behalf of the Company.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PLACE OF PAYMENT", when used with respect to the Securities
of or within any series, means the place or places where the principal of (and
premium, if any) and interest on such Securities are payable as specified as
contemplated by Sections 301 and 1002.
"PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains.
"PREFERRED SHARES" means, with respect to any Person, capital
stock issued by such Person that is entitled to a preference or priority over
any other capital stock issued by such Person upon any distribution of such
Person's assets, whether by dividend or upon liquidation.
"REDEMPTION DATE", when used with respect to any Security to
be redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"REDEMPTION PRICE", when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGISTERED SECURITY" shall mean any Security which is
registered in the Security Register.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 301, whether or not a
Business Day.
"REPAYMENT DATE" means, when used with respect to any Security
to be repaid at the option of the Holder, the date fixed for such repayment by
or pursuant to this Indenture.
"REPAYMENT PRICE" means, when used with respect to any
Security to be repaid at the option of the Holder, the price at which it is to
be repaid by or pursuant to this Indenture.
"RESPONSIBLE OFFICER", when used with respect to the Trustee,
means the chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president (whether or not designated by a number or a word
or words added before or after the title "vice president"), the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant
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<PAGE> 18
cashier, any trust officer or assistant trust officer, the controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers.
"SECURITY" has the meaning stated in the first recital of this
Indenture and, more particularly, means any Security or Securities authenticated
and delivered under this Indenture; PROVIDED, HOWEVER, that, if at any time
there is more than one Person acting as Trustee under this Indenture,
"Securities" with respect to the Indenture as to which such Person is Trustee
shall have the meaning stated in the first recital of this Indenture and shall
more particularly mean Securities authenticated and delivered under this
Indenture, exclusive, however, of Securities of any series as to which such
Person is not Trustee.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary which is a
"significant subsidiary" (as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated under the Securities Act of 1933) of the Company.
"SPECIAL RECORD DATE" for the payment of any Defaulted
Interest on the Registered Securities of or within any series means a date fixed
by the Trustee pursuant to Section 307.
"STATED MATURITY", when used with respect to any Security or
any installment of principal thereof or interest thereon, means the date
specified in such Security or a coupon representing such installment of interest
as the fixed date on which the principal of such Security or such installment of
principal or interest is due and payable.
"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 the 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.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act
of 1939, as amended and as in force at the date as of which this Indenture was
executed, except as provided in Section 905.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder;
PROVIDED, HOWEVER, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
"UNDEPRECIATED REAL ESTATE ASSETS" means as of any date the
amount of real estate assets of the Company and its Subsidiaries on such date,
before depreciation and amortization determined on a consolidated basis in
accordance with GAAP.
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<PAGE> 19
"UNENCUMBERED REAL ESTATE ASSET VALUE" means as of any date
the sum of (i) the Company's Undepreciated Real Estate Assets 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 said filing is not required under the Securities Exchange Act
of 1934, as amended, with the Trustee) prior to such date which Undepreciated
Real Estate Assets are unencumbered by any mortgage, lien, charge, pledge or
security interest and (ii) the purchase price of any real estate assets that are
unencumbered by any mortgage, lien, charge, pledge, or security interest and
were acquired by the Company or any Subsidiary since the end of such calendar
quarter.
"UNITED STATES" means, unless otherwise specified with respect
to any Securities pursuant to Section 301, the United States of America
(including the states and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"UNITED STATES PERSON" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source.
"YIELD TO MATURITY" means the yield to maturity, computed at
the time of issuance of a Security (or, if applicable, at the most recent
redetermination of interest on such Security) and as set forth in such Security
in accordance with generally accepted United States bond yield computation
principles.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or
request by the Company to the Trustee to take any action under any provision of
this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
delivered pursuant to Section 1011) shall include:
(1) a statement that each individual signing such certificate
or opinion has read such condition or covenant and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such condition
or covenant has been satisfied or complied with; and
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(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been satisfied or complied
with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion as to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 104. ACTS OF HOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders of the Outstanding Securities of
all series or one or more series, as the case may be, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agents duly appointed in writing. If Securities of
a series are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders of Securities of such series may, alternatively, be
embodied in and evidenced by the record of Holders of Securities of such series
voting in favor thereof, either in person or by proxies duly appointed in
writing, at any meeting of Holders of Securities of such series duly called and
held in accordance with the provisions of Article Fifteen, or a combination of
such instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
or record or both are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments and any such record
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments
or so voting at any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agent, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and conclusive
in favor of the Trustee and the Company and any agent of the Trustee or the
Company, if made in the manner provided in this Section. The record of any
meeting of Holders of Securities shall be proved in the manner provided in
Section 1506.
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<PAGE> 21
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness
of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to
him the execution thereof. Where such execution is by a signer acting
in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The
fact and date of the execution of any such instrument or writing, or
the authority of the Person executing the same, may also be proved in
any other reasonable manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by
the Security Register.
(d) The ownership of Bearer Securities may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary,
wherever situated, if such certificate shall be deemed by the Trustee
to be satisfactory, showing that at the date therein mentioned such
Person had on deposit with such depositary, or exhibited to it, the
Bearer Securities therein described; or such facts may be proved by the
certificate or affidavit of the Person holding such Bearer Securities,
if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such
ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the
same Bearer Security is produced, or (2) such Bearer Security is
produced to the Trustee by some other Person, or (3) such Bearer
Security is surrendered in exchange for a Registered Security, or (4)
such Bearer Security is no longer Outstanding. The ownership of Bearer
Securities may also be proved in any other manner which the Trustee
deems sufficient.
(e) If the Company shall solicit from the Holders of
Registered Securities any request, demand, authorization, direction,
notice, consent, waiver or other Act, the Company may, at its option,
in or pursuant to a Board Resolution, fix in advance a record date for
the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not earlier
than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such
solicitation is completed. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or
other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of
the requisite proportion of Outstanding Securities have authorized or
agreed or consented to such request, demand, authorization, direction,
notice, consent, waiver or other Act, and for that purpose the
Outstanding Securities shall be computed as of such record date;
PROVIDED that no such authorization, agreement or consent by the
Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later
than eleven months after the record date.
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(f) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee, any Security Registrar,
any Paying Agent, any Authenticating Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such
Security.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this Indenture or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture
provides for notice of any event to Holders of Registered Securities by the
Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each such Holder affected by such event, at his address as
it appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders of Registered Securities is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders of Registered Securities or the sufficiency of any notice to
Holders of Bearer Securities given as provided herein. Any notice mailed to a
Holder in the manner herein prescribed shall be conclusively deemed to have been
received by such Holder, whether or not such Holder actually receives such
notice.
If by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause it shall be impracticable to give
such notice by mail, then such notification to Holders of Registered Securities
as shall be made with the approval of the Trustee shall constitute a sufficient
notification to such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise
specified with respect to any Securities pursuant to Section 301, where this
Indenture provides for notice to Holders of Bearer Securities of any event, such
notice shall be sufficiently given if published in an Authorized Newspaper in
The City of New York and in such other city or cities as may be specified in
such Securities on a Business Day, such publication to be not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. Any such notice shall be deemed to have been given on the date
of such publication or, if published more than once, on the date of the first
such publication.
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If by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause it
shall be impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as shall
be given with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. Neither the failure to give notice by
publication to any particular Holder of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of such
notice with respect to other Holders of Bearer Securities or the sufficiency of
any notice to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent
or waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE. In case any provision in
this Indenture or in any Security or coupon shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE. Nothing in this Indenture
or in the Securities or coupons, express or implied, shall give to any Person,
other than the parties hereto, any Security Registrar, any Paying Agent, any
Authenticating Agent and their successors hereunder and the Holders any benefit
or any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW. This Indenture and the Securities
and coupons shall be governed by and construed in accordance with the law of the
State of Ohio. This Indenture is subject to the provisions of the TIA that are
required to be part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 112. LEGAL HOLIDAYS. In any case where any Interest
Payment Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or any
Security or coupon other than a provision in the Securities of any series which
specifically states that such provision shall apply in lieu hereof), payment of
interest or any Additional Amounts or principal (and premium, if any) need not
be
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made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date, Redemption Date, Repayment Date or
sinking fund payment date, or at the Stated Maturity or Maturity, PROVIDED that
no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date, Repayment Date, sinking fund
payment date, Stated Maturity or Maturity, as the case may be.
ARTICLE TWO
SECURITIES FORMS
SECTION 201. FORMS OF SECURITIES. The Registered Securities,
if any, of each series and the Bearer Securities, if any, of each series and
related coupons shall be in substantially the forms as shall be established in
one or more indentures supplemental hereto or approved from time to time by or
pursuant to a Board Resolution in accordance with Section 301, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Securities may be listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301,
Bearer Securities shall have interest coupons attached.
The definitive Securities and coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers executing such Securities or coupons,
as evidenced by their execution of such Securities or coupons.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Subject to Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
NATIONAL CITY BANK, as Trustee
By:
--------------------------------
Authorized Officer
SECTION 203. SECURITIES ISSUABLE IN GLOBAL FORM. If Securities
of or within a series are issuable in global form, as specified as contemplated
by Section 301, then, notwithstanding clause (8) of Section 301 and the
provisions of Section 302, any such Security
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<PAGE> 25
shall represent such of the Outstanding Securities of such series as shall be
specified therein and may provide that it shall represent the aggregate amount
of Outstanding Securities of such series from time to time endorsed thereon and
that the aggregate amount of Outstanding Securities of such series represented
thereby may from time to time be increased or decreased to reflect exchanges.
Any endorsement of a Security in global form to reflect the amount, or any
increase or decrease in the amount, of Outstanding Securities represented
thereby shall be made by the Trustee in such manner and upon instructions given
by such Person or Persons as shall be specified therein or in the Company Order
to be delivered to the Trustee pursuant to Section 303 or 304. Subject to the
provisions of Section 303 and, if applicable, Section 304, the Trustee shall
deliver and redeliver any Security in permanent global form in the manner and
upon instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 303 or 304 has
been or is, delivered, any instructions by the Company with respect to
endorsement or delivery or redelivery of a Security in global form shall be in
writing but need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply
to any Security represented by a Security in global form if such Security was
never issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
Notwithstanding the provisions of Section 307, unless
otherwise specified as contemplated by Section 301, payment of principal of and
any premium and interest on any Security in permanent global form shall be made
to the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as
provided in the preceding paragraph, the Company, the Trustee and any agent of
the Company and the Trustee shall treat as the Holder of such principal amount
of Outstanding Securities represented by a permanent global Security (i) in the
case of a permanent global Security in registered form, the Holder of such
permanent global Security in registered form, or (ii) in the case of a permanent
global Security in bearer form, Euroclear or CEDEL.
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in one or more Board Resolutions or pursuant to authority
granted by one or more Board Resolutions and, subject to Section 303, set forth,
or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series, any or all of the following, as applicable (each of
which
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(except for the matters set forth in clauses (1), (2) and (15) below), if so
provided, may be determined from time to time by the Company with respect to
unissued Securities of the series when issued from time to time):
(1) the title of the Securities of the series (which shall
distinguish the Securities of such series from all other series of
Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906, 1107
or 1305);
(3) the date or dates, or the method by which such date or
dates will be determined, on which the principal of the Securities of
the series shall be payable;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which such interest shall
accrue or the method by which such date or dates shall be determined,
the Interest Payment Dates on which such interest will be payable and
the Regular Record Date, if any, for the interest payable on any
Registered Security on any Interest Payment Date, or the method by
which such date shall be determined, and the basis upon which interest
shall be calculated if other than that of a 360-day year of twelve
30-day months;
(5) the place or places, if any, other than or in addition to
The Borough of Manhattan, The City of New York, where the principal of
(and premium, if any), interest, if any, on, and Additional Amounts, if
any, payable in respect of, Securities of the series shall be payable,
any Registered Securities of the series may be surrendered for
registration of transfer, exchange or conversion and notices or demands
to or upon the Company in respect of the Securities of the series and
this Indenture may be served;
(6) the period or periods within which, the price or prices at
which, the currency or currencies, currency unit or units or composite
currency or currencies in which, and other terms and conditions upon
which Securities of the series may be redeemed, in whole or in part, at
the option of the Company, if the Company is to have the option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the
period or periods within which or the date or dates on which, the price
or prices at which, the currency or currencies, currency unit or units
or composite currency or currencies in which, and other terms and
conditions upon which Securities of the series shall be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Registered Securities
of the series shall be issuable and, if other than the denomination of
$5,000, the denomination or denominations in which any Bearer
Securities of the series shall be issuable;
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(9) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(10) if other than the principal amount thereof, the portion
of the principal amount of Securities of the series that shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502 or, if applicable, the portion of the principal
amount of Securities of the series that is convertible in accordance
with the provisions of this Indenture, or the method by which such
portion shall be determined;
(11) if other than Dollars, the Foreign Currency or Foreign
Currencies in which payment of the principal of (and premium, if any)
or interest or Additional Amounts, if any, on the Securities of the
series shall be payable or in which the Securities of the series shall
be denominated;
(12) whether the amount of payments of principal of (and
premium, if any) or interest, if any, on the Securities of the series
may be determined with reference to an index, formula or other method
(which index, formula or method may be based, without limitation, on
one or more currencies, currency units, composite currencies,
commodities, equity indices or other indices), and the manner in which
such amounts shall be determined;
(13) whether the principal of (and premium, if any) or
interest or Additional Amounts, if any, on the Securities of the series
are to be payable, at the election of the Company or a Holder thereof,
in a currency or currencies, currency unit or units or composite
currency or currencies other than that in which such Securities are
denominated or stated to be payable, the period or periods within
which, and the terms and conditions upon which, such election may be
made, and the time and manner of, and identity of the exchange rate
agent with responsibility for, determining the exchange rate between
the currency or currencies, currency unit or units or composite
currency or currencies in which such Securities are denominated or
stated to be payable and the currency or currencies, currency unit or
units or composite currency or currencies in which such Securities are
to be so payable;
(14) provisions, if any, granting special rights to the
Holders of Securities of the series upon the occurrence of such events
as may be specified;
(15) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect to
Securities of the series, whether or not such Events of Default or
covenants are consistent with the Events of Default or covenants set
forth herein;
(16) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or
both, any restrictions applicable to the offer, sale or delivery of
Bearer Securities and the terms upon which Bearer Securities of the
series may be exchanged for Registered Securities of the series and
vice versa (if permitted by applicable laws and regulations), whether
any Securities of the series are
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to be issuable initially in temporary global form and whether any
Securities of the series are to be issuable in permanent global form
with or without coupons and, if so, whether beneficial owners of
interests in any such permanent global Security may exchange such
interests for Securities of such series and of like tenor of any
authorized form and denomination and the circumstances under which any
such exchanges may occur, if other than in the manner provided in
Section 305, and, if Registered Securities of the series are to be
issuable as a global Security, the identity of the depositary for such
series;
(17) the date as of which any Bearer Securities of the series
and any temporary global Security representing Outstanding Securities
of the series shall be dated if other than the date of original
issuance of the first Security of the series to be issued;
(18) the Person to whom any interest on any Registered
Security of the series shall be payable, if other than the Person in
whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, the manner in which, or the Person to whom, any interest on
any Bearer Security of the series shall be payable, if otherwise than
upon presentation and surrender of the coupons appertaining thereto as
they severally mature, and the extent to which, or the manner in which,
any interest payable on a temporary global Security on an Interest
Payment Date will be paid if other than in the manner provided in
Section 304;
(19) the applicability, if any, of Sections 1402 and/or 1403
to the Securities of the series and any provisions in modification of,
in addition to or in lieu of any of the provisions of Article Fourteen;
(20) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
then the form and/or terms of such certificates, documents or
conditions;
(21) if the Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Securities to
be authenticated and delivered;
(22) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1012 on the Securities of
the series to any Holder who is not a United States person (including
any modification to the definition of such term) in respect of any tax,
assessment or governmental charge and, if so, whether the Company will
have the option to redeem such Securities rather than pay such
Additional Amounts (and the terms of any such option);
(23) the obligation, if any, of the Company to permit the
conversion of the Securities of such series into the Company's Common
Shares or Preferred Shares (and the class thereof), as the case may be,
and the terms and conditions upon which such conversion shall be
effected (including, without limitation, the initial conversion price
or rate, the conversion period, any adjustment of the applicable
conversion price and any requirements relative to the reservation of
such shares for purposes of conversion; and
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(24) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and the coupons appertaining
to any Bearer Securities of such series shall be substantially identical except,
in the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in any such
indenture supplemental hereto. All Securities of any one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the Holders, for issuances of additional
Securities of such series.
If any of the terms of the Securities of any series are
established by action taken pursuant to one or more Board Resolutions, a copy of
an appropriate record of such action(s) shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Officers' Certificate setting forth the terms of the
Securities of such series.
SECTION 302. DENOMINATIONS. The Securities of each series
shall be issuable in such denominations as shall be specified as contemplated by
Section 301. With respect to Securities of any series denominated in Dollars, in
the absence of any such provisions with respect to the Securities of any series,
the Registered Securities of such series, other than Registered Securities
issued in global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than Bearer Securities issued in global form
(which may be of any denomination), shall be issuable in denominations of
$5,000.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities and any coupons appertaining thereto shall be executed on behalf
of the Company by its Chairman of the Board, its President or one of its Vice
Presidents and attested by its Secretary or one of its Assistant Secretaries.
The signature of any of these officers on the Securities and coupons may be
manual or facsimile signatures of the present or any future such authorized
officer and may be imprinted or otherwise reproduced on the Securities.
Securities or coupons bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities
or coupons.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series,
together with any coupon appertaining thereto, executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities; PROVIDED, HOWEVER, that,
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and PROVIDED FURTHER
that, unless otherwise specified with respect to any series of Securities
pursuant to Section 301, a Bearer
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Security may be delivered in connection with its original issuance only if the
Person entitled to receive such Bearer Security shall have furnished a
certificate to Euroclear or CEDEL, as the case may be, in the form set forth in
Exhibit A-1 to this Indenture or such other certificate as may be specified with
respect to any series of Securities pursuant to Section 301, dated no earlier
than 15 days prior to the earlier of the date on which such Bearer Security is
delivered and the date on which any temporary Security first becomes
exchangeable for such Bearer Security in accordance with the terms of such
temporary Security and this Indenture. If any Security shall be represented by a
permanent global Bearer Security, then, for purposes of this Section and Section
304, the notation of a beneficial owner's interest therein upon original
issuance of such Security or upon exchange of a portion of a temporary global
Security shall be deemed to be delivery in connection with its original issuance
of such beneficial owner's interest in such permanent global Security. Except as
permitted by Section 306, the Trustee shall not authenticate and deliver any
Bearer Security unless all appurtenant coupons for interest then matured have
been detached and cancelled.
If all the Securities of any series are not to be issued at
one time and if the Board Resolution or supplemental indenture establishing such
series shall so permit, such Company Order may set forth procedures acceptable
to the Trustee for the issuance of such Securities and determining the terms of
particular Securities of such series, such as interest rate or formula, maturity
date, date of issuance and date from which interest shall accrue. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to TIA Section 315(a) through 315(d)) shall be
fully protected in relying upon,
(i) an Opinion of Counsel stating that
(a) the form or forms of such Securities and any
coupons have been established in conformity with the
provisions of this Indenture;
(b) the terms of such Securities and any coupons have
been established in conformity with the provisions of this
Indenture; and
(c) such Securities, together with any coupons
appertaining thereto, when completed by appropriate insertions
and executed and delivered by the Company to the Trustee for
authentication in accordance with this Indenture,
authenticated and delivered by the Trustee in accordance with
this Indenture and issued by the Company in the manner and
subject to any conditions specified in such Opinion of
Counsel, will constitute legal, valid and binding obligations
of the Company, enforceable in accordance with their terms,
except as limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
affecting the enforcement of creditors' rights generally and
general equitable principles; and
(ii) an Officers' Certificate stating that all conditions
precedent provided for in this Indenture relating to the issuance of
the Securities have been complied with and that, to the best of the
knowledge of the signers of such certificate, no Event of Default with
respect to any of the Securities shall have occurred and be continuing.
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If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties,
obligations or immunities under the Securities and this Indenture or otherwise
in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Officers' Certificate
otherwise required pursuant to Section 301 or a Company Order, or an Opinion of
Counsel or an Officers' Certificate otherwise required pursuant to the preceding
paragraph at the time of issuance of each Security of such series, but such
order, opinion and certificates, with appropriate modifications to cover such
future issuances, shall be delivered at or before the time of issuance of the
first Security of such series.
Each Registered Security shall be dated the date of its
authentication and each Bearer Security shall be dated as of the date specified
as contemplated by Section 301.
No Security or coupon shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Security or Security to which such coupon appertains a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of an authorized signatory, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309 together with a written statement (which
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Company, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES. (a) Pending the preparation
of definitive Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary Securities
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued, in registered form, or,
if authorized, in bearer form with one or more coupons or without coupons, and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as conclusively
evidenced by their execution of such Securities. In the case of Securities of
any series, such temporary Securities may be in global form.
Except in the case of temporary Securities in global form
(which shall be exchanged in accordance with Section 304(b) or as otherwise
provided in or pursuant to a Board Resolution), if temporary Securities of any
series are issued, the Company will cause definitive Securities of that series
to be prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company in a
Place of Payment for that series, without charge to
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the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series (accompanied by any non-matured coupons appertaining
thereto), the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities of
the same series of authorized denominations; PROVIDED, HOWEVER, that no
definitive Bearer Security shall be delivered in exchange for a temporary
Registered Security; and PROVIDED FURTHER that a definitive Bearer Security
shall be delivered in exchange for a temporary Bearer Security only in
compliance with the conditions set forth in Section 303. Until so exchanged, the
temporary Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of such series.
(b) Unless otherwise provided in or pursuant to a Board
Resolution, this Section 304(b) shall govern the exchange of temporary
Securities issued in global form other than through the facilities of The
Depository Trust Company. If any such temporary Security is issued in global
form, then such temporary global Security shall, unless otherwise provided
therein, be delivered to the London office of a depositary or common depositary
(the "Common Depositary"), for the benefit of Euroclear and CEDEL, for credit to
the respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).
Without unnecessary delay but in any event not later than the
date specified in, or determined pursuant to the terms of, any such temporary
global Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Company. On or after
the Exchange Date, such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge, and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange for any such
temporary global Security shall be in bearer form, registered form, permanent
global bearer form or permanent global registered form, or any combination
thereof, as specified as contemplated by Section 301, and, if any combination
thereof is so specified, as requested by the beneficial owner thereof; PROVIDED,
HOWEVER, that, unless otherwise specified in such temporary global Security,
upon such presentation by the Common Depositary, such temporary global Security
is accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euroclear as to the portion of such temporary global Security held for
its account then to be exchanged and a certificate dated the Exchange Date or a
subsequent date and signed by CEDEL as to the portion of such temporary global
Security held for its account then to be exchanged, each in the form set forth
in Exhibit A-2 to this Indenture or in such other form as may be established
pursuant to Section 301; and PROVIDED FURTHER that definitive Bearer Securities
shall be delivered in exchange for a portion of a temporary global Security only
in compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Security,
the interest of a beneficial owner of Securities of a series in a temporary
global Security shall be exchanged for definitive Securities of the same series
and of like tenor following the Exchange Date when the account holder instructs
Euroclear or CEDEL, as the case may be, to request such exchange on
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his behalf and delivers to Euroclear or CEDEL, as the case may be, a certificate
in the form set forth in Exhibit A-1 to this Indenture (or in such other form as
may be established pursuant to Section 301), dated no earlier than 15 days prior
to the Exchange Date, copies of which certificate shall be available from the
offices of Euroclear and CEDEL, the Trustee, any Authenticating Agent appointed
for such series of Securities and each Paying Agent. Unless otherwise specified
in such temporary global Security, any such exchange shall be made free of
charge to the beneficial owners of such temporary global Security, except that a
Person receiving definitive Securities must bear the cost of insurance, postage,
transportation and the like unless such Person takes delivery of such definitive
Securities in person at the offices of Euroclear or CEDEL. Definitive Securities
in bearer form to be delivered in exchange for any portion of a temporary global
Security shall be delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary global
Security on an Interest Payment Date for Securities of such series occurring
prior to the applicable Exchange Date shall be payable to Euroclear and CEDEL on
such Interest Payment Date upon delivery by Euroclear and CEDEL to the Trustee
of a certificate or certificates in the form set forth in Exhibit A-2 to this
Indenture (or in such other forms as may be established pursuant to Section
301), for credit without further interest on or after such Interest Payment Date
to the respective accounts of Persons who are the beneficial owners of such
temporary global Security on such Interest Payment Date and who have each
delivered to Euroclear or CEDEL, as the case may be, a certificate dated no
earlier than 15 days prior to the Interest Payment Date occurring prior to such
Exchange Date in the form set forth as Exhibit A-1 to this Indenture (or in such
other forms as may be established pursuant to Section 301). Notwithstanding
anything to the contrary herein contained, the certifications made pursuant to
this paragraph shall satisfy the certification requirements of the preceding two
paragraphs of this Section 304(b) and of the third paragraph of Section 303 of
this Indenture and the interests of the Persons who are the beneficial owners of
the temporary global Security with respect to which such certification was made
will be exchanged for definitive Securities of the same series and of like tenor
on the Exchange Date or the date of certification if such date occurs after the
Exchange Date, without further act or deed by such beneficial owners. Except as
otherwise provided in this paragraph, no payments of principal or interest owing
with respect to a beneficial interest in a temporary global Security will be
made unless and until such interest in such temporary global Security shall have
been exchanged for an interest in a definitive Security. Any interest so
received by Euroclear and CEDEL and not paid as herein provided shall be
returned, prior to the expiration of two years after such Interest Payment Date,
(i) to the Trustee, in order to be repaid to the Company, if originally paid by
the Trustee, and (ii) to the Company if originally paid by the Company. The
Trustee shall be under no duty to make any inquiry of either Euroclear or CEDEL
as to whether any such interest remains unpaid.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND
EXCHANGE. The Company shall cause to be kept at the Corporate Trust Office of
the Trustee or in any office or agency of the Company in a Place of Payment a
register for each series of Securities (the registers maintained in such office
or in any such office or agency of the Company in a Place of Payment being
herein sometimes referred to collectively as the "Security Register") in which,
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subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Registered Securities and of transfers of
Registered Securities. The Security Register shall be in written form or any
other form capable of being converted into written form within a reasonable
time. The Trustee, at its Corporate Trust Office, is hereby initially appointed
"Security Registrar" for the purpose of registering Registered Securities and
transfers of Registered Securities on such Security Register as herein provided.
In the event that the Trustee shall cease to be Security Registrar, it shall
have the right to examine the Security Register at all reasonable times.
Subject to the provisions of this Section 305, upon surrender
for registration of transfer of any Registered Security of any series at any
office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Registered
Securities of the same series, of any authorized denominations and of a like
aggregate principal amount, bearing a number not contemporaneously outstanding,
and containing identical terms and provisions.
Subject to the provisions of this Section 305, at the option
of the Holder, Registered Securities of any series may be exchanged for other
Registered Securities of the same series, of any authorized denomination or
denominations and of a like aggregate principal amount, containing identical
terms and provisions, upon surrender of the Registered Securities to be
exchanged at any such office or agency. Whenever any such Registered Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Registered Securities which the Holder
making the exchange is entitled to receive. Unless otherwise specified with
respect to any series of Securities as contemplated by Section 301, Bearer
Securities may not be issued in exchange for Registered Securities.
If (but only if) permitted by the applicable Board Resolution
and (subject to Section 303) set forth in the applicable Officers' Certificate,
or in any indenture supplemental hereto, delivered as contemplated by Section
301, at the option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the Bearer Securities to be exchanged at any such office or agency, with all
unmatured coupons and all matured coupons in default thereto appertaining. If
the Holder of a Bearer Security is unable to produce any such unmatured coupon
or coupons or matured coupon or coupons in default, any such permitted exchange
may be effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company in an amount equal to the face amount of such missing
coupon or coupons, or the surrender of such missing coupon or coupons may be
waived by the Company and the Trustee if there is furnished to them such
security or indemnity as they may require to save each of them and any Paying
Agent harmless. If thereafter the Holder of such Security shall surrender to any
Paying Agent any such missing coupon in respect of which such a payment shall
have been made, such Holder shall be entitled to receive the portion of such
payment equal to the face amount of such surrendered coupon, PROVIDED, HOWEVER,
that, except as otherwise provided in Section 1002, interest represented by
coupons shall be payable only upon presentation and surrender of those coupons
at an office or agency located outside the United States. Notwithstanding the
foregoing, in case a Bearer Security of any series is surrendered at any such
office or agency in a permitted exchange for a Registered Security of the same
series
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and like tenor after the close of business at such office or agency on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such Interest Payment Date or
proposed date for payment, as the case may be, and interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such coupon when due in accordance with the provisions of this
Indenture. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified
as contemplated by Section 301, any permanent global Security shall be
exchangeable only as provided in this paragraph. If the depositary for any
permanent global Security is The Depository Trust Company ("DTC"), then, unless
the terms of such global Security expressly permit such global Security to be
exchanged in whole or in part for definitive Securities, a global Security may
be transferred, in whole but not in part, only to a nominee of DTC, or by a
nominee of DTC to DTC, or to a successor to DTC for such global Security
selected or approved by the Company or to a nominee of such successor to DTC. If
at any time DTC notifies the Company that it is unwilling or unable to continue
as depositary for the applicable global Security or Securities or if at any time
DTC ceases to be a clearing agency registered under the Securities Exchange Act
of 1934 if so required by applicable law or regulation, the Company shall
appoint a successor depositary with respect to such global Security or
Securities. If (x) a successor depositary for such global Security or Securities
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such unwillingness, inability or ineligibility, (y)
an Event of Default has occurred and is continuing and the beneficial owners
representing a majority in principal amount of the applicable series of
Securities represented by such global Security or Securities advise DTC to cease
acting as depositary for such global Security or Securities or (z) the Company,
in its sole discretion, determines at any time that all Outstanding Securities
(but not less than all) of any series issued or issuable in the form of one or
more global Securities shall no longer be represented by such global Security or
Securities, then the Company shall execute, and the Trustee shall authenticate
and deliver, definitive Securities of like series, rank, tenor and terms in
definitive form in an aggregate principal amount equal to the principal amount
of such global Security or Securities. If any beneficial owner of an interest in
a permanent global Security is otherwise entitled to exchange such interest for
Securities of such series and of like tenor and principal amount of another
authorized form and denomination, as specified as contemplated by Section 301
and provided that any applicable notice provided in the permanent global
Security shall have been given, then without unnecessary delay but in any event
not later than the earliest date on which such interest may be so exchanged, the
Company shall execute, and the Trustee shall authenticate and deliver,
definitive Securities in aggregate principal amount equal to the principal
amount of such beneficial owner's interest in such permanent global Security. On
or after the earliest date on which such interests may be so exchanged, such
permanent global Security shall be surrendered for exchange by DTC or such other
depositary as shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose; PROVIDED, HOWEVER, that no
such exchanges may occur
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during a period beginning at the opening of business 15 days before any
selection of Securities to be redeemed and ending on the relevant Redemption
Date if the Security for which exchange is requested may be among those selected
for redemption; and PROVIDED FURTHER that no Bearer Security delivered in
exchange for a portion of a permanent global Security shall be mailed or
otherwise delivered to any location in the United States. If a Registered
Security is issued in exchange for any portion of a permanent global Security
after the close of business at the office or agency where such exchange occurs
on (i) any Regular Record Date and before the opening of business at such office
or agency on the relevant Interest Payment Date, or (ii) any Special Record Date
and the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, interest or Defaulted Interest, as the
case may be, will not be payable on such Interest Payment Date or proposed date
for payment, as the case may be, in respect of such Registered Security, but
will be payable on such Interest Payment Date or proposed date for payment, as
the case may be, only to the Person to whom interest in respect of such portion
of such permanent global Security is payable in accordance with the provisions
of this Indenture.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange or redemption shall (if so required by
the Company or the Security Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any
transfer.
The Company or the Trustee, as applicable, shall not be
required (i) to issue, register the transfer of or exchange any Security if such
Security may be among those selected for redemption during a period beginning at
the opening of business 15 days before selection of the Securities to be
redeemed under Section 1103 and ending at the close of business on (A) if such
Securities are issuable only as Registered Securities, the day of the mailing of
the relevant notice of redemption and (B) if such Securities are issuable as
Bearer Securities, the day of the first publication of the relevant notice of
redemption or, if such Securities are also issuable as Registered Securities and
there is no publication, the mailing of the relevant notice of redemption, or
(ii) to register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except, in the case of any Registered
Security to be redeemed in part, the portion thereof not to be redeemed, or
(iii) to exchange any Bearer Security so selected for redemption except that
such a Bearer Security may be exchanged for a Registered Security of that series
and like tenor, PROVIDED that such Registered Security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Security
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which has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Security not to be so repaid.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security or a Security with a mutilated coupon appertaining to
it is surrendered to the Trustee or the Company, together with, in proper cases,
such security or indemnity as may be required by the Company or the Trustee to
save each of them or any agent of either of them harmless, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and principal amount, containing identical terms
and provisions and bearing a number not contemporaneously outstanding, with
coupons corresponding to the coupons, if any, appertaining to the surrendered
Security.
If there shall be delivered to the Company and to the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security or coupon, and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security or coupon has
been acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security or in exchange for the Security to which a
destroyed, lost or stolen coupon appertains (with all appurtenant coupons not
destroyed, lost or stolen), a new Security of the same series and principal
amount, containing identical terms and provisions and bearing a number not
contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen coupon appertains.
Notwithstanding the provisions of the previous two paragraphs,
in case any such mutilated, destroyed, lost or stolen Security or coupon has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, with coupons corresponding to the coupons, if
any, appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen coupon appertains, pay such Security or
coupon; PROVIDED, HOWEVER, that payment of principal of (and premium, if any),
any interest on and any Additional Amounts with respect to, Bearer Securities
shall, except as otherwise provided in Section 1002, be payable only at an
office or agency located outside the United States and, unless otherwise
specified as contemplated by Section 301, any interest on Bearer Securities
shall be payable only upon presentation and surrender of the coupons
appertaining thereto.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series with its coupons, if any,
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
and its coupons, if any, or the destroyed, lost or stolen coupon shall be at any
time enforceable by anyone, and
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shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series and their
coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities or
coupons.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, interest on any Registered
Security that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest at the office or agency of the
Company maintained for such purpose pursuant to Section 1002; PROVIDED, HOWEVER,
that each installment of interest on any Registered Security may at the
Company's option be paid by (i) mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section 308,
to the address of such Person as it appears on the Security Register or (ii)
transfer to an account maintained by the payee located inside the United States.
Unless otherwise provided as contemplated by Section 301 with
respect to the Securities of any series, payment of interest may be made, in the
case of a Bearer Security, by transfer to an account maintained by the payee
with a bank located outside the United States.
Unless otherwise provided as contemplated by Section 301,
every permanent global Security will provide that interest, if any, payable on
any Interest Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the
case may be, with respect to that portion of such permanent global Security held
for its account by Cede & Co. or the Common Depositary, as the case may be, for
the purpose of permitting such party to credit the interest received by it in
respect of such permanent global Security to the accounts of the beneficial
owners thereof.
In case a Bearer Security of any series is surrendered in
exchange for a Registered Security of such series after the close of business
(at an office or agency in a Place of Payment for such series) on any Regular
Record Date and before the opening of business (at such office or agency) on the
next succeeding Interest Payment Date, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date and interest will not
be payable on such Interest Payment Date in respect of the Registered Security
issued in exchange for such Bearer Security, but will be payable only to the
Holder of such coupon when due in accordance with the provisions of this
Indenture.
Except as otherwise specified with respect to a series of
Securities in accordance with the provisions of Section 301, any interest on any
Registered Security of any series that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder thereof
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
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(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of
such series (or their respective Predecessor Securities) are registered
at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Registered Security of
such series and the date of the proposed payment (which shall not be
less than 20 days after such notice is received by the Trustee), and at
the same time the Company shall deposit with the Trustee an amount of
money in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for
the Securities of such series) equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior
to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder of Registered Securities of such series at his address as it
appears in the Security Register not less than 10 days prior to such
Special Record Date. The Trustee may, in its discretion, in the name
and at the expense of the Company, cause a similar notice to be
published at least once in an Authorized Newspaper in each Place of
Payment, but such publications shall not be a condition precedent to
the establishment of such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid
to the Persons in whose names the Registered Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (2). In case a Bearer Security
of any series is surrendered at the office or agency in a Place of
Payment for such series in exchange for a Registered Security of such
series after the close of business at such office or agency on any
Special Record Date and before the opening of business at such office
or agency on the related proposed date for payment of Defaulted
Interest, such Bearer Security shall be surrendered without the coupon
relating to such proposed date of payment and Defaulted Interest will
not be payable on such proposed date of payment in respect of the
Registered Security issued in exchange for such Bearer Security, but
will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on
the Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the
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Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment
of a Registered Security for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name
such Registered Security is registered as the owner of such Security for the
purpose of receiving payment of principal of (and premium, if any), and (subject
to Sections 305 and 307) interest on, such Registered Security and for all other
purposes whatsoever, whether or not such Registered Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
Title to any Bearer Security and any coupons appertaining
thereto shall pass by delivery. The Company, the Trustee and any agent of the
Company or the Trustee may treat the Holder of any Bearer Security and the
Holder of any coupon as the absolute owner of such Security or coupon for the
purpose of receiving payment thereof or on account thereof and for all other
purposes whatsoever, whether or not such Security or coupon be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global
Security, nothing herein shall prevent the Company, the Trustee, or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by any depositary, as a Holder, with
respect to such global Security or impair, as between such depositary and owners
of beneficial interests in such global Security, the operation of customary
practices governing the exercise of the rights of such depositary (or its
nominee) as Holder of such global Security.
SECTION 309. CANCELLATION. All Securities and coupons
surrendered for payment, redemption, repayment at the option of the Holder,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee, and any such Securities and coupons surrendered directly to the
Trustee for any such purpose shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly cancelled by the Trustee. If the
Company shall so
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acquire any of the Securities, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. Cancelled Securities and coupons held by the Trustee shall be
destroyed by the Trustee and the Trustee shall deliver a certificate of such
destruction to the Company, unless by a Company Order the Company directs their
return to it.
SECTION 310. COMPUTATION OF INTEREST. Except as otherwise
specified as contemplated by Section 301 with respect to Securities of any
series, interest on the Securities of each series shall be computed on the basis
of a 360-day year consisting of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall upon Company Request cease to be of further effect with respect
to any series of Securities specified in such Company Request (except as to any
surviving rights of registration of transfer or exchange of Securities of such
series herein expressly provided for and any right to receive Additional
Amounts, as provided in Section 1012), and the Trustee, upon receipt of a
Company Order, and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture as to
such series when
(1) either
(a) all Securities of such series theretofore
authenticated and delivered and all coupons, if any,
appertaining thereto (other than (i) coupons appertaining to
Bearer Securities surrendered for exchange for Registered
Securities and maturing after such exchange, whose surrender
is not required or has been waived as provided in Section 305,
(ii) Securities and coupons of such series which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 306, (iii) coupons appertaining to
Securities called for redemption and maturing after the
relevant Redemption Date, whose surrender has been waived as
provided in Section 1106, and (iv) Securities and coupons of
such series for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(b) all Securities of such series and, in the case of
(i) or (ii) below, any coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
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(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) if redeemable at the option of the
Company, are to be called for redemption within one
year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee
in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount in
the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of
such series are payable, sufficient to pay and discharge the
entire indebtedness on such Securities and such coupons not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest, and any
Additional Amounts with respect thereto, to the date of such
deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Company to any Authenticating Agent under
Section 611 and, if money shall have been deposited with and held by the Trustee
pursuant to subclause (B) of clause (1) of this Section, the obligations of the
Trustee under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST FUNDS. Subject to the
provisions of the last paragraph of Section 1003, all money deposited with the
Trustee pursuant to Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities, the coupons and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any), and any interest and Additional Amounts for whose payment such money has
been deposited with or received by the Trustee, but such money need not be
segregated from other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT. "Event of Default", wherever
used herein with respect to any particular series of Securities, means any one
of the following events
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(whatever the reason for such Event of Default and whether or not it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon or any
Additional Amounts payable in respect of any Security of that series or
of any coupon appertaining thereto, when such interest, Additional
Amounts or coupon becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series when it becomes due and payable at
its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of any Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture with respect to any Security
of that series (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
60 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding
Securities of that series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(5) if any event of default under any bond, debenture, note or
other evidence of indebtedness of the Company (including an event of
default with respect to any other series of securities), or under any
mortgage, indenture or other instrument of the Company under which
there may be issued or by which there may be secured or evidenced any
indebtedness of the Company (or by any Subsidiary, the repayment of
which the Company has guaranteed or for which the Company is directly
responsible or liable as obligor or guarantor), whether such
indebtedness now exists or shall hereafter be created, shall happen and
shall result in an aggregate principal amount exceeding $10,000,000
becoming or being declared due and payable prior to the date on which
it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been
waived, rescinded or annulled, within a period of 10 days after there
shall have been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at
least 10% in principal amount of the Outstanding Securities of that
series a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice
is a "Notice of Default" hereunder. Subject to the provisions of
Section 601, the Trustee shall not be deemed to have knowledge of such
default unless either (A) a Responsible Officer of the Trustee shall
have actual knowledge of such default or (B) the Trustee shall have
received written notice thereof from the Company, from any Holder, from
the holder of any such indebtedness or from the trustee under any such
mortgage, indenture or other instrument; or
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(6) the Company or any Significant Subsidiary of the Company
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary of the Company in an involuntary case,
(B) appoints a Custodian of the Company or any
Significant Subsidiary of the Company or for all or
substantially all of either of its property, or
(C) orders the liquidation of the Company or any
Significant Subsidiary of the Company,
and the order or decree remains unstayed and in effect for 90 days; or
(8) any other Event of Default provided with respect to
Securities of that series.
As used in this Section 501, the term "Bankruptcy Law" means title 11, U.S. Code
or any similar Federal or State law for the relief of debtors and the term
"Custodian" means any receiver, trustee, assignee, liquidator or other similar
official under any Bankruptcy Law.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. If an Event of Default with respect to Securities of any series at
the time Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal (or, if any
Securities are Original Issue Discount Securities or Indexed Securities, such
portion of the principal as may be specified in the terms thereof) of all the
Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal or specified portion thereof shall become
immediately due and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in principal
amount of the Outstanding Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if:
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(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay in the currency, currency unit or composite currency
in which the Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such series):
(A) all overdue installments of interest on and any
Additional Amounts payable in respect of all Outstanding
Securities of that series and any related coupons,
(B) the principal of (and premium, if any, on) any
Outstanding Securities of that series which have become due
otherwise than by such declaration of acceleration and
interest thereon at the rate or rates borne by or provided for
in such Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest and any
Additional Amounts at the rate or rates borne by or provided
for in such Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default with respect to Securities of that
series, other than the nonpayment of the principal of (or premium, if
any) or interest on Securities of that series which have become due
solely by such declaration of acceleration, have been cured or waived
as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. The Company covenants that if:
(1) default is made in the payment of any installment of
interest or Additional Amounts, if any, on any Security of any series
and any related coupon when such interest or Additional Amount becomes
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security of any series at its Maturity,
then the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities of such series and coupons, the whole
amount then due and payable on such Securities and coupons for principal (and
premium, if any) and interest and Additional Amounts, with interest upon any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installments of interest
or Additional Amounts, if any, at the rate or rates borne by or provided for in
such Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and
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expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
of such series and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon such Securities of such series, wherever situated.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series and any related coupons by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities of any series
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(i) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Securities of such series,
of principal (and premium, if any) and interest and Additional Amounts,
if any, owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder of Securities of such series and coupons to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee and any predecessor Trustee, their agents and counsel, and any other
amounts due the Trustee or any predecessor Trustee under Section 606.
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Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder of
a Security or coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or coupon in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES OR COUPONS. All rights of action and claims under this Indenture or
any of the Securities or coupons may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or coupons or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities and coupons in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED. Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest and any Additional Amounts, upon presentation of the Securities or
coupons, or both, as the case may be, and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
SECOND: To the payment of the amounts then due and unpaid upon
the Securities and coupons for principal (and premium, if any) and
interest and any Additional Amounts payable, in respect of which or for
the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the aggregate amounts
due and payable on such Securities and coupons for principal (and
premium, if any), interest and Additional Amounts, respectively; and
THIRD: To the payment of the remainder, if any, to the
Company.
SECTION 507. LIMITATION ON SUITS. No Holder of any Security of
any series or any related coupon shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities
of that series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
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(3) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM, IF ANY, INTEREST AND ADDITIONAL AMOUNTS. Notwithstanding any
other provision in this Indenture, the Holder of any Security or coupon shall
have the right which is absolute and unconditional to receive payment of the
principal of (and premium, if any) and (subject to Sections 305 and 307)
interest on, and any Additional Amounts in respect of, such Security or payment
of such coupon on the respective due dates expressed in such Security or coupon
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the
Trustee or any Holder of a Security or coupon has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, the Company, the
Trustee and the Holders of Securities and coupons shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities or coupons in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders of Securities or coupons is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or
omission of the Trustee or of any Holder of any Security or coupon to exercise
any right or remedy accruing
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upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders of Securities or coupons, as the case may be.
SECTION 512. CONTROL BY HOLDERS OF SECURITIES. The Holders of
not less than a majority in principal amount of the Outstanding Securities of
any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Securities of
such series, PROVIDED that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve
it in personal liability or be unduly prejudicial to the Holders of
Securities of such series not joining therein.
SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less
than a majority in principal amount of the Outstanding Securities of any series
may on behalf of the Holders of all the Securities of such series and any
related coupons waive any past default hereunder with respect to such series and
its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on or Additional Amounts payable in respect of any Security of
such series or any related coupons, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS. The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee,
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but will suffer and permit the execution of every such power as though no such
law had been enacted.
SECTION 515. UNDERTAKING FOR COSTS. All parties to this
Indenture agree, and each Holder of any Security by his acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of any undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS. Within 90 days after the
occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall transmit, in the manner and to the extent provided in
TIA Section 313(c), notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; PROVIDED, HOWEVER, that,
except in the case of a default in the payment of the principal of (or premium,
if any) or interest on or any Additional Amounts with respect to any Security of
such series, or in the payment of any sinking fund installment with respect to
the Securities of such series, the Trustee shall be protected in withholding
such notice if and so long as Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Securities and coupons of such series; and PROVIDED FURTHER that in the
case of any default or breach of the character specified in Section 501(4) with
respect to the Securities and coupons of such series, no such notice to Holders
shall be given until at least 60 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to the Securities of such series.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE. Subject to the
provisions of TIA Section 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
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(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
(other than delivery of any Security, together with any coupons
appertaining thereto, to the Trustee for authentication and delivery
pursuant to Section 303 which shall be sufficiently evidenced as
provided therein) and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(4) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders of Securities of any series or any
related coupons pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, coupon or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers conferred
upon it by this Indenture.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
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Except during the continuance of an Event of Default, the
Trustee undertakes to perform only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, and in any coupons shall be taken as
the statements of the Company, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 604. MAY HOLD SECURITIES. The Trustee, any Paying
Agent, Security Registrar, Authenticating Agent or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and coupons and, subject to TIA Sections 310(b) and 311,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Paying Agent, Security Registrar, Authenticating Agent or such
other agent.
SECTION 605. MONEY HELD IN TRUST. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company.
SECTION 606. COMPENSATION AND REIMBURSEMENT. The Company
agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse each of the Trustee and any predecessor Trustee upon its
request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify each of the Trustee and any predecessor
Trustee for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its own part,
arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(6) or Section
501(7), the expenses (including the reasonable
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charges and expenses of its counsel) and the compensation for the services are
intended to constitute expenses of administration under any applicable Federal
or state bankruptcy, insolvency or other similar law.
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (or premium, if any)
or interest on particular Securities or any coupons.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY;
CONFLICTING INTERESTS. There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under TIA Section 310(a)(1) and shall have a
combined capital and surplus of at least $50,000,000. If such corporation
publishes reports of condition at least annually, pursuant to law or the
requirements of Federal, State, Territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to
the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered
to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
TIA Section 310(b) after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security
for at least six months, or
(2) the Trustee shall cease to be eligible under Section 607
and shall fail to resign after written request therefor by the Company
or by any Holder of a Security who has been a bona fide Holder of a
Security for at least six months, or
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(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by or pursuant to a Board Resolution may
remove the Trustee and appoint a successor Trustee with respect to all
Securities, or (ii) subject to TIA Section 315(e), any Holder of a Security who
has been a bona fide Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause with respect to the Securities of one or more series, the Company, by
or pursuant to a Board Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there shall
be only one Trustee with respect to the Securities of any particular series).
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders of Securities and accepted appointment in the manner hereinafter
provided, any Holder of a Security who has been a bona fide Holder of a Security
of such series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
in the manner provided for notices to the Holders of Securities in Section 106.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In
case of the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
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deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder, subject nevertheless to its lien and claim, if any, provided
for in Section 606.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto, pursuant to Article Nine hereof, wherein each successor
Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
PROVIDED such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities or coupons shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities or coupons so
authenticated with the same
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effect as if such successor Trustee had itself authenticated such Securities or
coupons. In case any Securities or coupons shall not have been authenticated by
such predecessor Trustee, any such successor Trustee may authenticate and
deliver such Securities or coupons, in either its own name or that of its
predecessor Trustee, with the full force and effect which this Indenture
provides for the certificate of authentication of the Trustee.
SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT. At any time
when any of the Securities remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents with respect to one or more series of Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities of such series issued upon exchange, registration of transfer or
partial redemption or repayment thereof, and Securities so authenticated shall
be entitled to the benefits of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee hereunder. Any such
appointment shall be evidenced by an instrument in writing signed by a
Responsible Officer of the Trustee, a copy of which instrument shall be promptly
furnished to the Company. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a bank or trust company or corporation
organized and doing business and in good standing under the laws of the United
States of America or of any State or the District of Columbia, authorized under
such laws to act as Authenticating Agent, having a combined capital and surplus
of not less than $50,000,000 and subject to supervision or examination by
Federal or State authorities. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at
any time resign by giving written notice of resignation to the Trustee for such
series and to the Company. The Trustee for any series of Securities may at any
time terminate the agency of an Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment to all Holders of Securities
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of the series with respect to which such Authenticating Agent will serve in the
manner set forth in Section 106. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent herein. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation including reimbursement of its reasonable
expenses for its services under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to or in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication substantially in the
following form:
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This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
NATIONAL CITY BANK, as Trustee
By: ,
-----------------------------------
as Authenticating Agent
By:
-----------------------------------
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Securities or coupons, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any Authenticating Agent nor any Paying Agent nor any Security Registrar shall
be held accountable by reason of the disclosure of any information as to the
names and addresses of the Holders of Securities in accordance with TIA Section
312, regardless of the source from which such information was derived, and that
the Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under TIA Section 312(b).
SECTION 702. REPORTS BY TRUSTEE. Within 60 days after May 15
of each year commencing with the first May 15 after the first issuance of
Securities pursuant to this Indenture, the Trustee shall transmit by mail to all
Holders of Securities as provided in TIA Section 313(c) a brief report dated as
of such May 15 if required by TIA Section 313(a).
SECTION 703. REPORTS BY COMPANY.
The Company will:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of such Sections, then it will file with the Trustee
and the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission, such of the supplementary and
periodic information, documents and reports which may be required
pursuant to Section 13 of the
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Securities Exchange Act of 1934 in respect of a security listed and
registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(3) transmit by mail to the Holders of Securities, within 30
days after the filing thereof with the Trustee, in the manner and to
the extent provided in TIA Section 313(c), such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required
by rules and regulations prescribed from time to time by the
Commission.
SECTION 704. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS. The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after the Regular
Record Date for interest for each series of Securities, a list, in such
form as the Trustee may reasonably require, of the names and addresses
of the Holders of Registered Securities of such series as of such
Regular Record Date, or if there is no Regular Record Date for interest
for such series of Securities, semi-annually, upon such dates as are
set forth in the Board Resolution or indenture supplemental hereto
authorizing such series, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished, PROVIDED, HOWEVER, that, so
long as the Trustee is the Security Registrar, no such list shall be
required to be furnished.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES,
LEASES AND CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS. 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 in any
such case, (i) either the Company shall be the continuing corporation, or the
successor corporation shall be a corporation organized and existing under the
laws of the United States or a State thereof and such successor corporation
shall expressly assume the due and punctual payment of the principal of (and
premium, if any) and any interest on and all Additional Amounts, if any, payable
in respect of, all of the Securities, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by the Company by supplemental indenture,
complying with Article Nine hereof, satisfactory to the Trustee, executed and
delivered to the Trustee by such corporation and (ii) immediately after giving
effect to such transaction and
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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, and no event
which, after notice or the lapse of time, or both, would become an Event of
Default, shall have occurred and be continuing.
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In
case of any such consolidation, merger, sale, lease or conveyance and upon any
such assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named herein as the party of the first part, and the predecessor
corporation, except in the event of a lease, shall be relieved of any further
obligation under this Indenture and the Securities. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name of the Company, any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor corporation, instead of the
Company, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Securities which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Securities had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale, lease or
conveyance, such changes in phraseology and form (but not in substance) may be
made in the Securities thereafter to be issued as may be appropriate.
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL. Any
consolidation, merger, sale, lease or conveyance permitted under Section 801 is
also subject to the condition that the Trustee receive an Officers' Certificate
and an Opinion of Counsel to the effect that any such consolidation, merger,
sale, lease or conveyance, and the assumption by any successor corporation,
complies with the provisions of this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS. Without the consent of any Holders of Securities or coupons, the
Company, when authorized by or pursuant to a Board Resolution, and the Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities contained; or
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(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of
the Holders of all or any series of Securities (and if such Events of
Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are expressly being
included solely for the benefit of such series); PROVIDED, HOWEVER,
that in respect of any such additional Events of Default such
supplemental indenture may provide for a particular period of grace
after default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to
the Trustee upon such default or may limit the right of the Holders of
a majority in aggregate principal amount of that or those series of
Securities to which such additional Events of Default apply to waive
such default; or
(4) to add to or change any of the provisions of this
Indenture to provide that Bearer Securities may be registrable as to
principal, to change or eliminate any restrictions on the payment of
principal of or any premium or interest on Bearer Securities, to permit
Bearer Securities to be issued in exchange for Registered Securities,
to permit Bearer Securities to be issued in exchange for Bearer
Securities of other authorized denominations or to permit or facilitate
the issuance of Securities in uncertificated form, PROVIDED that any
such action shall not adversely affect the interests of the Holders of
Securities of any series or any related coupons in any material
respect; or
(5) to change or eliminate any of the provisions of this
Indenture, PROVIDED that any such change or elimination shall become
effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series
and any related coupons as permitted by Sections 201 and 301, including
the provisions and procedures relating to Securities convertible into
Common Shares or Preferred Shares, as the case may be; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee; or
(9) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture which shall
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not be inconsistent with the provisions of this Indenture, PROVIDED
such provisions shall not adversely affect the interests of the Holders
of Securities of any series or any related coupons in any material
respect; or
(10) to supplement any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Sections 401, 1402 and 1403; PROVIDED that any such action shall not
adversely affect the interests of the Holders of Securities of such
series and any related coupons or any other series of Securities in any
material respect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal amount
of all Outstanding Securities affected by such supplemental indenture, by Act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities and any related coupons under this Indenture; PROVIDED, HOWEVER, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of (or
premium, if any, on) or any installment of principal of or interest on,
any Security; or reduce the principal amount thereof or the rate or
amount of interest thereon or any Additional Amounts payable in respect
thereof, or any premium payable upon the redemption thereof, or change
any obligation of the Company to pay Additional Amounts pursuant to
Section 1012 (except as contemplated by Section 801 and permitted by
Section 901), or reduce the amount of the principal of an Original
Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
502 or the amount thereof provable in bankruptcy pursuant to Section
504, or adversely affect any right of repayment at the option of the
Holder of any Security, or change any Place of Payment where, or the
currency or currencies, currency unit or units or composite currency or
currencies in which, any Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption or repayment at the option of the
Holder, on or after the Redemption Date or the Repayment Date, as the
case may be), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver with respect to such series (or
compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1504 for quorum or
voting, or
(3) modify any of the provisions of this Section, Section 513
or Section 1013, except to increase the percentage required to effect
such action or to provide that certain
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other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected
thereby.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modification thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder and of any coupon appertaining thereto shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL
INDENTURES. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall,
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST
AND ADDITIONAL AMOUNTS. The Company covenants and agrees for the benefit of the
Holders of each series of
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Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on and any Additional Amounts payable in respect of the
Securities of that series in accordance with the terms of such series of
Securities, any coupons appertaining thereto and this Indenture. Unless
otherwise specified as contemplated by Section 301 with respect to any series of
Securities, any interest due on and any Additional Amounts payable in respect of
Bearer Securities on or before Maturity, other than Additional Amounts, if any,
payable as provided in Section 1012 in respect of principal of (or premium, if
any, on) such a Security, shall be payable only upon presentation and surrender
of the several coupons for such interest installments as are evidenced thereby
as they severally mature. Unless otherwise specified with respect to Securities
of any series pursuant to Section 301, at the option of the Company, all
payments of principal may be paid by check to the registered Holder of the
Registered Security or other person entitled thereto against surrender of such
Security.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. If Securities
of a series are issuable only as Registered Securities, the Company shall
maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for
payment or conversion, where Securities of that series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities of that series and this Indenture may
be served. If Securities of a series are issuable as Bearer Securities, the
Company will maintain: (A) in The Borough of Manhattan, City of New York, an
office or agency where any Registered Securities of that series may be presented
or surrendered for payment or conversion, where any Registered Securities of
that series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange, where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served and where Bearer Securities of that series and related coupons may
be presented or surrendered for payment or conversion in the circumstances
described in the following paragraph (and not otherwise); (B) subject to any
laws or regulations applicable thereto, in a Place of Payment for that series
which is located outside the United States, an office or agency where Securities
of that series and related coupons may be presented and surrendered for payment
(including payment of any Additional Amounts payable on Securities of that
series pursuant to Section 1012) or conversion; PROVIDED, HOWEVER, that if the
Securities of that series are listed on the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Company will maintain a Paying Agent for the Securities of
that series in Luxembourg or any other required city located outside the United
States, as the case may be, so long as the Securities of that series are listed
on such exchange; and (C) subject to any laws or regulations applicable thereto,
in a Place of Payment for that series located outside the United States an
office or agency where any Registered Securities of that series may be
surrendered for registration of transfer, where Securities of that series may be
surrendered for exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of each such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, except that Bearer Securities of that series and the related coupons
may be presented and surrendered for payment (including payment of any
Additional Amounts payable on Bearer Securities of that series pursuant to
Section 1012) or conversion at
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the offices specified in the Security, in London, England, and the Company
hereby appoints the same as its agent to receive such respective presentations,
surrenders, notices and demands, and the Company hereby appoints the Trustee its
agent to receive all such presentations, surrenders, notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, no payment of principal, premium or interest on or
Additional Amounts in respect of Bearer Securities shall be made at any office
or agency of the Company in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank located
in the United States; PROVIDED, HOWEVER, that, if the Securities of a series are
payable in Dollars, payment of principal of and any premium and interest on any
Bearer Security (including any Additional Amounts payable in respect of
Securities of such series pursuant to Section 1012) shall be made at the office
of the Company's Paying Agent in The Borough of Manhattan, City of New York, if
(but only if) payment in Dollars of the full amount of such principal, premium,
interest or Additional Amounts, as the case may be, at all offices or agencies
outside the United States maintained for the purpose by the Company in
accordance with this Indenture, is illegal or effectively precluded by exchange
controls or other similar restrictions.
The Company may from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all of such purposes, and may from time to time
rescind such designations; PROVIDED, HOWEVER, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. Unless otherwise specified with
respect to any Securities pursuant to Section 301 with respect to a series of
Securities, the Company hereby designates as a Place of Payment for each series
of Securities the office or agency of the Company in The Borough of Manhattan,
The City of New York, and initially appoints the Trustee, at its offices located
at 120 Broadway, 33rd Floor, New York, New york 10271, as Paying Agent in such
city and as its agent to receive all such presentations, surrenders, notices and
demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, if and so long as the Securities of any series (i) are
denominated in a Foreign Currency or (ii) may be payable in a Foreign Currency,
or so long as it is required under any other provision of the Indenture, then
the Company will maintain with respect to each such series of Securities, or as
so required, at least one exchange rate agent.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN
TRUST. If the Company shall at any time act as its own Paying Agent with respect
to any series of any Securities and any related coupons, it will, on or before
each due date of the principal of (and premium, if any), or interest on or
Additional Amounts in respect of, any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum in the currency or currencies, currency unit or units or composite currency
or currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series)
sufficient to pay the principal (and premium, if any) or interest or Additional
Amounts so becoming due until such sums shall be paid to such Persons or
otherwise
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disposed of as herein provided, and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities and any related coupons, it will, on or before each due
date of the principal of (and premium, if any), or interest on or Additional
Amounts in respect of, any Securities of that series, deposit with a Paying
Agent a sum (in the currency or currencies, currency unit or units or composite
currency or currencies described in the preceding paragraph) sufficient to pay
the principal (and premium, if any) or interest or Additional Amounts, so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest or Additional Amounts and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will
(1) hold all sums held by it for the payment of principal of
(and premium, if any) or interest on Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities) in the making of any such
payment of principal (and premium, if any) or interest; and
(3) at any time during the continuance of any such default
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Except as otherwise provided in the Securities of any series,
any money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of (and premium, if any) or
interest on, or any Additional Amounts in respect of, any Security of any series
and remaining unclaimed for two years after such principal (and premium, if
any), interest or Additional Amounts has become due and payable shall be paid to
the Company upon Company Request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment of such
principal of (and premium, if any) or interest on, or any Additional Amounts in
respect of, any Security, without interest thereon, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER,
that the Trustee or such
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Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in an Authorized Newspaper,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1004. LIMITATIONS ON INCURRENCE OF DEBT. (a) The
Company will not, and will not permit any Subsidiary to, incur any Debt 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 GAAP is
greater than 65% of the sum of (i) the Company's Undepreciated Real Estate
Assets 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 Securities Exchange Act of 1934, with the 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;
(b) In addition to the limitation set forth in subsection (a)
of this Section 1004, the Company will not, and will not permit any
Subsidiary to, incur any Debt if Consolidated Income Available for Debt
Service 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 on the Debt of the Company and all Subsidiaries to be
outstanding immediately after the incurring of such additional Debt.
(c) For purposes of this Section 1004, Debt shall be deemed to
be "incurred" by the Company or a Subsidiary whenever the Company or
such Subsidiary shall create, assume, guarantee or otherwise become
liable in respect thereof.
SECTION 1005. RESTRICTIONS ON DIVIDENDS AND OTHER
DISTRIBUTIONS.
The Company will not, in respect of any shares of any class
of its capital stock, (a) declare or pay any dividends (other than dividends
payable in capital stock of the Company) thereon, (b) apply any of its property
or assets to the purchase, redemption or other acquisition or retirement
thereof, (c) set apart any sum for the purchase, redemption or other acquisition
or retirement thereof, or (d) make any other distribution, by reduction of
capital or otherwise if, immediately after such declaration or other action
referred to above, the aggregate of all such declarations and other actions
since the date on which this Indenture was originally executed shall exceed the
sum of (i) Funds from Operations from December 31, 1993 until 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 Securities Exchange
Act of 1934, with the Trustee) prior to such declaration or other action and
(ii) $20,000,000; PROVIDED, HOWEVER, that the foregoing limitation shall not
apply to any declaration or other action referred to above which is necessary to
maintain the Company's status as a "real estate investment trust" under the
Internal Revenue Code of 1986, as amended, if the aggregate principal amount of
all outstanding Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP at such time is less
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than 65% of the Company's Undepreciated Real Estate Assets 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 Securities Exchange
Act of 1934, with the Trustee) prior to such declaration or other action.
Notwithstanding the foregoing, the provisions of this Section
1005 will not prohibit the payment of any dividend within 30 days of the
declaration thereof if at such date of declaration such payment would have
complied with the provisions hereof.
SECTION 1006. EXISTENCE. Subject to Article Eight, the Company
will 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 shall not be required to
preserve any right or franchise if the Board of Directors shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 1007. MAINTENANCE OF PROPERTIES. The Company will
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 will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; PROVIDED, HOWEVER, that nothing in this Section shall
prevent the Company or any Subsidiary from selling or otherwise disposing for
value its properties in the ordinary course of its business.
SECTION 1008. INSURANCE. The Company will, and will cause each
of its Subsidiaries to, keep all of its insurable properties insured against
loss or damage at least equal to their then full insurable value with insurers
of recognized responsibility and having a rating of at least A:VIII in Best's
Key Rating Guide.
SECTION 1009. PAYMENT OF TAXES AND OTHER CLAIMS. The Company
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (1) 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 (2) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary; PROVIDED, HOWEVER, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 1010. PROVISION OF FINANCIAL INFORMATION. Whether or
not the Company is subject to Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Company will, to the extent permitted under the Securities Exchange
Act of 1934, 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
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"Financial Statements") if the Company were so subject, such documents to be
filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so to file such
documents if the Company were so subject.
The Company will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders copies
of the annual reports and quarterly reports which the Company would have been
required to file with the Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 if the Company were subject to such Sections,
and (ii) file with the 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 Securities Exchange Act of
1934 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
Securities Exchange Act of 1934, promptly upon written request and payment of
the reasonable cost of duplication and delivery, supply copies of such documents
to any prospective Holder.
SECTION 1011. MAINTENANCE OF UNENCUMBERED REAL ESTATE ASSETS.
The Company will maintain an Unencumbered Real Estate Asset Value of not less
than 135% of the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries that is unsecured and unsubordinated.
SECTION 1012. STATEMENT AS TO COMPLIANCE.
The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year, a brief certificate from the principal
executive officer, principal financial officer or principal accounting officer
as to his or her knowledge of the Company's compliance with all conditions and
covenants under this Indenture and, in the event of any noncompliance,
specifying such noncompliance and the nature and status thereof. For purposes of
this Section 1011, such compliance shall be determined without regard to any
period of grace or requirement of notice under this Indenture.
SECTION 1013. ADDITIONAL AMOUNTS. If any Securities of a
series provide for the payment of Additional Amounts, the Company will pay to
the Holder of any Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301. Whenever
in this Indenture there is mentioned, in any context except in the case of
Section 502(1), the payment of the principal of or any premium or interest on,
or in respect of, any Security of any series or payment of any related coupon or
the net proceeds received on the sale or exchange of any Security of any series,
such mention shall be deemed to include mention of the payment of Additional
Amounts provided by the terms of such series established pursuant to Section 301
to the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof pursuant to such terms and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall not
be construed as excluding Additional Amounts in those provisions hereof where
such express mention is not made.
Except as otherwise specified as contemplated by Section 301,
if the Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest
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Payment Date with respect to that series of Securities (or if the Securities of
that series will not bear interest prior to Maturity, the first day on which a
payment of principal and any premium is made), and at least 10 days prior to
each date of payment of principal and any premium or interest if there has been
any change with respect to the matters set forth in the below-mentioned
Officers' Certificate, the Company will furnish the Trustee and the Company's
principal Paying Agent or Paying Agents, if other than the Trustee, with an
Officers' Certificate instructing the Trustee and such Paying Agent or Paying
Agents whether such payment of principal of and any premium or interest on the
Securities of that series shall be made to Holders of Securities of that series
or any related coupons who are not United States persons without withholding for
or on account of any tax, assessment or other governmental charge described in
the Securities of the series. If any such withholding shall be required, then
such Officers' Certificate shall specify by country the amount, if any, required
to be withheld on such payments to such Holders of Securities of that series or
related coupons and the Company will pay to the Trustee or such Paying Agent the
Additional Amounts required by the terms of such Securities. In the event that
the Trustee or any Paying Agent, as the case may be, shall not so receive the
above-mentioned certificate, then the Trustee or such Paying Agent shall be
entitled (i) to assume that no such withholding or deduction is required with
respect to any payment of principal or interest with respect to any Securities
of a series or related coupons until it shall have received a certificate
advising otherwise and (ii) to make all payments of principal and interest with
respect to the Securities of a series or related coupons without withholding or
deductions until otherwise advised. The Company covenants to indemnify the
Trustee and any Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by any
of them or in reliance on any Officers' Certificate furnished pursuant to this
Section or in reliance on the Company's not furnishing such an Officers'
Certificate.
SECTION 1014. WAIVER OF CERTAIN COVENANTS. The Company may
omit in any particular instance to comply with any term, provision or condition
set forth in Sections 1004 to 1011, inclusive, if before or after the time for
such compliance the Holders of at least a majority in principal amount of all
outstanding Securities of such series, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such term, provision or condition shall remain in full force
and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE. Securities of any
series which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 301 for Securities of any series) in accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The
election of the Company to redeem any Securities shall be evidenced by or
pursuant to a Board Resolution. In
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case of any redemption at the election of the Company of less than all of the
Securities of any series, the Company shall, at least 45 days prior to the
giving of the notice of redemption referred to in Section 1104 (unless a shorter
notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities of such series to be
redeemed. In the case of any redemption of Securities prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE
REDEEMED. If less than all the Securities of any series issued on the same day
with the same terms are to be redeemed, the particular Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Securities of such series issued on such date with
the same terms not previously called for redemption (excluding any such
Outstanding Securities held by the Company or any of its Subsidiaries), by such
method as the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has been or
is to be redeemed.
SECTION 1104. NOTICE OF REDEMPTION. Notice of redemption shall
be given in the manner provided in Section 106, not less than 30 days nor more
than 60 days prior to the Redemption Date, unless a shorter period is specified
by the terms of such series established pursuant to Section 301, to each Holder
of Securities to be redeemed, but failure to give such notice in the manner
herein provided to the Holder of any Security designated for redemption as a
whole or in part, or any defect in the notice to any such Holder, shall not
affect the validity of the proceedings for the redemption of any other such
Security or portion thereof.
Any notice that is mailed to the Holders of Registered
Securities in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, accrued interest to the Redemption
Date payable as provided in Section 1106, if any, and Additional
Amounts, if any,
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(3) if less than all Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial
redemption, the principal amount) of the particular Security or
Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the holder will
receive, without a charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price and
accrued interest to the Redemption Date payable as provided in Section
1106, if any, will become due and payable upon each such Security, or
the portion thereof, to be redeemed and, if applicable, that interest
thereon shall cease to accrue on and after said date,
(6) the Place or Places of Payment where such Securities,
together in the case of Bearer Securities with all coupons appertaining
thereto, if any, maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price and accrued interest,
if any, or for conversion,
(7) that the redemption is for a sinking fund, if such is the
case,
(8) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be
accompanied by all coupons maturing subsequent to the date fixed for
redemption or the amount of any such missing coupon or coupons will be
deducted from the Redemption Price, unless security or indemnity
satisfactory to the Company, the Trustee for such series and any Paying
Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed and
any Registered Securities of such series are not to be redeemed, and if
such Bearer Securities may be exchanged for Registered Securities not
subject to redemption on this Redemption Date pursuant to Section 305
or otherwise, the last date, as determined by the Company, on which
such exchanges may be made,
(10) the CUSIP number of such Security, if any, and
(11) if applicable, that a Holder of Securities who desires to
convert Securities for redemption must satisfy the requirements for
conversion contained in such Securities, the then existing conversion
price or rate, and the date and time when the option to convert shall
expire.
Notice of redemption of Securities to be redeemed shall be
given by the Company or, at the Company's request, by the Trustee in the name
and at the expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE. At or prior to
10:00 a.m. on any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent, which
it may not do in the case of a sinking fund payment under Article Twelve,
segregate and hold in trust as provided in Section 1003) an
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amount of money in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) sufficient to pay on the Redemption Date the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities or portions thereof which
are to be redeemed on that date.
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued interest) such Securities
shall, if the same were interest-bearing, cease to bear interest and the coupons
for such interest appertaining to any Bearer Securities so to be redeemed,
except to the extent provided below, shall be void. Upon surrender of any such
Security for redemption in accordance with said notice, together with all
coupons, if any, appertaining thereto maturing after the Redemption Date, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest, if any, to the Redemption Date; PROVIDED, HOWEVER, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section 1002)
and, unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of coupons for such interest; and PROVIDED FURTHER
that, except as otherwise provided with respect to Securities convertible into
Common Shares or Preferred Shares, installments of interest on Registered
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; PROVIDED,
HOWEVER, that interest represented by coupons shall be payable only at an office
or agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified as contemplated by Section 301,
only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate borne by
the Security.
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SECTION 1107. SECURITIES REDEEMED IN PART. Any Registered
Security which is to be redeemed only in part (pursuant to the provisions of
this Article or of Article Twelve) shall be surrendered at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing) and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge a new Security or
Securities of the same series, of any authorized denomination as requested by
such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
SECTION 1108. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of Securities, the Company may arrange for the
purchase and conversion of any Securities called for redemption by an agreement
with one or more investment bankers or other purchasers to purchase such
Securities by paying to the Trustee or the Paying Agent in trust for the Holders
of Securities, on or before 10:00 a.m. New York time on the Redemption Date, an
amount not less than the Redemption Price, together with interest, if any,
accrued to the Redemption Date of such Securities, in immediately available
funds. Notwithstanding anything to the contrary contained in this Article
Eleven, the obligation of the Company to pay the Redemption Price of such
Securities, including all accrued interest, if any, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, any Securities not duly
surrendered for conversion by the Holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such Holders and surrendered by such purchasers for conversion,
all as of immediately prior to the close of business on the last day on which
Securities of such series called for redemption may be converted in accordance
with this Indenture and the terms of such Securities, subject to payment to the
Trustee or Paying Agent of the above-described amount. The Trustee or the Paying
Agent shall hold and pay to the Holders whose Securities are selected for
redemption any such amount paid to it in the same manner as it would pay moneys
deposited with it by the Company for the redemption of Securities. Without the
Trustee's and the Paying Agent's prior written consent, no arrangement between
the Company and such purchasers for the purchase and conversion of any
Securities shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee and the Paying Agent as set forth
in this Indenture, and the Company agrees to indemnify the Trustee and the
Paying Agent from, and hold them harmless against, any loss, liability or
expense arising out of or in connection with any such arrangement for the
purpose and conversion of any Securities between the Company and such
purchasers, including the costs and expenses incurred by the Trustee and the
Paying Agent (including the fees and expenses of their agents and counsel) in
the defense of any claim or liability arising out of or in connection with the
exercise or performance of any of their powers, duties, responsibilities or
obligations under this Indenture.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this
Article shall be applicable to any sinking fund for the retirement of Securities
of a series except as otherwise specified as contemplated by Section 301 for
Securities of such series.
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The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of such Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of any Securities
of any series, the cash amount of any mandatory sinking fund payment may be
subject to reduction as provided in Section 1202. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of Securities of such series.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH
SECURITIES. The Company may, in satisfaction of all or any part of any mandatory
sinking fund payment with respect to the Securities of a series, (1) deliver
Outstanding Securities of such series (other than any previously called for
redemption) together in the case of any Bearer Securities of such series with
all unmatured coupons appertaining thereto and (2) apply as a credit Securities
of such series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, as
provided for by the terms of such Securities, or which have otherwise been
acquired by the Company; PROVIDED that such Securities so delivered or applied
as a credit have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the applicable
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such mandatory sinking fund payment shall
be reduced accordingly.
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND. Not
less than 60 days prior to each sinking fund payment date for Securities of any
series, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202, and the optional amount, if any, to be added in cash
to the next ensuing mandatory sinking fund payment, and will also deliver to the
Trustee any Securities to be so delivered and credited. If such Officers'
Certificate shall specify an optional amount to be added in cash to the next
ensuing mandatory sinking fund payment, the Company shall thereupon be obligated
to pay the amount therein specified. Not less than 30 days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1106 and 1107.
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ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. APPLICABILITY OF ARTICLE. Repayment of
Securities of any series before their Stated Maturity at the option of Holders
thereof shall be made in accordance with the terms of such Securities, if any,
and (except as otherwise specified by the terms of such series established
pursuant to Section 301) in accordance with this Article.
SECTION 1302. REPAYMENT OF SECURITIES. Securities of any
series subject to repayment in whole or in part at the option of the Holders
thereof will, unless otherwise provided in the terms of such Securities, be
repaid at a price equal to the principal amount thereof, together with interest,
if any, thereon accrued to the Repayment Date specified in or pursuant to the
terms of such Securities. The Company covenants that at or prior to 10:00 a.m.
on the Repayment Date it will deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 1003) an amount of money in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay the
principal (or, if so provided by the terms of the Securities of any series, a
percentage of the principal) of, and (except if the Repayment Date shall be an
Interest Payment Date) accrued interest on, all the Securities or portions
thereof, as the case may be, to be repaid on such date.
SECTION 1303. EXERCISE OF OPTION. Securities of any series subject to repayment
at the option of the Holders thereof will contain an "Option to Elect Repayment"
form on the reverse of such Securities. In order for any Security to be repaid
at the option of the Holder, the Trustee must receive at the Place of Payment
therefor specified in the terms of such Security (or at such other place or
places of which the Company shall from time to time notify the Holders of such
Securities) not earlier than 60 days nor later than 30 days prior to the
Repayment Date (1) the Security so providing for such repayment together with
the "Option to Elect Repayment" form on the reverse thereof duly completed by
the Holder (or by the Holder's attorney duly authorized in writing) or (2) a
telegram, facsimile transmission or a letter from a member of a national
securities exchange, or the National Association of Securities Dealers, Inc.
("NASD"), or a commercial bank or trust company in the United States setting
forth the name of the Holder of the Security, the principal amount of the
Security, the principal amount of the Security to be repaid, the CUSIP number,
if any, or a description of the tenor and terms of the Security, a statement
that the option to elect repayment is being exercised thereby and a guarantee
that the Security to be repaid, together with the duly completed form entitled
"Option to Elect Repayment" on the reverse of the Security, will be received by
the Trustee not later than the fifth Business Day after the date of such
telegram, facsimile transmission or letter; PROVIDED, HOWEVER, that such
telegram, facsimile transmission or letter shall only be effective if such
Security and form duly completed are received by the Trustee by such fifth
Business Day. If less than the entire principal amount of such Security is to be
repaid in accordance with the terms of such Security, the principal amount of
such Security to be repaid, in increments of the minimum denomination for
Securities of such series, and the denomination or denominations of the Security
or Securities to be issued to the Holder for the portion of the principal amount
of such Security surrendered that is not to be repaid, must be specified. The
principal amount of any
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Security providing for repayment at the option of the Holder thereof may not be
repaid in part if, following such repayment, the unpaid principal amount of such
Security would be less than the minimum authorized denomination of Securities of
the series of which such Security to be repaid is a part. Except as otherwise
may be provided by the terms of any Security providing for repayment at the
option of the Holder thereof, exercise of the repayment option by the Holder
shall be irrevocable unless waived by the Company.
SECTION 1304. WHEN SECURITIES PRESENTED FOR REPAYMENT BECOME
DUE AND PAYABLE. If Securities of any series providing for repayment at the
option of the Holders thereof shall have been surrendered as provided in this
Article and as provided by or pursuant to the terms of such Securities, such
Securities or the portions thereof, as the case may be, to be repaid shall
become due and payable and shall be paid by the Company on the Repayment Date
therein specified, and on and after such Repayment Date (unless the Company
shall default in the payment of such Securities on such Repayment Date) such
Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with all coupons, if any, appertaining thereto maturing after the Repayment
Date, the principal amount of such Security so to be repaid shall be paid by the
Company, together with accrued interest, if any, to the Repayment Date;
PROVIDED, HOWEVER, that coupons whose Stated Maturity is on or prior to the
Repayment Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified pursuant to Section 301, only upon presentation and
surrender of such coupons; and PROVIDED FURTHER that, in the case of Registered
Securities, installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall be payable (but without interest thereon,
unless the Company shall default in the payment thereof) to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repayment Date, such
Security may be paid after deducting from the amount payable therefor as
provided in Section 1302 an amount equal to the face amount of all such missing
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to the Trustee or any
Paying Agent any such missing coupon in respect of which a deduction shall have
been made as provided in the preceding sentence, such Holder shall be entitled
to receive the amount so deducted; PROVIDED, HOWEVER, that interest represented
by coupons shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon presentation and
surrender of those coupons.
If the principal amount of any Security surrendered for
repayment shall not be so repaid upon surrender thereof, such principal amount
(together with interest, if any, thereon accrued to such Repayment Date) shall,
until paid, bear interest from the Repayment Date at the
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rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) set forth in such Security.
SECTION 1305. SECURITIES REPAID IN PART. Upon surrender of any
Registered Security which is to be repaid in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of such
Security, without service charge and at the expense of the Company, a new
Registered Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount equal to
and in exchange for the portion of the principal of such Security so surrendered
which is not to be repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO
EFFECT DEFEASANCE OR COVENANT DEFEASANCE. If, pursuant to Section 301, provision
is made for either or both of (a) defeasance of the Securities of or within a
series under Section 1402 or (b) covenant defeasance of the Securities of or
within a series under Section 1403, then the provisions of such Section or
Sections, as the case may be, together with the other provisions of this Article
(with such modifications thereto as may be specified pursuant to Section 301
with respect to any Securities), shall be applicable to such Securities and any
coupons appertaining thereto, and the Company may at its option by Board
Resolution, at any time, with respect to such Securities and any coupons
appertaining thereto, elect to have Section 1402 (if applicable) or Section 1403
(if applicable) be applied to such Outstanding Securities and any coupons
appertaining thereto upon compliance with the conditions set forth below in this
Article.
SECTION 1402. DEFEASANCE AND DISCHARGE. Upon the Company's
exercise of the above option applicable to this Section with respect to any
Securities of or within a series, the Company shall be deemed to have been
discharged from its obligations with respect to such Outstanding Securities and
any coupons appertaining thereto on the date the conditions set forth in Section
1404 are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by such Outstanding Securities and any
coupons appertaining thereto, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 1405 and the other Sections of
this Indenture referred to in clauses (A) and (B) below, and to have satisfied
all of its other obligations under such Securities and any coupons appertaining
thereto and this Indenture insofar as such Securities and any coupons
appertaining thereto are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of such Outstanding Securities and any
coupons appertaining thereto to receive, solely from the trust fund described in
Section 1404 and as more fully set forth in such Section, payments in respect of
the principal of (and premium, if any) and interest, if any, on such Securities
and any coupons appertaining thereto when such payments are due, (B) the
Company's obligations with respect to such Securities under Sections 305, 306,
1002 and 1003 and with respect to the payment of Additional Amounts, if any, on
such Securities as contemplated by Section 1012, (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (D) this Article. Subject to
compliance with this Article Fourteen, the
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Company may exercise its option under this Section notwithstanding the prior
exercise of its option under Section 1403 with respect to such Securities and
any coupons appertaining thereto.
SECTION 1403. COVENANT DEFEASANCE. Upon the Company's exercise
of the above option applicable to this Section with respect to any Securities of
or within a series, the Company shall be released from its obligations under
Sections 1004 to 1011, inclusive, and, if specified pursuant to Section 301, its
obligations under any other covenant, with respect to such Outstanding
Securities and any coupons appertaining thereto on and after the date the
conditions set forth in Section 1404 are satisfied (hereinafter, "covenant
defeasance"), and such Securities and any coupons appertaining thereto shall
thereafter be deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with Sections 1004 to 1011, inclusive, or such other
covenant, but shall continue to be deemed "Outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to such Outstanding Securities and any coupons appertaining thereto, the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section or such other covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such Section or such other covenant or by reason of reference in any such
Section or such other covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a default or an Event
of Default under Section 501(4) or 501(7) or otherwise, as the case may be, but,
except as specified above, the remainder of this Indenture and such Securities
and any coupons appertaining thereto shall be unaffected thereby.
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of Section 1402 or Section
1403 to any Outstanding Securities of or within a series and any coupons
appertaining thereto:
(a) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 607 who shall agree to
comply with the provisions of this Article Fourteen applicable
to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such
Securities and any coupons appertaining thereto, (1) an amount
in such currency, currencies or currency unit in which such
Securities and any coupons appertaining thereto are then
specified as payable at Stated Maturity, or (2) Government
Obligations applicable to such Securities and coupons
appertaining thereto (determined on the basis of the currency,
currencies or currency unit in which such Securities and
coupons appertaining thereto are then specified as payable at
Stated Maturity) which through the scheduled payment of
principal and interest in respect thereof in accordance with
their terms will provide, not later than one day before the
due date of any payment of principal of (and premium, if any)
and interest, if any, on such Securities and any coupons
appertaining thereto, money in an amount, or (3) a combination
thereof, in any case, in an amount, sufficient, without
consideration of any reinvestment of such principal and
interest, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the
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Trustee (or other qualifying trustee) to pay and discharge,
(i) the principal of (and premium, if any) and interest, if
any, on such Outstanding Securities and any coupons
appertaining thereto on the Stated Maturity of such principal
or installment of principal or interest and (ii) any mandatory
sinking fund payments or analogous payments applicable to such
Outstanding Securities and any coupons appertaining thereto on
the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such
Securities and any coupons appertaining thereto.
(b) Such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a default
under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which it is
bound.
(c) No Event of Default or event which with notice or
lapse of time or both would become an Event of Default with
respect to such Securities and any coupons appertaining
thereto shall have occurred and be continuing on the date of
such deposit or, insofar as Sections 501(6) and 501(7) are
concerned, at any time during the period ending on the 91st
day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the
expiration of such period).
(d) In the case of an election under Section 1402,
the Company shall have delivered to the Trustee an Opinion of
Counsel stating that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of execution of this Indenture,
there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such
opinion shall confirm that, the Holders of such Outstanding
Securities and any coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes
as a result of such defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance had
not occurred.
(e) In the case of an election under Section 1403,
the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such Outstanding
Securities and any coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes
as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such covenant
defeasance had not occurred.
(f) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent to the defeasance under
Section 1402 or the covenant defeasance under Section 1403 (as
the case may be) have been complied with and an Opinion of
Counsel to the effect that either (i) as a result of a deposit
pursuant to subsection (a) above and the related exercise of
the Company's option under Section 1402 or Section 1403 (as
the case may be), registration is not required under the
Investment
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Company Act of 1940, as amended, by the Company, with respect
to the trust funds representing such deposit or by the Trustee
for such trust funds or (ii) all necessary registrations under
said Act have been effected.
(g) Notwithstanding any other provisions of this
Section, such defeasance or covenant defeasance shall be
effected in compliance with any additional or substitute
terms, conditions or limitations which may be imposed on the
Company in connection therewith pursuant to Section 301.
SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS Provisions. Subject to the provisions of the
last paragraph of Section 1003, all money and Government Obligations (or other
property as may be provided pursuant to Section 301) (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 1405, the "Trustee") pursuant to Section 1404 in
respect of any Outstanding Securities of any series and any coupons appertaining
thereto shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and any coupons appertaining thereto and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities and any coupons appertaining
thereto of all sums due and to become due thereon in respect of principal (and
premium, if any) and interest and Additional Amounts, if any, but such money
need not be segregated from other funds except to the extent required by law.
Unless otherwise specified with respect to any Security
pursuant to Section 301, if, after a deposit referred to in Section 1404(a) has
been made, (a) the Holder of a Security in respect of which such deposit was
made is entitled to, and does, elect pursuant to Section 301 or the terms of
such Security to receive payment in a currency or currency unit other than that
in which the deposit pursuant to Section 1404(a) has been made in respect of
such Security, or (b) a Conversion Event occurs in respect of the currency or
currency unit in which the deposit pursuant to Section 1404(a) has been made,
the indebtedness represented by such Security and any coupons appertaining
thereto 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, if any, on such Security as the same becomes due out of the proceeds
yielded by converting (from time to time as specified below in the case of any
such election) the amount or other property deposited in respect of such
Security into the currency or currency unit in which such Security becomes
payable as a result of such election or Conversion Event based on the applicable
market exchange rate for such currency or currency unit in effect on the second
Business Day prior to each payment date, except, with respect to a Conversion
Event, for such currency or currency unit in effect (as nearly as feasible) at
the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the Government
Obligations deposited pursuant to Section 1404 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of such Outstanding Securities and any
coupons appertaining thereto.
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Anything in this Article to the contrary notwithstanding,
subject to Section 606, the Trustee shall deliver or pay to the Company from
time to time upon Company Request any money or Government Obligations (or other
property and any proceeds therefrom) held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect a defeasance or covenant defeasance, as applicable, in
accordance with this Article.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A
meeting of Holders of Securities of any series may be called at any time and
from time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Securities
of such series.
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS. (a) The
Trustee may at any time call a meeting of Holders of Securities of any series
for any purpose specified in Section 1501, to be held at such time and at such
place in The City of Cleveland, State of Ohio, or in London as the Trustee shall
determine. Notice of every meeting of Holders of Securities of any series,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 106, not less than 21 nor more than 180 days prior to the
date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified in
Section 1501, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first publication of the notice of such meeting within 21 days after receipt of
such request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Securities of such series in
the amount above specified, as the case may be, may determine the time and the
place in The City of Cleveland, State of Ohio, or in London for such meeting and
may call such meeting for such purposes by giving notice thereof as provided in
subsection (a) of this Section.
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS. To be
entitled to vote at any meeting of Holders of Securities of any series, a Person
shall be (1) a Holder of one or more Outstanding Securities of such series, or
(2) a Person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Securities of such series by such Holder or
Holders. The only Persons who shall be entitled to be present or to speak at any
meeting of Holders of Securities of any series shall be the Persons entitled to
vote at such meeting and their counsel, any representatives of the Trustee and
its counsel and any representatives of the Company and its counsel.
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SECTION 1504. QUORUM; ACTION. The Persons entitled to vote a
majority in principal amount of the Outstanding Securities of a series shall
constitute a quorum for a meeting of Holders of Securities of such series;
PROVIDED, HOWEVER, that if any action is to be taken at such meeting with
respect to a consent or waiver which this Indenture expressly provides may be
given by the Holders of not less than a specified percentage in principal amount
of the Outstanding Securities of a series, the Persons entitled to vote such
specified percentage in principal amount of the Outstanding Securities of such
series shall constitute a quorum. In the absence of a quorum within 30 minutes
after the time appointed for any such meeting, the meeting shall, if convened at
the request of Holders of Securities of such series, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 1502(a), except that such notice need be given only
once not less than five days prior to the date on which the meeting is scheduled
to be reconvened. Notice of the reconvening of any adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as aforesaid may be adopted by the affirmative vote of the
Holders of a majority in principal amount of the Outstanding Securities of that
series; PROVIDED, HOWEVER, that, except as limited by the proviso to Section
902, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in principal amount
of the Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
shall be binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504,
if any action is to be taken at a meeting of Holders of Securities of any series
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage in principal amount of all
Outstanding Securities affected thereby, or of the Holders of such series and
one or more additional series:
(i) there shall be no minimum quorum requirement for such
meeting; and
-74-
<PAGE> 84
(ii) the principal amount of the Outstanding Securities of
such series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into
account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given
or taken under this Indenture.
SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND
ADJOURNMENT OF MEETINGS. (a) Notwithstanding any provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Securities of a series in regard to proof of the
holding of Securities of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Securities shall be proved in the manner specified in Section 104
and the appointment of any proxy shall be proved in the manner specified in
Section 104 or by having the signature of the Person executing the proxy
witnessed or guaranteed by any trust company, bank or banker authorized by
Section 104 to certify to the holding of Bearer Securities. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Section 104 or
other proof.
(b) The Trustee shall, by an instrument in writing appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders of Securities as provided in Section 1502(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount of the
Outstanding Securities of such series held or represented by him; PROVIDED,
however, that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not Outstanding and ruled by the chairman of the meeting
to be not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 1502 at which a quorum is present may be adjourned
from time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting, and the
meeting may be held as so adjourned without further notice.
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of Securities
of any series shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities of such series or of their
representatives by proxy and the principal amounts and serial numbers of the
Outstanding Securities of such series held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for
-75-
<PAGE> 85
or against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record, at least in duplicate, of the proceedings of each meeting of
Holders of Securities of any Series shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the fact, setting forth a copy of the notice of
the meeting and showing that said notice was given as provided in Section 1502
and, if applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
* * * * *
This Indenture may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Indenture.
-76-
<PAGE> 86
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By: Scott A. Wolstein
Scott A. Wolstein
Title: President and Chief
Executive Officer
Attest:
Joan Allgood
Title:
NATIONAL CITY BANK, as Trustee
By: /s/ Sherry L. Damore
Sherry L. Damore
Title: Vice President
Attest:
/s/ J. Schwartz
Title: Vice President
-77-
<PAGE> 87
STATE OF OHIO )
) ss:
COUNTY OF OHIO )
On the 7th day of December, 1994, before me personally came
SCOTT A. WOLSTEIN, to me known, who, being by me duly sworn, did depose and say
that he resides at Pepper Pike, Ohio , that he is the President and Chief
Executive Officer of DEVELOPERS DIVERSIFIED REALTY CORPORATION, one of the
corporations described in and which executed the foregoing instrument and that
he signed his name thereto by authority of the Board of Directors of said
corporation.
[Notarial Seal]
/s/ Elizabeth A. Berry
Notary Public
COMMISSION EXPIRES
STATE OF OHIO )
) ss:
COUNTY OF OHIO )
On the 5th day of December , 1994, before me personally came
SHERRY L. DAMORE, to me known, who, being by me duly sworn, did depose and say
that she resides at 1900 East 9th Street that she is a Vice President of
NATIONAL CITY BANK, one of the corporations described in and which executed the
foregoing instrument and that she signed her name thereto by authority of the
Board of Directors of said corporation.
[Notarial Seal]
/s/ Penny J. Jarrell
Notary Public
COMMISSION EXPIRES
-78-
<PAGE> 88
EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, as of the date hereof, and except as
set forth below, the above-captioned Securities held by you for our account (i)
are owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States federal income taxation regardless of its
source ("United States person(s)"), (ii) are owned by United States person(s)
that are (a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section
2.165-12(c)(1)(v) are herein referred to as "financial institutions") purchasing
for their own account or for resale, or (b) United States person(s) who acquired
the Securities through foreign branches of United States financial institutions
and who hold the Securities through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United States
financial institution hereby agrees, on its own behalf or through its agent,
that you may advise Developers Diversified Realty Corporation or its agent that
such financial institution will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) are owned by United States or
foreign financial institution(s) for purposes of resale during the restricted
period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a United States or
foreign financial institution described in clause (iii) above (whether or not
also described in clause (i) or (ii)), this is to further certify that such
financial institution has not acquired the Securities for purposes of resale
directly or indirectly to a United States person or to a person within the
United States or its possessions.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and its
"possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the above-captioned Securities held by you for our account in accordance with
your Operating Procedures if any applicable statement
-1-
<PAGE> 89
herein is not correct on such date, and in the absence of any such notification
it may be assumed that this certification applies as of such date.
This certificate excepts and does not relate to [U.S.$] of
such interest in the above-captioned Securities in respect of which we are not
able to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.
We understand that this certificate may be required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: , 19
[To be dated no earlier than the 15th day prior
to (i) the Exchange Date or (ii) the relevant
Interest Payment Date occurring prior to the
Exchange Date, as applicable]
[Name of Person Making
Certification]
------------------------------
(Authorized Signator)
Name:
Title:
-2-
<PAGE> 90
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, based solely on written
certifications that we have received in writing, by tested telex or by
electronic transmission from each of the persons appearing in our records as
persons entitled to a portion of the principal amount set forth below (our
"Member Organizations") substantially in the form attached hereto, as of the
date hereof, [U.S.$] principal amount of the above-captioned Securities (i) is
owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States Federal income taxation regardless of its
source ("United States person(s)"), (ii) is owned by United States person(s)
that are (a) foreign branches of United States financial institutions (financial
institutions, as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
are herein referred to as "financial institutions") purchasing for their own
account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on the
date hereof (and in either case (a) or (b), each such financial institution has
agreed, on its own behalf or through its agent, that we may advise Kimco Realty
Corporation or its agent that such financial institution will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by United
States or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that financial institutions
described in clause (iii) above (whether or not also described in clause (i) or
(ii)) have certified that they have not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and its
"possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We further certify that (i) we are not making available
herewith for exchange (or, if relevant, collection of any interest) any portion
of the temporary global Security representing the above- captioned Securities
excepted in the above-referenced certificates of Member Organizations and (ii)
as of the date hereof we have not received any notification from any of our
Member Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
-3-
<PAGE> 91
We understand that this certification is required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: 19
-----------------------------
[To be dated no earlier than the Exchange Date
or the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]
[Morgan Guaranty Trust
Company of New York,
Brussels Office,] as
Operator of the
Euroclear System
[Cedel S.A.]
By:_________________________
-4-
<PAGE> 1
EXHIBIT 4.9
FIRST SUPPLEMENTAL INDENTURE
----------------------------
THIS FIRST SUPPLEMENTAL INDENTURE, is entered into as of May
10, 1995, by and between Developers Diversified Realty Corporation, an Ohio
corporation (the "Company"), and National City Bank, a national banking
association organized and existing under the laws of the United States, as
trustee (the "Trustee").
WHEREAS, the parties entered into the Indenture dated as of
May 1, 1994 (the "Original Indenture"), relating to the Company's senior debt
securities;
WHEREAS, the Company has made a request to the Trustee that
the Trustee join with it, in accordance with Section 901 of the Indenture, in
the execution of this First Supplemental Indenture to amend certain existing
provisions for the benefit of Holders of all series of Securities;
WHEREAS, the Company and the Trustees are authorized to enter
into this First Supplemental Indenture; and
NOW, THEREFORE, the Company and the Trustee agree as follows:
Section 1. RELATION TO INDENTURE. This First Supplemental
Indenture supplements the Original Indenture and shall be a part and subject to
all the terms thereof. Except as supplemented hereby, the Indenture and the
Securities issued thereunder shall continue in full force and effect.
Section 2. CAPITALIZED TERMS. Capitalized terms used herein
and not otherwise defined herein are used as defined in the original Indenture.
Section 3. MAINTENANCE OF UNENCUMBERED REAL ESTATE ASSET
VALUE. Section 1011 of the Indenture is deleted in its entirety and replaced
with the following:
Section 1011. MAINTENANCE OF UNENCUMBERED REAL ESTATE
ASSETS. The Company will at all times 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.
<PAGE> 2
Section 4. COUNTERPARTS. This First Supplemental Indenture may
be executed in counterparts, each of which shall be deemed an original, but all
of which shall together constitute one and the same instrument.
Section 5. GOVERNING LAW. THIS FIRST SUPPLEMENTAL INDENTURE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
OHIO (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
Section 6. CONCERNING THE TRUSTEE. The Trustee shall not be
responsible for any recital herein (other than the third recital as it appears
as it applies to the Trustee) as such recitals shall be taken as statements of
the Company, or the validity of the execution by the Company of this First
Supplemental Indenture. The Trustee makes no representations as to the validity
or sufficiency of this First Supplemental Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
Attest: DEVELOPERS DIVERSIFIED REALTY
CORPORATION
/s/ Joan U. Allgood By: /s/ James A. Schoff
Title: Name: James A. Schoff
Title: Executive Vice
President and Chief
Operating Officer
Attest: NATIONAL CITY BANK, as Trustee
/s/ N. Hartofillis By: /s/ David B. Davis
Title: Trust Officer Name: David B. Davis
Title: Vice President
-2-
<PAGE> 3
STATE OF OHIO )
) SS:
COUNTY OF CUYAHOGA )
On the 15th day of May, 1995, before me personally came JAMES
A. SCHOFF, to me known, who, being by me duly sworn, did depose and say that he
resides at Shaker Hts., Ohio, that he is the Executive Vice President and Chief
Operating Officer of DEVELOPERS DIVERSIFIED REALTY CORPORATION, one of the
corporations described in and which executed the foregoing instrument and that
he signed his name thereto by authority of the Board of Directors of said
corporation.
[Notarial Seal]
/s/ Elizabeth A. Berry
Notary Public
COMMISSION EXPIRES
STATE OF OHIO )
) SS:
COUNTY OF CUYAHOGA )
On the 16th day of May, 1995, before me personally came DAVID
B. DAVIS, to me known, who, being by me duly sworn, did depose and say that he
resides at North Ridgeville, Ohio, that he is the Vice President of NATIONAL
CITY BANK, one of the corporations described in and which executed the foregoing
instrument and that he signed his name thereto by authority of the Board of
Directors of said corporation.
[Notarial Seal]
/s/ Jeanette Peplowski
Notary Public
COMMISSION EXPIRES
-3-
<PAGE> 1
EXHIBIT 4.17
[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)
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FXR-
-- ------------------ --------------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Fixed Rate Senior Security)
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
________________
1 This paragraph applies to global Notes only.
2 This paragraph applies to global Notes only.
<PAGE> 2
11
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 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
2
<PAGE> 3
maintained for that purpose in The Borough of Manhattan, The City of New York,
currently located at 120 Broadway, 13th 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 commercial banks are
authorized or required by law, regulation 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 commercial banks are authorized or required by law, regulation or
executive order to close in the principal financial center of the country
issuing the Specified Currency (or, if the Specified Currency is Euro, such day
is also a day on which the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System is open); provided, further, that, with respect
to Notes for which LIBOR is an applicable Interest Rate Basis, such day is also
a London Business Day (as defined below). "London Business Day" means any day on
which dealings in the currency (including composite currencies) specified in
this Note as the Designated LIBOR Currency for which LIBOR is calculated are
transacted in the London interbank market. It being understood that if no such
currency or composite currency is specified in this Note, the Designated LIBOR
Currency shall be U.S. dollars.
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
3
<PAGE> 4
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 (or at the office of the New York
presenting agent) in The City of New York on or prior to the applicable Record
Date or at least 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
4
<PAGE> 5
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 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.
5
<PAGE> 6
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
6
<PAGE> 7
[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 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,
7
<PAGE> 8
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 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
8
<PAGE> 9
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 applicable to agreements made and
to be performed entirely in such State.
9
<PAGE> 10
-------------
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.
10
<PAGE> 11
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: $
Date:________________ Notice: The signature(s) on 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.
11
<PAGE> 1
EXHIBIT 4.18
[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
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FLR-
-- ---------------- -------------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Floating Rate Senior Security)
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:
DESIGNATED LIBOR CURRENCY:
INDEX MATURITY: INITIAL INTEREST RATE: % INITIAL INTEREST RESET DATE:
SPREAD (PLUS OR MINIMUM INTEREST RATE: % INTEREST PAYMENT DATE(S):
MINUS):
___________________
1 This paragraph applies to global Notes only.
2 This paragraph applies to global Notes only.
<PAGE> 2
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):
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 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, 13th Floor, New York, New York 10271, or at such other paying
3
<PAGE> 4
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 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
4
<PAGE> 5
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 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
5
<PAGE> 6
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.
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.
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
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
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,
8
<PAGE> 9
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 this Note (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 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.
9
<PAGE> 10
(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 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 commercial banks are
authorized or required by law, regulation or executive order to close in The
City of New York; PROVIDED, HOWEVER, that such day is also not a day on which
commercial banks are authorized or required by law, regulation or executive
order to close in the principal financial center of the country issuing the
Specified Currency (or, if the Specified Currency is Euro, such day is also a
day on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer (TARGET) System is open); provided, further, that, with respect to
Notes as to which LIBOR is an applicable Interest Rate Basis, such day is also a
London Business Day (as defined below). "London Business Day"
10
<PAGE> 11
means any day on which dealings in the currency (including composite currencies)
specified in this Note as the Designated LIBOR Currency for which LIBOR is
calculated are transacted in the London interbank market. It being understood
that if no such currency or composite currency is specified in this Note, the
Designated LIBOR Currency shall be U.S. dollars.
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 Designated LIBOR 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 such
Monday is a legal holiday, in which case the auction is normally held on the
immediately succeeding 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 the Interest Determination Date would otherwise fall on an Interest Reset
Date, then the Interest Reset Date will be postponed to the next succeeding
Business Day. 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 in H.15(519) by 9:00
a.m., New York City time, on the Calculation Date, the CD Rate will be the rate
on such CD Interest Determination Date set forth in the daily update of
H.15(519), available through the world wide website of the Board of Governors of
the Federal Reserve System at HTTP://www.bog.frb.fed.us/releases/h15/update, or
any successor site or publication ("H.15 Daily Update"), for the day in respect
of certificates of deposit having the Index Maturity specified in this Note
under the caption "CDs (Secondary Market)." If such rate is not yet published in
either H.15(519) of the H.15 Daily Update by 3:00 p.m., New York City time, on
the Calculation Date, the Calculation Agent will determine the CD Rate to be the
arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York
City time, on such CD Interest Determination Date, of three leading nonbank
dealers in negotiable U.S. dollar certificates of deposit in New York City
(which may include the Agents or their affiliates)
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<PAGE> 12
selected by the Calculation Agent for negotiable United States dollar
certificates of deposit of major United States money market banks for negotiable
certificates of deposit with a remaining maturity closest to the Index Maturity
specified in this Note in an amount that is representative for a single
transaction in that market at that time. If the dealers selected by the
Calculation Agent are not quoting as set forth above, the CD Rate will remain
the CD Rate then in effect on such CD 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 7051, 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 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 notes 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
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<PAGE> 13
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 Interest Rate 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 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.
"Designated CMT Telerate Page" means the display on Bridge Telerate,
Inc. (or any successor service) on the page specified on the face hereof (or any
other page as may replace such page on that service (or any successor service)
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519)). If no such page is specified on the face hereof, the Designated CMT
Telerate Page shall be 7052.
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-Nonfinancial". In the event that such rate is not published by 3:00 P.M.,
New York City time, on the related Calculation Date, then the Commercial Paper
Rate on such Commercial Paper Rate Interest Determination Date will be the Money
Market Yield of the rate for commercial paper having the Index Maturity as
published in H.15 Daily Update, or such other recognized electronic source under
the heading "Commercial Paper-Nonfinancial". If such rate is not yet published
in either H.15(519) or H.15 Daily Update, 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.
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<PAGE> 14
"Money Market Yield" means a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360 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.
EURIBOR. If an Interest Rate Basis for this Note is specified on the
face hereof as EURIBOR, EURIBOR shall be determined as of the applicable
Interest Determination Date (a "EURIBOR Interest Determination Date") as the
EURIBOR rate for deposits in euros as sponsored, calculated and published
jointly by the European Banking Federation and ACI - The Financial Market
Association, or any company established by the joint sponsors for purposes of
compiling and publishing those rates, for the index maturity specified in this
Note as that rate appears on the display on Bridge Telerate, Inc., or any
successor service, on page 248 or any other page as may replace page 248 on that
service, which is commonly referred to as "Telerate Page 248," as of 11:00 a.m.
(Brussels time). If the above rate does not appear, the Calculation Agent will
request the principal Euro-zone office of each of four major banks in the
Euro-zone interbank market, as selected by the Calculation Agent, after
consultation with the Company, to provide the Calculation Agent with its offered
rate for deposits in euros, at approximately 11:00 a.m. (Brussels time) on the
Interest Determination Date, to prime banks in the Euro-zone interbank market
for the index maturity specified in this Note commencing on the Interest Reset
Date, and in a principal amount not less than the equivalent of U.S. $1 million
in euro that is representative of a single transaction in euro, in that market
at that time. If at least two quotations are provided, EURIBOR will be the
arithmetic mean of those quotations. If fewer than two quotations are provided,
EURIBOR will be the arithmetic mean of the rates quoted by four major banks in
the Euro-zone, as defined below, as selected by the Calculation Agent, after
consultation with the Company, at approximately 11:00 a.m. (Brussels time), on
the applicable Interest Reset Date for loans in euro to leading European banks
for a period of time equivalent to the index maturity specified in this Note
commencing on that Interest Reset Date in a principal amount not less than the
equivalent of U.S. $1 million in euro. If the banks so selected by the
Calculation Agent are not quoting as mentioned above, the EURIBOR rate in effect
for the period will be the same as EURIBOR for the immediately preceding
interest reset period, or, if there was not interest reset period, the rate of
interest will be the initial interest rate. "Euro-zone" means the region
comprised of member states of the European Union that adopt the single currency
in accordance with the treaty establishing the European Community, as amended by
the treaty on European Union.
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 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 the display of Bridge Telerate,
Inc. (or any successor service) on Page 7058 ("Telerate Page 7058") as of 11:00
A.M., San Francisco time, on such
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<PAGE> 15
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)" as displayed on Bridge Telerate, Inc. (or any successor
service) on page 120 or any other page that may replace the applicable page on
that service ("Telerate Page 120") 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 for United States dollar federal funds as published in H.15
Daily Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the heading "Federal Funds/(Effective)." If such
rate does not appear on Telerate Page 120 or is not yet published in either
H.15(519) or H.15 Daily Update or another recognized electronic source by 3:00
p.m., New York City time, on the related Calculation Date, then the Federal
Funds Rate on such Federal Funds 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 United States dollar federal funds transactions in The
City of New York (which may include the Agents or their affiliates) 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.
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 Designated LIBOR 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
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<PAGE> 16
"LIBOR Telerate" is specified on the face hereof as the method for calculating
LIBOR, the rate for deposits in the Designated LIBOR 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 Designated
LIBOR 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 Designated LIBOR Currency in such market at such time. If at least two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in
the applicable Principal Financial Center, for the country of the Designated
LIBOR Currency, on such LIBOR Interest Determination Date by three major banks
in such Principal Financial Center selected by the Calculation Agent for loans
in the Designated LIBOR Currency to leading European banks, having the Index
Maturity and in a principal amount that is representative for a single
transaction in such Designated LIBOR Currency in such market at such time;
PROVIDED, HOWEVER, that if the banks so selected by the Calculation Agent are
not quoting as mentioned in this sentence, LIBOR in effect for the applicable
period will be the same as LIBOR for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable on the LIBOR Notes for which such LIBOR is being determined shall be the
Initial Interest Rate).
"Designated LIBOR Currency" means the currency specified on the face
hereof as to which LIBOR shall be calculated, or if the Euro is substituted for
that currency, the Designated LIBOR Currency, will be the Euro. If no such
currency or composite currency is specified on the face hereof, the Designated
LIBOR 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) (or any other page as may replace such page on such service
(or any successor service))for the purpose of displaying the London interbank
rates of major banks for the Designated LIBOR Currency, or (b) if "LIBOR
Telerate" is specified 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 Bridge Telerate, Inc. (or any successor service) for the
purpose of displaying the London interbank rates of major banks for the
Designated LIBOR 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
16
<PAGE> 17
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 rate on such Prime Rate Interest Determination Date
as published in H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying such rate, under the caption "Bank Prime
Loan." If the rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date, in either H.15(519) or H.15 Daily Update, or another
recognized electronic source, then the Calculation Agent will determine the
Prime Rate to be the arithmetic mean of the rates of interest publicly announced
by each bank that appears on the Reuters Screen US PRIME 1 Page as such bank's
prime rate or base lending rate as of 11:00 a.m., New York City time, on such
Prime Rate Interest Determination Date. If fewer than four such rates appear on
the Reuters Screen US PRIME 1 Page for such Prime Rate Interest Determination
Date, the Prime Rate shall be the arithmetic mean of the prime rates or base
lending rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date by three major banks (which may include affiliates
of the Agents) in The City of New York selected by the Calculation Agent. If the
banks selected are not quoting as mentioned above, the Prime Rate determined as
of such Prime Rate Interest Determination Date will be the Prime Rate in effect
on such Prime Rate Interest Determination Date.
TREASURY RATE. 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 appears on the
display on Bridge Telerate, Inc. (or any such successor service) on page 56 (or
any other page as may replace page 56) on that service ("Telerate Page 56") or
on page 57 (or any other page as may replace page 57) on that service ("Telerate
Page 57"), or, if not published by 3:00 P.M., New York City time, on the related
Calculation Date, the Bond Equivalent Yield on the rate for such Treasury Bills
as published in H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Auction High" or, if not so published by 3:00 p.m.,
New York City time, on the related Calculation Date, the Bond Equivalent Yield
of the auction rate of such Treasury Bills as announced by the United States
Department of the Treasury. In the event that the 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 the Bond Equivalent Yield of the rate
on such Treasury Rate Interest Determination Date of Treasury bills having the
Index Maturity specified in this Note as published in H.15(519) under the
caption "U.S. Government Securities/Treasury Bills/Secondary Market" or, if not
yet published by 3:00 P.M., New York City time, on the related Calculation Date,
the rate on such Treasury Rate Interest Determination Date of such Treasury
Bills as published in H.15 Daily Update, or such other recognized electronic
source used for the purpose of displaying such rate, under the caption "U.S.
Government Securities/Treasury Bills/Secondary Market." If such rate is not yet
published in H.15(519), H.15 Daily Update or another recognized electronic
source, then the Treasury Rate will be calculated by the Calculation Agent and
will be the Bond Equivalent Yield of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on the Treasury
Rate Interest Determination Date of three primary United States government
securities dealers (which may include the Agents or their affiliates) selected
by the Calculation
17
<PAGE> 18
Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index maturity. If the dealers selected by the Calculation Agent are not
quoting, the Treasury Rate determined as of that Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on the 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 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.
18
<PAGE> 19
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 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 applicable to agreements made and
to be performed entirely in such State.
19
<PAGE> 20
-------------
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.
20
<PAGE> 21
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: $
Date:______________ Notice: The signature(s) on 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.
21
<PAGE> 1
EXHIBIT 4.19
[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)
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FXR-
-- ----------------- ----------------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Fixed Rate Subordinated Security)
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
- --------
1 This paragraph applies to global Notes only.
2 This paragraph applies to global Notes only.
<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 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
2
<PAGE> 3
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 commercial banks are
authorized or required by law, regulation 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 commercial banks are authorized or required by law, regulation or
executive order to close in the principal financial center of the country
issuing the Specified Currency (or, if the Specified Currency is Euro, such day
is also a day on which the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System is open); provided, further, that, with respect
to Notes for which LIBOR is an applicable Interest Rate Basis, such day is also
a London Business Day (as defined below). "London Business Day" means any day on
which dealings in the currency (including composite currencies) specified in
this Note as the Designated LIBOR Currency for which LIBOR is calculated are
transacted in the London interbank market. It being understood that if no such
currency or composite currency is specified in this Note, the Designated LIBOR
Currency shall be U.S. dollars.
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
3
<PAGE> 4
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 (or at the office of the New York
presenting agent) in The City of New York on or prior to the applicable Record
Date or at least 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).
4
<PAGE> 5
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 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.
5
<PAGE> 6
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.
THE CHASE MANHATTAN BANK,
as Trustee
By____________________________
Authorized Signatory
6
<PAGE> 7
[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 THE CHASE MANHATTAN BANK
(formerly known as 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 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,
7
<PAGE> 8
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 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
8
<PAGE> 9
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.
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.
9
<PAGE> 10
-------------
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.
10
<PAGE> 11
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.
11
<PAGE> 1
EXHIBIT 4.20
[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)
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FLR-
----------------------- ------------------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
MEDIUM-TERM NOTE
(Form of Floating Rate Subordinated Security)
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:
DESIGNATED LIBOR CURRENCY:
INDEX MATURITY: INITIAL INTEREST RATE: % INITIAL INTEREST RESET DATE:
SPREAD (PLUS OR MINIMUM INTEREST RATE: % INTEREST PAYMENT DATE(S):
MINUS):
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: % INTEREST RESET DATE(S):
- -------------------------
(1) This paragraph applies to global Notes only.
(2) This paragraph applies to global Notes only.
<PAGE> 2
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE REDUCTION: %
OPTIONAL REPAYMENT CALCULATION AGENT:
DATE(S):
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 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
3
<PAGE> 4
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 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 of, and 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
4
<PAGE> 5
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 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
5
<PAGE> 6
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.
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.
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.
THE CHASE MANHATTAN 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 THE CHASE MANHATTAN
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 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,
8
<PAGE> 9
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 this Note (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 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.
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<PAGE> 10
(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 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 commercial banks are
authorized or required by law, regulation 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 commercial banks are authorized or required by law, regulation or
executive order to close in the principal financial center of the country
issuing the Specified Currency (or, if the Specified Currency is Euro, such day
is also a day on which the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System is open); PROVIDED, FURTHER, that, with
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<PAGE> 11
respect to Notes as to which LIBOR is an applicable Interest Rate Basis, such
day is also a London Business Day (as defined below). "London Business Day"
means any day on which dealings in the currency (including composite currencies)
specified in this Note as the Designated LIBOR Currency for which LIBOR is
calculated are transacted in the London interbank market. It being understood
that if no such currency or composite currency is specified in this Note, the
Designated LIBOR Currency shall be U.S. dollars.
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 Designated LIBOR 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 such
Monday is a legal holiday, in which case the auction is normally held on the
immediately succeeding 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 the Interest Determination Date would otherwise fall on an Interest Reset
Date, then the Interest Reset Date will be postponed to the next succeeding
Business Day. 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 in H.15(519) by 9:00
a.m., New York City time, on the Calculation Date, the CD Rate will be the rate
on such CD Interest Determination Date set forth in the daily update of
H.15(519), available through the world wide website of the Board of Governors of
the Federal Reserve System at http://www.bog.frb.fed.us/releases/h15/update, or
any successor site or publication ("H.15 Daily Update"), for the day in respect
of certificates of deposit having the Index Maturity specified in this Note
under the caption "CDs (Secondary Market)". If such rate is not yet published in
either H.15(519) or the H.15 Daily Update by 3:00 p.m., New York City time, on
the Calculation Date, the Calculation Agent will determine the CD Rate to be the
arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York
City time, on
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<PAGE> 12
such CD Interest Determination Date, of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in New York City (which may
include the Agents or their affiliates) selected by the Calculation Agent for
negotiable United States dollar certificates of deposit of major United States
money market banks for negotiable certificates of deposit with a remaining
maturity closest to the Index Maturity specified in this Note in an amount that
is representative for a single transaction in that market at that time. If the
dealers selected by the Calculation Agent are not quoting as set forth above,
the CD Rate will remain the CD Rate then in effect on such CD 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 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
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<PAGE> 13
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 notes 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
Interest Rate 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 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.
"Designated CMT Telerate Page" means the display on the Bridge
Telerate, Inc. (or any successor service) on the page specified on the face
hereof (or any other page as may replace such page on that service (or any
successor service) for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519). If no such page is specified on the face hereof, the
Designated CMT Telerate Page shall be 7052.
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--Nonfinancial". In the event that such rate is not published by 3:00 p.m.,
New York City time, on the related Calculation Date, then the Commercial Paper
Rate on such Commercial Paper Rate Interest Determination Date will be the Money
Market Yield of the rate for commercial paper having the Index Maturity as
published in H.15 Daily Update, or such other recognized electronic source under
the heading "Commercial Paper--Nonfinancial". If such rate is not yet published
in either H.15(519) or H.15 Daily Update, 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 a non-financial 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.
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"Money Market Yield" means a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360 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 applicable Interest Reset Period.
EURIBOR. If an Interest Rate Basis for this Note is specified on the
face hereof as EURIBOR, EURIBOR shall be determined as of the applicable
Interest Determination Date (a "EURIBOR Interest Determination Date") as the
EURIBOR rate for deposits in euros as sponsored, calculated and published
jointly by the European Banking Federation and ACI - The Financial Market
Association, or any company established by the joint sponsors for purposes of
compiling and publishing those rates, for the index maturity specified in this
Note as that rate appears on the display on Bridge Telerate, Inc., or any
successor service, on page 248 or any other page as may replace page 248 on that
service, which is commonly referred to as "Telerate Page 248," as of 11:00 a.m.
(Brussels time). If the above rate does not appear, the Calculation Agent will
request the principal Euro-zone office of each of four major banks in the
Euro-zone interbank market, as selected by the Calculation Agent, after
consultation with the Company, to provide the Calculation Agent with its offered
rate for deposits in euros, at approximately 11:00 a.m. (Brussels time) on the
Interest Determination Date, to prime banks in the Euro-zone interbank market
for the index maturity specified in this Note commencing on the Interest Reset
Date, and in a principal amount not less than the equivalent of U.S. $1 million
in euro that is representative of a single transaction in euro, in that market
at that time. If at least two quotations are provided, EURIBOR will be the
arithmetic mean of those quotations. If fewer than two quotations are provided,
EURIBOR will be the arithmetic mean of the rates quoted by four major banks in
the Euro-zone, as defined below, as selected by the Calculation Agent, after
consultation with the Company, at approximately 11:00 a.m. (Brussels time), on
the applicable Interest Reset Date for loans in euro to leading European banks
for a period of time equivalent to the index maturity specified in this Note
commencing on that Interest Reset Date in a principal amount not less than the
equivalent of U.S. $1 million in euro. If the banks so selected by the
Calculation Agent are not quoting as mentioned above, the EURIBOR rate in effect
for the period will be the same as EURIBOR for the immediately preceding
interest reset period, or, if there was not interest reset period, the rate of
interest will be the initial interest rate. "Euro-zone" means the region
comprised of member states of the European Union that adopt the single currency
in accordance with the treaty establishing the European Community, as amended by
the treaty on European Union.
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 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 the display of Bridge Telerate,
Inc. (or any successor services) on Page 7058 ("Telerate Page 7058") as of 11:00
a.m., San Francisco time, on such
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<PAGE> 15
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)" as displayed on Bridge Telerate, Inc. (or any successor
service) on page 120 or any other page as may replace the applicable page on
that service ("Telerate Page 120") 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 for United States dollar federal funds as published in H.15
Daily Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the heading "Federal Funds/(Effective)." If such
rate does not appear on Telerate Page 120 or is not published in either
H.15(519) or H.15 Daily Update or another recognized electronic source by 3:00
p.m., New York City time, on the related Calculation Date, then the Federal
Funds Rate on such Federal Funds 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 United States dollar federal funds transactions in The
City of New York (which may include the Agents or their affiliates) 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.
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 Designated LIBOR 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
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<PAGE> 16
"LIBOR Telerate" is specified on the face hereof as the method for calculating
LIBOR, the rate for deposits in the Designated LIBOR 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 Designated
LIBOR 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 Designated LIBOR Currency in such market at such time. If at least two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in
the applicable Principal Financial Center, for the country of the Designated
LIBOR Currency on such LIBOR Interest Determination Date by three major banks in
such Principal Financial Center selected by the Calculation Agent for loans in
the Designated LIBOR Currency to leading European banks, having the Index
Maturity and in a principal amount that is representative for a single
transaction in such Designated LIBOR Currency in such market at such time;
PROVIDED, HOWEVER, that if the banks so selected by the Calculation Agent are
not quoting as mentioned in this sentence, LIBOR in effect for the applicable
period will be the same as LIBOR for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable on the LIBOR Notes for which such LIBOR is being determined shall be the
Initial Interest Rate).
"Designated LIBOR Currency" means the currency specified on the face
hereof as to which LIBOR shall be calculated, or if the Euro is substituted for
that currency, the Designated LIBOR Currency, will be the Euro. If no such
currency or composite currency is specified on the face hereof, the Designated
LIBOR 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) (or any other page as may replace such page on such service
(or any successor service)) for the purpose of displaying the London interbank
rates of major banks for the Designated LIBOR Currency, or (b) if "LIBOR
Telerate" is specified 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 Bridge Telerate, Inc. (or any successor service) for the
purpose of displaying the London interbank rates of major banks for the
Designated LIBOR 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
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<PAGE> 17
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 rate on such Prime Rate Interest Determination Date
as published in H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying such rate, under the caption "Bank Prime
Loan." If the rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date, in either H.15(519) or H.15 Daily Update, or another
recognized electronic source, then the Calculation Agent will determine the
Prime Rate to be the arithmetic mean of the rates of interest publicly announced
by each bank that appears on the Reuters Screen US PRIME 1 Page as such bank's
prime rate or base lending rate as of 11:00 a.m., New York City time, on such
Prime Rate Interest Determination Date. If fewer than four such rates appear on
the Reuters Screen US PRIME 1 Page for such Prime Rate Interest Determination
Date, the Prime Rate shall be the arithmetic mean of the prime rates or base
lending rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date by three major banks which may include affiliates of
the Agents in The City of New York selected by the Calculation Agent. If the
banks selected are not quoting as mentioned above, the Prime Rate determined as
of such Prime Rate Interest Determination Date will be the Prime Rate in effect
on such Prime Rate Interest Determination Date.
TREASURY RATE. 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 appears on the
display on Bridge Telerate, Inc. (or any such successor service) on page 56 (or
any other page as may replace page 56) on that service ("Telerate Page 56") or
on page 57 (or any other page as may replace page 57) on that service ("Telerate
Page 57"), or, if not published by 3:00 p.m., New York City time, on the related
Calculation Date, the Bond Equivalent Yield for the rate for such Treasury Bills
as published in H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Auction High" or, if not so published by 3:00 p.m.,
New York City time, on the related Calculation Date, the Bond Equivalent Yield
of the auction rate of such Treasury Bills as announced by the United States
Department of the Treasury. In the event that the 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 the Bond Equivalent Yield of the rate
on such Treasury Rate Interest Determination Date of Treasury bills having the
Index Maturity specified in this Note as published in H.15(519) under the
caption "U.S. Government Securities/Treasury Bills/Secondary Market" or, if not
yet published by 3:00 P.M., New York City time, on the related Calculation Date,
the rate on such Treasury Rate Interest Determination Date of such Treasury
Bills as published in H.15 Daily Update, or such other recognized electronic
source used for the purpose of displaying such rate, under the caption "U.S.
Government Securities/Treasury Bills/Secondary Market." If such rate is not yet
published in H.15(519), H.15 Daily Update or another recognized electronic
source, then the Treasury Rate will be calculated by the Calculation Agent and
will be the Bond Equivalent Yield of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on the Treasury
Rate Interest Determination Date of three primary United States government
securities dealers (which may include the Agents or their affiliates) selected
by the Calculation
17
<PAGE> 18
Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index maturity. If the dealers selected by the Calculation Agent are not
quoting, the Treasury Rate determined as of that Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on the 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 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.
18
<PAGE> 19
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 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.
19
<PAGE> 20
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.
20
<PAGE> 21
-------------
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.
21
<PAGE> 22
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 this Option to
Elect Repayment must correspond with the
Date: name(s) as written upon the face of this
--------- Note in every particular, without alteration
or enlargement or any change whatsoever.
22
<PAGE> 1
EXHIBIT 4.21
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This First Amendment to Second Amended and Restated Credit Agreement,
dated as of September 27, 1999, is among Developers Diversified Realty
Corporation, a corporation organized under the laws of the State of Ohio (the
"BORROWER"), Bank One, NA, formerly known as The First National Bank of Chicago,
a national banking association and the several banks, financial institutions and
other entities from time to time parties to the Credit Agreement (as defined
below) (collectively, the "LENDERS"), Bank One, NA, formerly known as The First
National Bank of Chicago, not individually, but as "ADMINISTRATIVE AGENT", Bank
of America, N.A., formerly known as Bank of America National Trust & Savings
Association, not individually, but as "SYNDICATION AGENT", Fleet National Bank,
not individually, but as "DOCUMENTATION AGENT" and Commerzbank
Aktiengesellschaft, UBS AG, Stamford Branch, as successor-in-interest to UBS AG,
New York Branch and AmSouth Bank, not individually but as "CO-AGENTS" (this
"Amendment").
RECITALS
--------
A. The Borrower, the Administrative Agent, and certain of the Lenders
entered into a Second Amended and Restated Credit Agreement dated as of November
16, 1998, pursuant to which the Lenders that are parties thereto agreed to make
loans to the Borrower in the aggregate amount of up to $375,000,000 subject to
future increase to up to $400,000,000 (the "Credit Agreement"). All capitalized
terms used in this Amendment and not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement.
B. The Borrower and the Lenders have agreed to amend the Credit
Agreement to (i) change the treatment of Borrower's investment in American
Industrial Properties REIT ("AIP"); (ii) add a letter of credit facility; and
(iii) make certain other modifications to the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
AGREEMENTS
1. The foregoing Recitals to this Amendment hereby are incorporated
into and made a part of this Amendment.
2. A. ARTICLE I of the Credit Agreement is hereby amended by adding the
following new definitions:
"AIP" means American Industrial Properties REIT, a Texas real estate
investment trust.
"AIP Conditions" means the following conditions: (i) all Indebtedness
of AIP shall be non-recourse to Borrower at all times; (ii) AIP shall be listed
on the New York Stock Exchange at all times; (iii) Borrower shall not hold fifty
percent (50%) or more of the total outstanding equity interests in AIP at any
time; (iv) Borrower shall not hold any ownership interest or right in AIP which
will result in the consolidation under GAAP of AIP's financial results with the
financial results of the Consolidated Group at any time; and (v) the
Consolidated Group's Investment in
<PAGE> 2
AIP, as determined in accordance with GAAP, shall be at all times less than the
greater of (a) $175,000,000 or (b) five percent (5%) of Consolidated Market
Value without giving effect to the Consolidated Group's Investment in AIP.
"Allocated Facility Amount" means, at any time, the sum of all then
outstanding Advances and the then Facility Letter of Credit Obligations.
"Defaulting Lender" means any Lender which fails or refuses to perform
its obligations under this Agreement within the time period specified for
performance of such obligation, or, if no time frame is specified, if such
failure or refusal continues for a period of five Business Days after written
notice from the Administrative Agent; PROVIDED that if such Lender cures such
failure or refusal, such Lender shall cease to be a Defaulting Lender.
"Default Rate" means the interest rate which may apply during the
continuance of a Default pursuant to SECTION 2.12.
"Facility Letter of Credit" means a Letter of Credit issued hereunder.
"Facility Letter of Credit Fee" is defined in SECTION 2A.8.
"Facility Letter of Credit Obligations" means, as at the time of
determination thereof, all liabilities, whether actual or contingent, of the
Borrower with respect to Facility Letters of Credit, including the sum of (a)
the Reimbursement Obligations and (b) the aggregate undrawn face amount of the
then outstanding Facility Letters of Credit.
"Issuance Date" is defined in SECTION 2A.4.
"Issuance Notice" is defined in SECTION 2A.4.
"Issuing Bank" means, with respect to each Facility Letter of Credit,
the Lender which issues such Facility Letter of Credit.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon application of such Person or upon which such
Person is an account party or for which such Person is in any way liable.
"Letter of Credit Collateral Account" is defined in SECTION 2A.9.
"Letter of Credit Request" is defined in SECTION 2A.4.
"Reimbursement Obligations" means at any time, the aggregate of the
Obligations of the Borrower to the Lenders, the Issuing Bank and the
Administrative Agent in respect of all unreimbursed payments or disbursements
made by the Lenders, the Issuing Bank and the Administrative Agent under or in
respect of the Facility Letters of Credit.
B. Article I of the Credit Agreement is hereby amended by restating the
definitions of "Consolidated Group Pro Rata Share", "Consolidated Market Value",
"Funds From Operations", "Investment Affiliate" and "Obligations" as follows:
2
<PAGE> 3
"Consolidated Group Pro Rata Share" means, with respect to any
Investment Affiliate or AIP, the percentage of the total equity ownership
interests held by the Consolidated Group in the aggregate, in such Investment
Affiliate or AIP, respectively, determined by calculating the greater of (i) the
percentage of the issued and outstanding stock, partnership interests or
membership interests in such Investment Affiliate or AIP, respectively, held by
the Consolidated Group in the aggregate and (ii) the percentage of the total
book value of such Investment Affiliate or AIP, respectively that would be
received by the Consolidated Group in the aggregate, upon liquidation of such
Investment Affiliate or AIP, respectively, after repayment in full of all
Indebtedness of such Investment Affiliate or AIP, respectively.
"Consolidated Market Value" means, as of any date, an amount equal to
the sum of (a) the Consolidated Capitalization Value as of such date, PLUS (b)
the value of Unrestricted Cash and Cash Equivalents, PLUS (c) the lesser of (i)
the value of Assets Under Development, (ii) ten percent (10%) of the
Consolidated Capitalization Value PLUS (d) the lesser of (i) 100% of the
then-current value under GAAP of all First Mortgage Receivables or (ii) five
percent (5%) of the Consolidated Capitalization Value, PLUS (e) the Consolidated
Group's Investment in AIP, as determined in accordance with GAAP (the "AIP
Value"); provided, however, that AIP Value shall only be included in the
aforementioned calculation if Borrower is in compliance with all of the AT
Conditions.
"Funds From Operations" means, for any period, the sum of (i)
Consolidated Net Income for such period, excluding (A) gains (losses) on sales
of property, (B) non-recurring charges and extraordinary items, (C) non-cash
charges (including, without limitation, depreciation and amortization, and
equity gains (losses) from each Investment Affiliate included therein, but
excluding any amortization of deferred finance costs) and (D) any income
attributable to the Consolidated Group's investment in AIP, if, and only if,
Borrower is in compliance with all of the AIP Conditions, plus (ii) the
applicable Consolidated Group Pro Rata Share of funds from operations of each
Investment Affiliate that is due to the Consolidated Group for such period, all
determined on a consistent basis. With regard to the foregoing sentence, for
each consolidated Subsidiary of the Borrower in which the Borrower does not
directly or indirectly hold a 100% ownership interest, each of clauses (A), (B)
and (C) shall exclude the portion of such item attributable to minority interest
holders which do not hold operating partnership units convertible to stock in
the Borrower.
"Investment Affiliate" means any Person in which the Consolidated
Group, directly or indirectly, has an ownership interest, whose financial
results are not consolidated under GAAP with the financial results of the
Consolidated Group; provided, however, that AIP shall not be deemed an
Investment Affiliate if Borrower is in compliance with all of the AIP Conditions
(I.e., if all AIP Conditions are not met, AIP would then be considered an
"Investment Affiliate" for purposes of this Agreement and would be treated as an
"Investment Affiliate" for purposes of all financial calculations under this
Agreement.).
"Obligations" means the Advances, the Facility Letter of Credit
Obligations and all accrued and unpaid fees and all other obligations of
Borrower to the Administrative Agent or the Lenders arising under this Agreement
or any of the other Loan Documents.
6. SECTION 2.1 of the Credit Agreement is hereby amended by (i) adding
the phrase "and the Facility Letter of Credit Obligations" after the phrase
"Competitive Bid Loans)" in the
3
<PAGE> 4
sixth line of such section; (ii) adding the phrase ", (ii) Facility Letter of
Credit Obligations" after the phrase "then outstanding" in the eleventh line of
such section; and (iii) deleting the word "(ii)" and replacing such word with
the word "(iii)" in the eleventh line of such section.
7. SECTION 2.9 of the Credit Agreement is hereby amended by deleting
the word "five (5)" in the last sentence of the last paragraph of such section
and replacing such word with the word "ten (10)".
8. SECTION 2.21 of the Credit Agreement is hereby amended by adding the
phrase "plus its Percentage of Facility Letter of Credit Obligations" after the
phrase "Swingline Lender hereunder" in the twelfth line of such section and
after the phrase "Competitive Bid Loans)" in the eighteenth line of such
section.
9. SECTION 2.25 of the Credit Agreement is hereby amended by restating
such section as follows:
All moneys collected or received by the Administrative Agent on account
of the Facility directly or indirectly, shall be applied in the following order
of priority:
(i) to the payment of all reasonable costs incurred in the
collection of such moneys of which the Administrative Agent shall have
given notice to the Borrower;
(ii) to the reimbursement of any yield protection due to any
of the Lenders in accordance with SECTION 3.1;
(iii) to the payment of any fee due pursuant to SECTION
2A.8(b) in connection with the issuance of a Facility Letter of Credit
to the Issuing Bank, to the payment of the Facility Fee to the Lenders,
if then due, and to the payment of all fees to the Administrative
Agent;
(iv) to payment of the full amount of interest and principal
on the Swingline Loans;
(v) first to interest and the Facility Letter of Credit Fee
then due to the Lenders until paid in full and then to principal for
all Lenders (other than Defaulting Lenders) (i) as allocated by the
Borrower (unless a Default exists) between Competitive Bid Loans and
ratable Advances (the amount allocated to ratable Advances to be
distributed in accordance with the Percentages of the Lenders) or (ii)
if an Event of Default exists, in accordance with the respective Funded
Percentages of the Lenders until principal is paid in full and then to
the Letter of Credit Collateral Account until the full amount of
Facility Letter of Credit Obligations is on deposit therein;
(vi) any other sums due to the Administrative Agent or any
Lender under any of the Loan Documents; and
(vii) to the payment of any sums due to each Defaulting Lender
as their respective Percentages appear (provided that Administrative
Agent shall have the right to set-off against such sums any amounts due
from such Defaulting Lender).
4
<PAGE> 5
10. The Credit Agreement is hereby amended by adding the following new
ARTICLE IIA:
ARTICLE IIA
THE LETTER OF CREDIT SUBFACILITY
2A.1. OBLIGATION TO ISSUE. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrower herein set forth, the Issuing Bank hereby agrees to issue for the
account of the Borrower, one or more Facility Letters of Credit in accordance
with this ARTICLE 2A, from time to time during the period commencing on
September 27, 1999 and ending on the Business Day prior to the Facility
Termination Date. Any Lender shall have the right to decline to be the Issuing
Bank for a Facility Letter of Credit provided that if no other Lender agrees to
be the Issuing Bank then the Administrative Agent shall agree to do so.
2A.2. TYPES AND AMOUNTS. The Issuing Bank shall not have any obligation
to:
(i) issue any Facility Letter of Credit if the aggregate
maximum amount then available for drawing under Letters of Credit
issued by such Issuing Bank, after giving effect to the Facility Letter
of Credit requested hereunder, shall exceed any limit imposed by law or
regulation upon such Issuing Bank;
(ii) issue any Facility Letter of Credit if, after giving
effect thereto, the Facility Letter of Credit Obligations would exceed
$20,000,000 or the Allocated Facility Amount would exceed the Aggregate
Commitment;
(iii) issue any Facility Letter of Credit having an expiration
date, or containing automatic extension provisions to extend such date,
to a date which is after the Facility Termination Date; or
(iv) issue any Facility Letter of Credit having an expiration
date, or containing automatic extension provisions to extend such date,
to a date which is more than twelve (12) months after the date of its
issuance.
2A.3. CONDITIONS. In addition to being subject to the satisfaction of
the conditions contained in SECTION 4.2 hereof, the obligation of the Issuing
Bank to issue any Facility Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) the Borrower shall have delivered to the Issuing Bank at
such times and in such manner as the Issuing Bank may reasonably
prescribe such documents and materials as may be reasonably required
pursuant to the terms of the proposed Facility Letter of Credit (it
being understood that if any inconsistency exists between such
documents and the Loan Documents, the terms of the Loan Documents shall
control) and the proposed Facility Letter of Credit shall be reasonably
satisfactory to the Issuing Bank as to form and content; and
(ii) as of the date of issuance, no order, judgment or decree
of any court, arbitrator or governmental authority shall purport by its
terms to enjoin or restrain the Issuing Bank from issuing the requested
Facility Letter of Credit and no law, rule or
5
<PAGE> 6
regulation applicable to the Issuing Bank and no request or directive
(whether or not having the force of law) from any governmental
authority with jurisdiction over the Issuing Bank shall prohibit or
request that the Issuing Bank refrain from the issuance of Letters of
Credit generally or the issuance of the requested Facility Letter or
Credit in particular.
2A.4. PROCEDURE FOR ISSUANCE OF FACILITY LETTERS OF CREDIT.
(a) Borrower shall give the Issuing Bank and the Administrative Agent
at least five (5) Business Days' prior written notice of any requested issuance
of a Facility Letter of Credit under this Agreement (a "LETTER OF CREDIT
REQUEST") (except that, in lieu of such written notice, the Borrower may give
the Issuing Bank and the Administrative Agent telephonic notice of such request
if confirmed in writing by delivery to the Issuing Bank and the Administrative
Agent (i) immediately (A) of a telecopy of the written notice required hereunder
which has been signed by an authorized officer, or (B) of a telex containing all
information required to be contained in such written notice and (ii) promptly
(but in no event later than the requested date of issuance) of the written
notice required hereunder containing the original signature of an authorized
officer); such notice shall be irrevocable and shall specify:
(1) the stated amount of the Facility Letter of Credit requested (which
stated amount shall not be less than $50,000);
(2) the effective date (which day shall be a Business Day) of issuance
of such requested Facility Letter of Credit (the "ISSUANCE DATE");
(3) the date on which such requested Facility Letter of Credit is to
expire (which date shall be a Business Day and shall in no event be
later than the earlier of twelve months after the Issuance Date and
the Facility Termination Date):
(4) the purpose for which such Facility Letter of Credit is to be
issued;
(5) the full name and the address of the Person for whose benefit the
requested Facility Letter of Credit is to be issued; and
(6) any special language required to be included in the Facility Letter
of Credit.
At the time such request is made, the Borrower shall also provide the
Administrative Agent and the Issuing Bank with a copy of the form of the
Facility Letter of Credit that the Borrower is requesting be issued, which shall
be subject to the approval of the Issuing Bank and Administrative Agent. Such
notice, to be effective, must be received by such Issuing Bank and the
Administrative Agent not later than 2:00 p.m. (Chicago time) on the last
Business Day on which notice can be given under this SECTION 2A.4(a).
Administrative Agent shall promptly give a copy of the Letter of Credit Request
to the other Lenders.
(b) Subject to the terms and conditions of this ARTICLE IIA and
provided that the applicable conditions set forth in SECTION 4.2 hereof have
been satisfied, such Issuing Bank shall, on the Issuance Date, issue a Facility
Letter of Credit on behalf of the Borrower in accordance with the Letter of
Credit Request and the Issuing Bank's usual and customary business practices
unless the Issuing Bank has actually received (i) written notice from the
Borrower specifically revoking the Letter of Credit Request with respect to such
Facility Letter of Credit, (ii) written
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notice from a Lender, which complies with the provisions of SECTION 2A.6(a), or
(iii) written or telephonic notice from the Administrative Agent stating that
the issuance of such Facility Letter of Credit would violate SECTION 2A.2.
(c) The Issuing Bank shall give the Administrative Agent and the
Borrower written or telex notice, or telephonic notice confirmed promptly
thereafter in writing, of the issuance of a Facility Letter of Credit (the
"ISSUANCE NOTICE") and the Administrative Agent shall promptly give a copy of
the Issuance Notice to the other Lenders.
(d) The Issuing Bank shall not extend or amend any Facility Letter of
Credit unless the requirements of this SECTION 2A.4 are met as though a new
Facility Letter of Credit was being requested and issued.
2A.5. REIMBURSEMENT OBLIGATIONS; DUTIES OF ISSUING BANK.
(a) The Issuing Bank shall promptly notify the Borrower and the
Administrative Agent of any draw under a Facility Letter of Credit, and the
Administrative Agent shall promptly notify the other Lenders that such draw has
occurred. Any such draw shall constitute an Advance in the amount of the
Reimbursement Obligation with respect to such Facility Letter of Credit and
shall bear interest from the date of the relevant drawing(s) under the pertinent
Facility Letter of Credit at a rate selected by Borrower in accordance with
SECTION 2.9 hereof; provided that if a Default or an Unmatured Default exists at
the time of any such drawing(s), then the Borrower shall reimburse the Issuing
Bank for drawings under a Facility Letter of Credit issued by the Issuing Bank
no later than the next succeeding Business Day after the payment by the Issuing
Bank and until repaid such Reimbursement Obligation shall bear interest from the
date funded at the Default Rate.
(b) Any action taken or omitted to be taken by the Issuing Bank under
or in connection with any Facility Letter of Credit, if taken or omitted in the
absence of willful misconduct or gross negligence, shall not put the Issuing
Bank under any resulting liability to the Borrower or any Lender or, provided
that such Issuing Bank has complied with the procedures specified in SECTION
2A.4 and such Lender has not given a notice contemplated by SECTION 2A.6(a) that
continues in full force and effect, relieve a Lender of its obligations
hereunder to the Issuing Bank. In determining whether to pay under any Facility
Letter of Credit, the Issuing Bank shall have no obligation relative to the
Lenders other than to confirm that any documents required to be delivered under
such Letter of Credit appear to have been delivered in compliance, and that they
appear to comply on their face, with the requirements of such Letter of Credit.
2A.6. PARTICIPATION.
(a) Immediately upon issuance by the Issuing Bank of any Facility
Letter of Credit in accordance with the procedures set forth in SECTION 2A.4,
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received from the Issuing Bank, without recourse, representation or
warranty, an undivided interest and participation equal to such Lender's
Percentage in such Facility Letter of Credit (including, without limitation, all
obligations of the Borrower with respect thereto) and any security therefor or
guaranty pertaining thereto; PROVIDED that a Letter of Credit issued by the
Issuing Bank shall not be deemed to be a Facility Letter of Credit for purposes
of this SECTION 2A.6 if the Issuing Bank shall have received written notice from
any Lender on or before the Business Day prior to the date of its issuance of
such Letter of Credit that one or more of the conditions contained in SECTION
4.2 is not then satisfied, and in the
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<PAGE> 8
event the Issuing Bank receives such a notice it shall have no further
obligation to issue any Facility Letter of Credit until such notice is withdrawn
by that Lender or the Issuing Bank receives a notice from the Administrative
Agent that such condition has been effectively waived in accordance with the
provisions of this Agreement. Each Lender's obligation to make further Loans to
the Borrower (other than any payments such Lender is required to make under
subparagraph (b) below) or issue any letters of credit on behalf of Borrower
shall be reduced by such Lender's pro rata share of each Facility Letter of
Credit outstanding.
(b) In the event that the Issuing Bank makes any payment under any
Facility Letter of Credit and the Borrower shall not have repaid such amount to
the Issuing Bank pursuant to SECTION 2A.7 hereof, the Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Lender of such failure, and each Lender shall promptly and unconditionally pay
to the Administrative Agent for the account of the Issuing Bank the amount of
such Lender's Percentage of the unreimbursed amount of such payment, and the
Administrative Agent shall promptly pay such amount to the Issuing Bank. The
failure of any Lender to make available to the Administrative Agent for the
account of any Issuing Bank its Percentage of the unreimbursed amount of any
such payment shall not relieve any other Lender of its obligation hereunder to
make available to the Administrative Agent for the account of such Issuing Bank
its Percentage of the unreimbursed amount of any payment on the date such
payment is to be made, but no Lender shall be responsible for the failure of any
other Lender to make available to the Administrative Agent its Percentage of the
unreimbursed amount of any payment on the date such payment is to be made. Any
Lender which fails to make any payment required pursuant to this SECTION 2A.6(b)
shall be deemed to be a Defaulting Lender hereunder.
(c) Whenever the Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, the Issuing Bank shall
promptly pay to the Administrative Agent and the Administrative Agent shall
promptly pay to each Lender which has funded its participating interest therein,
in immediately available funds, an amount equal to such Lender's Percentage
thereof.
(d) Upon the request of the Administrative Agent or any Lender, an
Issuing Bank shall furnish to the Administrative Agent or such Lender copies of
any Facility Letter of Credit to which that Issuing Bank is party and such other
documentation as may reasonably be requested by the Administrative Agent or such
Lender.
(e) The obligations of a Lender to make payments to the Administrative
Agent for the account of each Issuing Bank with respect to a Facility Letter of
Credit shall be absolute, unconditional and irrevocable, not subject to any
counterclaim, set-off, qualification or exception whatsoever other than a
failure of any such Issuing Bank to comply with the terms of this Agreement
relating to the issuance of such Facility Letter of Credit and shall be made in
accordance with the terms and conditions of this Agreement under all
circumstances.
2A.7. PAYMENT OF REIMBURSEMENT OBLIGATIONS.
(a) The Borrower agrees to pay to each Issuing Bank the amount of all
Reimbursement Obligations, interest and other amounts payable to such Issuing
Bank under or in connection with any Facility Letter of Credit when due in
accordance with SECTION 2A.5(A) above, irrespective of any claim, set-off,
defense or other right which the Borrower may have at any time against any
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<PAGE> 9
Issuing Bank or any other Person, under all circumstances, including without
limitation any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a beneficiary
named in a Facility Letter of Credit or any transferee of any Facility
Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, the Issuing Bank, any Lender, or any
other Person, whether in connection with this Agreement, any Facility
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the
Borrower and the beneficiary named in any Facility Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect of any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents; or
(v) the occurrence of any Default or Unmatured Default.
(b) In the event any payment by the Borrower received by the Issuing
Bank with respect to a Facility Letter of Credit and distributed by the
Administrative Agent to the Lenders on account of their participations is
thereafter set aside, avoided or recovered from the Issuing Bank in connection
with any receivership, liquidation; reorganization or bankruptcy proceeding,
each Lender which received such distribution shall, upon demand by the Issuing
Bank, contribute such Lender's Percentage of the amount set aside, avoided or
recovered together with interest at the rate required to be paid by the Issuing
Bank upon the amount required to be repaid by the Issuing Bank.
2A.8. COMPENSATION FOR FACILITY LETTERS OF CREDIT.
(a) The Borrower shall pay to the Administrative Agent, for the ratable
account of the Lenders, based upon the Lenders' respective Percentages, a per
annum fee (the "FACILITY LETTER OF CREDIT FEE") with respect to each Facility
Letter of Credit that is equal to the LIBOR Applicable Margin. The Facility
Letter of Credit Fee relating to any Facility Letter of Credit shall be due and
payable in arrears in equal installments on each Payment Date and, to the extent
any such fees are then due and unpaid, on the Facility Termination Date. The
Administrative Agent shall promptly remit such Facility Letter of Credit Fees,
when paid, to the other Lenders in accordance with their Percentages thereof.
(b) The Issuing Bank also shall have the right to receive solely for
its own account an issuance fee of 0.125% of the face amount of each Facility
Letter of Credit, payable by the Borrower on the Issuance Date for each such
Facility Letter of Credit. The Issuing Bank shall also be entitled to receive
its reasonable out-of-pocket costs and the Issuing Bank's standard charges of
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<PAGE> 10
issuing, amending and servicing Facility Letters of Credit and processing draws
thereunder. The Borrower shall pay such issuance fee and other amounts when due
to the Issuing Bank.
2A.9. LETTER OF CREDIT COLLATERAL ACCOUNT. The Borrower hereby agrees
that it will, until the Facility Termination Date, maintain a special collateral
account (the "LETTER OF CREDIT COLLATERAL ACCOUNT") at the Administrative
Agent's office at the address specified pursuant to Article XIII, in the name of
the Borrower but under the sole dominion and control of the Administrative
Agent, for the benefit of the Lenders, and in which the Borrower shall have no
interest other than as set forth in SECTION 8.1. Such Letter of Credit
Collateral Account shall be funded to the extent required by SECTION 8.1. In
addition to the foregoing, the Borrower hereby grants to the Administrative
Agent, for the benefit of the Lenders, a properly perfected security interest in
and to the Letter of Credit Collateral Account, any funds that may hereafter be
on deposit in such account and the proceeds thereof.
11. SECTION 3.1(I) of the Credit Agreement is hereby amended by adding
the phrase ", Facility Letters of Credit" after the word "Loans" in the second
to the last line thereof.
12. SECTION 3.1 (III) of the Credit Agreement is hereby amended by
adding the phrase ", Letters of Credit issued or participated in" after the
phrase "loans held" in the third to the last line thereof.
13. SECTION 3.2 of the Credit Agreement is hereby amended by adding the
phrase ", its interest in the Facility Letters of Credit" after the phrase "its
Loans" in the seventh line thereof and the phrase "or participate in or issue
Facility Letters of Credit" after the phrase "Loans hereunder" in the eighth
line thereof.
14. The Credit Agreement is hereby amended by adding the following new
SECTION 6.23:
6.23. INVESTMENTS IN AIP AND INVESTMENT AFFILIATES. The Consolidated
Group's Investment in AIP, as determined in accordance with GAAP, PLUS the
Consolidated Group's Investment in Investment Affiliates, as determined in
accordance with GAAP, shall not at any time exceed thirty percent (30%) of
Consolidated Market Value.
15. SECTION 7.3 of the Credit Agreement is hereby amended by restating
such section as follows:
The breach of any terms or provisions of SECTION 6.2, 6.10 through 6.21
and 6.23.
16. SECTION 8.1 of the Credit Agreement is hereby amended by restating
such section as follows:
If any Default described in SECTION 7.7 or 7.8 occurs with respect to
the Borrower, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Facility Letters of Credit hereunder shall automatically terminate
and the Obligations shall immediately become due and payable without any
election or action on the part of the Administrative Agent or any Lender. If any
other Default occurs, the Required Lenders, at any time prior to the date that
such Default has been fully cured, may terminate or suspend the obligations of
the Lenders to make Loans hereunder and to issue Facility Letters of Credit, or
declare the Obligations to be due and payable,
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or both, whereupon (i) the Obligations shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which the
Borrower hereby expressly waives and (ii) the Administrative Agent, as directed
by the Required Lenders (or if no such direction is given within 30 days after a
request for direction, as the Administrative Agent deems in the best interests
of the Lenders, in its sole discretion), shall use its good faith efforts to
collect, including without limitation, by filing and diligently pursuing
judicial action, all amounts owed by the Borrower and any Subsidiary Guarantor
under the Loan Documents.
In addition to the foregoing, following the occurrence of a Default and
so long as any Facility Letter of Credit has not been fully drawn and has not
been canceled or expired by its terms, upon demand by the Administrative Agent,
the Borrower shall deposit in the Letter of Credit Collateral Account cash in an
amount equal to the aggregate undrawn face amount of all outstanding Facility
Letters of Credit and all fees and other amounts due or which may become due
with respect thereto. The Borrower shall have no control over funds in the
Letter of Credit Collateral Account, which funds will be invested by the
Administrative Agent from time to time at its discretion in certificates of
deposit of First Chicago having a maturity not exceeding 30 days. Such funds
shall be promptly applied by the Administrative Agent to reimburse any Issuing
Bank for drafts drawn from time to time under the Facility Levers of Credit.
Such funds, if any, remaining in the Letter of Credit Collateral Account
following the payment of all Obligations in full shall, unless the
Administrative Agent is otherwise directed by a court of competent jurisdiction,
be promptly paid over to the Borrower.
If after acceleration of the maturity of the Obligations or termination
of the obligations of the Lenders to make Loans hereunder or to issue Facility
Letters of Credit as a result of any Default (other than any Default as
described in SECTION 7.7 or 7.8 with respect to the Borrower) and before any
judgment or decree for the payment of the Obligations shall have been obtained
or entered, all of the Lenders (in their sole discretion) shall so direct, the
Administrative Agent shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.
17. Except as specifically modified hereby, the Credit Agreement is and
remains unmodified and in full force and effect and is hereby ratified and
confirmed. Borrower hereby remakes as of the date hereof, each of its respective
representations and warranties contained in Article V of the Credit Agreement.
18. This Amendment may be executed in any number of counterparts, all
of which taken together shall constitute one agreement, and any of the parties
hereto may execute this Amendment by signing any such counterpart. This
Amendment shall be construed in accordance with the internal laws (and not the
law of conflicts) of the State of Illinois, but giving effect to federal laws
applicable to national banks. This Amendment shall be effective when it has been
executed by the Borrower, the Administrative Agent and each other Lender and
each party has notified the Administrative Agent by telecopy or telephone that
it has taken such action.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative
Agent have executed this Amendment as of the date first above written.
<TABLE>
<CAPTION>
<S> <C>
DEVELOPERS DIVERSIFIED REALTY CORPORATION THE FIRST NATIONAL BANK OF CHICAGO, Individually and as
Administrative Agent
By: By:
------------------------------------------------- -------------------------------------------------
Print Name: Print Name:
----------------------------------------- -----------------------------------------
Title: Title:
---------------------------------------------- ----------------------------------------------
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, a COMMERZBANK
national banking association AKTIENGESELLSCHAFT
By: By:
------------------------------------------------- -------------------------------------------------
Print Name: Print Name:
----------------------------------------- -----------------------------------------
Title: Title:
---------------------------------------------- ----------------------------------------------
FLEET NATIONAL BANK UBS AG, NEW YORK BRANCH
By: By:
------------------------------------------------- -------------------------------------------------
Print Name: Print Name:
----------------------------------------- -----------------------------------------
Title: Title:
---------------------------------------------- ----------------------------------------------
ASMOUTH BANK PNC BANK, NATIONAL ASSOCIATION
By: By:
------------------------------------------------- -------------------------------------------------
Print Name: Print Name:
----------------------------------------- -----------------------------------------
Title: Title:
---------------------------------------------- ----------------------------------------------
COMERCIA BANK FIRST UNION NATIONAL BANK
By: By:
------------------------------------------------- -------------------------------------------------
Print Name: Print Name:
----------------------------------------- -----------------------------------------
Title: Title:
---------------------------------------------- ----------------------------------------------
MELLON BANK, N.A. HUNTINGTON NATIONAL BANK
By: By:
------------------------------------------------- -------------------------------------------------
Print Name: Print Name:
----------------------------------------- -----------------------------------------
Title: Title:
---------------------------------------------- ----------------------------------------------
HIBERNIA NATIONAL BANK
By:
-------------------------------------------------
Print Name:
-----------------------------------------
Title:
----------------------------------------------
</TABLE>
12
<PAGE> 1
EXHIBIT 10.18
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(an Ohio corporation)
MEDIUM-TERM NOTES
DUE 9 MONTHS OR MORE FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
August 31, 1999
MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
BANC OF AMERICA SECURITIES LLC
100 North Tryon Street
Charlotte, North Carolina 28255
BANC ONE CAPITAL MARKETS, INC.
One First National Plaza
Chicago, Illinois 60670
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
LEHMAN BROTHERS INC.
3 World Financial Center
New York, New York 10285
SALOMON SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
WARBURG DILLON READ LLC 299 Park Avenue New York, New York 10171
Dear Sirs:
1. INTRODUCTORY. Developers Diversified Realty Corporation, an Ohio
corporation (the "Company"), confirms its agreement with Morgan Stanley & Co.
Incorporated, Banc of America Securities LLC, Banc One Capital Markets, Inc.,
Goldman, Sachs & Co., Lehman
<PAGE> 2
Brothers Inc., Salomon Smith Barney Inc. and Warburg Dillon Read LLC (each, an
"Agent," and collectively, the "Agents") 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 The Chase Manhattan Bank (formerly 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. $400,000,000 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.
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. Notwithstanding anything to
the contrary contained herein, the Company may accept offers to purchase Notes
through an agent other than the Agents if (i) the Company shall not have
solicited such offers, (ii) the Company and such agent shall have entered into
an agreement with substantially the same terms as this Agreement (including
Schedule A) and (iii) the Company shall have notified the Agents promptly after
the acceptance of any such offer and shall have
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<PAGE> 3
provided the Agents with a copy of such agreement in written form promptly
following the execution thereof.
(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 reasonable
discretion, 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 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:
3
<PAGE> 4
(i) A registration statement on Form S-3 (No. 333-72519) 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"), 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. The 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 (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
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 statement referred to above (No. 333-72519) 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
4
<PAGE> 5
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 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 not occurred any material
adverse change or any development that is reasonably likely to involve
a 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 from that
set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), (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
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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; 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) PricewaterhouseCoopers 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 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 Significant Subsidiary, as defined in Section
9(b)(iv), has been duly incorporated or formed and is validly existing
as a corporation, partnership or limited liability company in good
standing or in full force and effect under the laws of the
jurisdiction of its incorporation or formation, has corporate,
partnership or limited liability company power and authority to own,
lease and operate its properties and to conduct its business and is
duly qualified as a foreign corporation, partnership or limited
liability company 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).
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<PAGE> 7
(x) The Notes 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 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 of 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 (the "Articles of Incorporation"), 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 on 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 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
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<PAGE> 8
Code of Regulations of the Company or any of its subsidiaries 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 year ended December 31,
1993 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, 1994, 1995, 1996 and 1997 and
the Company intends to make a timely election to be taxed as a REIT
with respect to its current taxable year.
(xv) Neither the Company nor any of its subsidiaries is
required to be registered as an investment company 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.
(xvii) If applicable, the Notes have been approved for
listing on the New York Stock Exchange.
(xviii) There are no persons with registration or other
similar rights to have any securities registered pursuant to the
Registration Statement.
(xix) (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
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<PAGE> 9
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 Solon outlot 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
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.
(xx) 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.
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<PAGE> 10
(xxi) 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.
(xxii) 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.
(xxiii) The Senior Notes are rated not less than Baa2 by
Moody's Investors Service, Inc. ("Moody's") and BBB by Standard &
Poor's, a division of the McGraw-Hill Companies, Inc. ("S&P"). The
Subordinated Notes are rated not less than Baa3 by Moody's and BBB- by
S&P.
(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 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
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<PAGE> 11
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
"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
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<PAGE> 12
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 use all commercially reasonable efforts 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 Brown & Wood LLP, counsel for 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 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
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<PAGE> 13
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, and the Company will furnish to the Agents a reasonable number of
copies of such amendment or supplement.
(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 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,
if any such laws are applicable, and real estate syndication laws, if any such
laws are applicable, 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.
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(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, 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
Brown & Wood LLP, 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 Brown & Wood LLP, 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
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-
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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 either Section 15 of the 1933 Act or Section 20
of the 1934 Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Agent
furnished to the Company in writing by such Agent through you expressly for use
therein.
(b) Each Agent agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act
to the same extent as the foregoing indemnity from the Company to such Agent,
but only with reference to information relating to such Agent furnished to the
Company in writing by such Agent through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 7(a) or 7(b), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of
the indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to one firm serving as local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to Section 7(a),
and by the Company, in the case of parties indemnified pursuant to Section
7(b). The indemnifying party shall not be liable for any settlement of any
proceeding
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<PAGE> 16
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Agents on the other
hand from the offering of the Notes or (ii) if the allocation provided by
clause 7(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
7(d)(i) above but also the relative fault of the Company on the one hand and of
the Agents on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Agents on the other hand in connection with the
offering of the Notes shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Notes (before deducting expenses)
received by the Company and the total commissions received by the Agents. The
relative fault of the Company on the one hand and the Agents on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Agents and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Agents'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the respective number of Notes they have purchased hereunder, and
not joint.
(e) The Company and the Agents agree that it would not be just or
equitable if contribution pursuant to this Section 7 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 that does not take account of the
equitable considerations referred to in Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified
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<PAGE> 17
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Agents shall be required
to contribute any amount in excess of the amount by which the total price at
which the Notes purchased by it or through it and distributed to the public
were offered to the public exceeds the amount of any damages that 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 remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Agent or any person controlling any
Agent or by or on behalf of the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Notes.
8. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, 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
PricewaterhouseCoopers LLP a letter, dated as of the date hereof and
in form and substance satisfactory to you, to the effect that:
(i) they are independent accountants with respect to
the Company and its subsidiaries 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 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
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<PAGE> 18
Company's Current Reports on Form 8-K (the "Forms 8-K") dated
February 25, 1998 and filed on April 7, 1998, as amended on
April 23, 1998, and dated April 28, 1998 and filed on June
24, 1998, each of which is incorporated by reference in the
Company's Registration Statement and covered by their
opinions therein comply as to form in all material respects
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, and the Company's Forms 8-K dated
September 10, 1998 and filed on December 8, 1998, and dated
April 23, 1999 and filed on August 20, 1999, 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 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;
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<PAGE> 19
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 LLP, 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 all requisite 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, 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 or formed and is validly existing as a
corporation, partnership or limited liability company in good
standing or in full force and effect under the laws of the
jurisdiction of its incorporation or formation, has
corporate, partnership or limited liability company power and
authority to own, lease and operate its properties and to
conduct its business, and is duly qualified as a foreign
corporation, partnership or limited liability company 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, of the Company and its Subsidiaries considered as
one enterprise.
(v) The Notes have been duly and validly authorized
by all necessary corporate action on the part of the Company
and, when the terms of the Notes and of their issue and sale
have been duly established in accordance with the applicable
Indentures and this Agreement so as not to violate any
applicable law or agreement or instrument then binding on the
Company, and when the Notes have been executed, authenticated
and delivered by the Company pursuant to the provisions of
this Agreement, and the Indentures against payment of the
consideration therefor, the Notes will constitute valid and
legally binding
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<PAGE> 20
obligations of the Company entitled to the benefits provided
by the Indentures and enforceable in accordance with their
terms.
(vi) This Agreement has been duly authorized,
executed and delivered by the Company.
(vii) Each Indenture has been duly and validly
authorized, executed and delivered by the Company and
(assuming due authorization, execution and delivery by the
Trustee and the validity, legality, binding effect on and
enforceability against the Trustee) constitutes the valid and
legally binding agreement of the Company, enforceable in
accordance with its terms; provided that no opinion is
rendered in this paragraph herein with respect to the
enforceability of the choice of law provisions in the
Indentures.
(viii) Each 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
(other than the financial statements, related schedules and
other financial and statistical data included or incorporated
by reference in the Registration Statement or the Prospectus,
as to which no opinion need be rendered) 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.
(xi) Each document filed pursuant to the 1934 Act
(other than the financial statements, related 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 (other than the financial
statements, related schedules and other financial and
statistical information 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 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
20
<PAGE> 21
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 (other than the financial
statements, related schedules and other financial and
statistical data 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 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 their knowledge, all pending legal
or governmental proceedings to which the Company or its
Significant 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 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 summaries thereof or references thereto
are correct in all material respects.
(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 transactions
contemplated by this Agreement, 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 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 any Significant
Subsidiary pursuant to any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the
Company or any Significant Subsidiary is a party or by which
they may be bound or to which any of the property or assets
of the Company or any Significant Subsidiary is subject,
except where such breach, default, creation or imposition
would not have a material adverse effect on the condition,
financial or otherwise, or (B) result in violation of the
provisions of the Articles of Incorporation, Partnership
Agreement, Code of Regulations or
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<PAGE> 22
Operating Agreement of the Company or subsidiaries or any
applicable law, administrative regulation or administrative
or court order or decree.
(xvi) Neither the Company nor any Significant
Subsidiary is required to be registered as an investment
company under the 1940 Act.
(xvii) The statements in the Prospectus, if any,
under the captions "Certain Anti-Takeover Provisions of Ohio
Law," "Certain Federal Income Tax Considerations" and
"Federal Income Tax Considerations," to the extent that they
constitute matters of law or legal conclusions, have been
reviewed by them and such statements or summaries are correct
in all material respects.
(xviii) The Company has qualified as a REIT for its
taxable years ended December 31, 1993, 1994, 1995, 1996 and
1997 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 years ended December 31, 1998 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.
(xix) The choice of law provisions in the Senior
Indenture are enforceable in accordance with their terms.
(xx) To 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 described or referred to in the Registration
Statement or filed as an exhibit thereto which would have a
material adverse effect on the condition, financial or
otherwise, or on the earnings or business affairs of the
Company and its subsidiaries considered as one enterprise.
(c) On the date hereof, you shall have received from Brown &
Wood LLP, 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 LLP may rely as to
matters involving the laws of the State of Ohio upon the opinion of
Baker & Hostetler LLP. In giving their opinion, Baker & Hostetler LLP
may rely as to matters involving the laws of the State of New York upon
the opinion of Brown & Wood llp. Baker & Hostetler LLP and Brown & Wood
LLP 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 and between pricing and each
settlement date:
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<PAGE> 23
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Notes on the terms and
in the manner contemplated in the Prospectus.
(e) At the date hereof, the Agents shall have received a
certificate of the Chief Executive Officer 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(e), 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.
(f) 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
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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 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
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<PAGE> 25
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 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 LLP, 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
PricewaterhouseCoopers 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.
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
25
<PAGE> 26
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.
(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.
26
<PAGE> 27
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 or telecopy number specified
below:
If to the Company:
Developers Diversified Corporation
3300 Enterprise Parkway
Beachwood, Ohio 44122
Attention: Scott A. Wolstein
Chief Executive Officer
Telecopy No.: 216-755-1500
With a copy to:
Baker & Hostetler LLP
3200 National City Center
1900 East 9th Street
Cleveland, Ohio 44114-3485
Attention: Albert T. Adams
Telecopy No.: 216-696-0740
If to the Agents:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Manager - Continuously Offered Products
Telecopy No.: 212-761-0780
With a copy to: Morgan Stanley & Co. Incorporated
1585 Broadway, 29th Floor
New York, New York 10036
Attention: Peter Cooper
Investment Banking Information Center
Telecopy No.: 212-761-0260
Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: MTN Product Management
Telecopy No.: 704-388-9939
Banc One Capital Markets, Inc.
One First National Plaza, Suite IL1-0595
Chicago, Illinois 60670
Attention: Corporate Securities Structuring
Telecopy No.: 312-732-4172
27
<PAGE> 28
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Ben Smilchensky
Telecopy No.: 212-902-0658
Lehman Brothers Inc.
3 World Financial Center
12th Floor
New York, New York 10285-1200
Attention: Richard Yates
Telecopy No.: 212-526-9433
Salomon Smith Barney Inc.
7 World Trade Center, 32nd Floor
New York, New York 10046
Attention: Medium-Term Note Department
Telecopy No.: 212-783-2274
Warburg Dillon Read LLC
677 Washington Boulevard
Stamford, Connecticut 06912
Attention: Christopher Forshner
Telecopy No.: 203-719-7139
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.
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.
28
<PAGE> 29
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:
MORGAN STANLEY & CO. INCORPORATED
By: _____________________________________
Name:
Title:
BANC OF AMERICA SECURITIES LLC
By: _____________________________________
Name:
Title:
BANC ONE CAPITAL MARKETS, INC.
By: _____________________________________
Name:
Title:
GOLDMAN, SACHS & CO.
By: _____________________________________
Name:
Title:
29
<PAGE> 30
LEHMAN BROTHERS INC.
By: _____________________________
Name:
Title:
SALOMON SMITH BARNEY INC.
By: _____________________________
Name:
Title:
WARBURG DILLON READ LLC
By: _____________________________
Name:
Title:
30
<PAGE> 31
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.
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-1
<PAGE> 32
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):
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
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........................................... *
________________
*As agreed to by the Company and the applicable Agent at the time of sale.
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
NAME STATE OF ORGANIZATION
---- ---------------------
<S> <C>
Developers Diversified Realty Corporation Ohio
Community Centers One L.L.C. Delaware
Community Centers Two L.L.C. Delaware
Community Centers Three, L.L.C. Delaware
Shoppers World Community Center, L.P. Delaware
DD Community Centers One, Inc. Ohio
DD Community Centers Two, Inc. Ohio
DD Community Centers Three, Inc. Ohio
Developers Diversified of Alabama, Inc. Alabama
Highland Grove Limited Liability Company Ohio
Merriam Town Center Ltd. Ohio
DOTRS Limited Liability Company Ohio
Developers Diversified of Pennsylvania, Inc. Ohio
Pedro Community Centers, Inc. Ohio
DDRA Community Centers Four, L.P. Texas
DDRC Great Northern Limited Partnership Ohio
Developers Diversified Cook's Corner LP Ohio
Developers Diversified Centennial Promenade LP Ohio
DDRC PDK Hagerstown LLC Ohio
DDRC PDK Salisbury LLC Ohio
Developers Diversified of Indiana, Inc. Ohio
DDR Nassau Park II Inc. Ohio
DDR Nassau Pavilion Inc. Ohio.
DDR Nassau Pavilion Associates LP Georgia
DDR Hendon Nassau Park II LP Georgia
Developers Diversified of Mississippi, Inc. Ohio
DDRC Michigan LLC Ohio
Coon Rapids Riverdale Village LLC Ohio
DDRC P&M Deer Park Town Center LLC Ohio
Hendon/DDR /BP, LLC Delaware
DDR Continental LP Ohio
DDR Continental Inc. Ohio
DDR OliverMcMillan LP Delaware
DDR OliverMcMillan Inc. Delaware
DDR Office Flex Corporation Delaware
DDR Office Flex LP Ohio
DD Development Company II, Inc. Ohio
DDR Realty Company Maryland
ORIX Sansone Brentwood L.L.C. Illinois
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
NAME STATE OF ORGANIZATION
---- ---------------------
<S> <C>
The Plaza at Sunset Hills, L.L.C. Missouri
The Shoppes at Sunset Hills, L.L.C. Missouri
DDR Family Centers LP Delaware
DDR Family Centers I Inc. Ohio
DDRC Gateway LLC Delaware
DDRC Salem LLC Delaware
DDR DB Opportunity Sub, Inc. Ohio
DDR DB Development Ventures LP Texas
DDRA Community Centers Five, L.P. Delaware
DD Community Centers Five Inc. Delaware
Easton Market Limited Liability Company Ohio
Continental Sawmill Limited Liability Company Ohio
Continental Sawmill Limited Partnership Ohio
Sun Center Limited Ohio
Drexel Washington Limited Liability Company Ohio
Drexel Washington Limited Partnership Ohio
Lennox Town Center Limited Ohio
Hermes Associates Utah
Hermes Associates, Ltd. Utah
University Square Associates, Ltd. Utah
Riverdale Retail Associates L.C. Utah
TFCM Associates, LLC Utah
Fort Union Associates, L.C. Utah
Rocky Mountain Real Estate L.L.C. Utah
Sansone Group/DDR LLC Missouri
DDR Sansone Development Ventures LLC Missouri
DDR OliverMcMillan Management Services, Inc. Delaware
Coventry Real Estate Partners, Ltd. Ohio
Retail Value Investment Program Limited Partnership I Delaware
Retail Value Investment Program Limited Partnership II Delaware
Retail Value Investment Program Limited Partnership III Delaware
Retail Value Investment Program Limited Partnership IV Delaware
Retail Value Investment Program Limited Partnership V Delaware
Retail Value Investment Program Limited Partnership VI Delaware
DDR Michigan II LLC Ohio
Town Center Plaza, L.L.C. Delaware
Plainville Connecticut L.L.C. Ohio
Plainville Development L.P. Ohio
DDRA Community Centers Six, L.P. Delaware
DDPD OPP LLC Maryland
DDR DownREIT LLC Ohio
DDR Ohio Opportunity LLC Ohio
DDR VIC I L.C. Utah
DDR Hermes Associates L.C. Utah
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
NAME STATE OF ORGANIZATION
---- ---------------------
<S> <C>
DDR University Square Associates Utah
Hagerstown Development LLC Ohio
DLA Ventures LP Ohio
DD Community Centers Seven, Inc. Delaware
DDRA Community Centers Seven, L.P. Delaware
Developers Diversified of Tennessee, Inc. Ohio
DDR DB SA Ventures LP Texas
DDR Liberty Fair, Inc. Delaware
Liberty Fair VA LP Virginia
DDR Wilshire, Inc. Ohio
DDR DB Outlot LP Texas
Hagerstown TIF LLC Ohio
Coventry Round Rock LLC Ohio
DD Community Centers Eight, Inc. Delaware
DDRA Community Centers Eight, L.P. Delaware
DD Community Centers Investments LLC Delaware
DLA Ventures LLC Ohio
</TABLE>
3
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (Nos. 333-70607 and 333-72519) and in the Registration
Statements on Form S-8 (Nos. 333-76537 and 333-85691) of Developers Diversified
Realty Corporation of our report dated March 3, 2000 relating to the financial
statements and financial statement schedules, which appears in this Form 10-K.
PricewaterhouseCoopers LLP
Cleveland, Ohio
March 29, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,992
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,068,274
<DEPRECIATION> 249,912
<TOTAL-ASSETS> 2,320,860
<CURRENT-LIABILITIES> 0
<BONDS> 1,152,051
0
303,750
<COMMON> 6,136
<OTHER-SE> 542,459
<TOTAL-LIABILITY-AND-EQUITY> 2,320,860
<SALES> 0
<TOTAL-REVENUES> 263,933
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 69,670
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68,023
<INCOME-PRETAX> 87,397
<INCOME-TAX> 0
<INCOME-CONTINUING> 87,397
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,397
<EPS-BASIC> 0.99
<EPS-DILUTED> 0.95
</TABLE>
