<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER , 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
COLONIAL PROPERTIES TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ALABAMA 59-7007599
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2101 SIXTH AVENUE NORTH, SUITE 750
BIRMINGHAM, ALABAMA 35202
(205) 250-8700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
THOMAS H. LOWDER
2101 SIXTH AVENUE NORTH, SUITE 750
BIRMINGHAM, ALABAMA 35202
(202) 250-8700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
J. WARREN GORRELL, JR.
ALAN L. DYE
HOGAN & HARTSON L.L.P.
COLUMBIA SQUARE
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after the effective date of this Registration Statement and from time
to time as determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF BE REGISTERED AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED (1)(2)(3) PER SECURITY PRICE(2)(4) REGISTRATION FEE(5)
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<S> <C> <C> <C> <C>
Debt Securities........
Preferred Shares of
Beneficial
Interest(6)...........
Common Shares of
Beneficial
Interest(7)........... $297,406,250 (9) $297,406,250 $90,123
Common Share Warrants..
Depositary Shares,
representing Preferred
Shares(8).............
</TABLE>
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(Footnotes on the following page)
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE
PROSPECTUS WHICH CONSTITUTES PART OF THIS REGISTRATION STATEMENT ALSO RELATES
TO AND INCLUDES AN AGGREGATE PRINCIPAL AMOUNT OF $152,593,750 OF SECURITIES
REGISTERED ON FORM S-3, REGISTRATION NO. 333-18259.
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<PAGE>
(Footnotes continued from previous page)
(1) This Registration Statement also covers delayed delivery contracts which
may be issued by the Registrant under which the counterparty may be
required to purchase Debt Securities, Preferred Shares, Common Shares,
Common Share Warrants or Depositary Shares. Such contracts may be issued
together with the specific Securities to which they relate. In addition,
Securities registered hereunder may be sold separately, together or as
units with other Securities registered hereunder.
(2) In U.S. Dollars or the equivalent thereof denominated in one or more
foreign currencies or units of two or more foreign currencies or composite
currencies (such as European Currency Units).
(3) Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
Prospectus included in this Registration Statement relates also to
$152,593,750 of Securities registered on Form S-3 Registration No. 333-
18259 and unissued as of the date hereof.
(4) Estimated solely for purposes of calculating the registration fee. No
separate consideration will be received for Common Shares or Preferred
Shares that are issued upon conversion of Debt Securities, Preferred
Shares or Depositary Shares or upon exercise of Common Share Warrants
registered hereunder, as the case may be. The aggregate maximum offering
price of all Securities issued pursuant to this Registration Statement
will not exceed $297,406,250.
(5) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933, as amended.
(6) Such indeterminate number of Preferred Shares as may from time to time be
issued at indeterminate prices or issuable upon conversion of Debt
Securities.
(7) Such indeterminate number of Common Shares as may from time to time be
issued at indeterminate prices or issuable upon conversion of Debt
Securities, Preferred Shares or Depositary Shares registered hereunder or
upon exercise of Common Share Warrants registered hereunder, as the case
may be.
(8) To be represented by Depositary Receipts representing an interest in all
or a specified portion of a Preferred Share.
(9) Omitted pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1933, as amended.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS DATED OCTOBER , 1997
SUBJECT TO COMPLETION
PROSPECTUS
$450,000,000
COLONIAL PROPERTIES TRUST
DEBT SECURITIES, PREFERRED SHARES, COMMON SHARES, COMMON SHARE WARRANTS AND
DEPOSITARY SHARES
-----------
Colonial Properties Trust (the "Company") may from time to time offer in one
or more series of (i) unsecured debt securities ("Debt Securities"), (ii)
preferred shares of beneficial interest ("Preferred Shares"), (iii) common
shares of beneficial interest, $.01 par value ("Common Shares"), (iv) warrants
exercisable for Common Shares ("Common Share Warrants"), and (v) Preferred
Shares represented by depositary shares (the "Depositary Shares"), with an
aggregate public offering price of up to $450,000,000 (or its equivalent based
on the exchange rate at the time of sale) in amounts, at prices and on terms to
be determined at the time of offering. The Debt Securities, Preferred Shares,
Common Shares, Common Share Warrants and Depositary Shares (collectively, the
"Securities") may be offered, separately or together, in separate series in
amounts, at prices and on terms to be described in one or more supplements to
this Prospectus (a "Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable: (i) in the case of Debt Securities, the
specific title, aggregate principal amount, currency, form (which may be
registered or bearer, or certificated or global), authorized denominations,
maturity, rate (or manner of calculation thereof) and time of payment of
interest, any terms for redemption at the option of the Company or repayment at
the option of the holder, any terms for any sinking fund payments, any terms
for conversion into Preferred Shares or Common Shares of the Company, covenants
and any initial public offering price; (ii) in the case of Preferred Shares,
the specific title and stated value, any dividend, liquidation, redemption,
conversion, voting and other rights, and any initial public offering price;
(iii) in the case of Common Shares, any initial public offering price or, if
applicable, information regarding the exchange of units of partnership interest
("Units") of Colonial Realty Limited Partnership for Common Shares; (iv) in the
case of Common Share Warrants, the specific title and aggregate number, and the
issue price and the exercise price; and (v) in the case of Depositary Shares,
the fractional Preferred Share represented by each Depositary Share. In
addition, such specific terms may include limitations on direct or beneficial
ownership and restrictions on transfer of the Securities, in each case as may
be appropriate to preserve the status of the Company as a real estate
investment trust for federal income tax purposes.
The applicable Prospectus Supplement also will contain information, where
applicable, about certain U.S. federal income tax considerations relating to,
and any listing on a securities exchange of, the Securities covered by such
Prospectus Supplement.
The Securities may be offered directly, through agents designated from time
to time by the Company, or to or through underwriters or dealers. If any agents
or underwriters are involved in the sale of any of the Securities, their names,
and any applicable purchase price, fee, commission or discount arrangement
with, between or among them, will be set forth, or will be calculable from the
information set forth, in an accompanying Prospectus Supplement. See "Plan of
Distribution." No Securities may be sold without delivery of a Prospectus
Supplement describing the method and terms of the offering of such Securities.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR CERTAIN FACTORS
RELATING TO AN INVESTMENT IN THE SECURITIES.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is October , 1997
<PAGE>
As used herein, the term "Company" includes Colonial Properties Trust, an
Alabama real estate investment trust, and one or more of its subsidiaries
(including Colonial Properties Holding Company, Inc., Colonial Realty Limited
Partnership, Colonial Properties Services Limited Partnership and Colonial
Properties Services, Inc.) or, as the context may require, Colonial Properties
Trust only or Colonial Realty Limited Partnership only.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus and the documents incorporated by
reference herein and any accompanying Prospectus Supplement, including those
set forth in "Risk Factors" and "Use of Proceeds" herein constitute "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company or industry results
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions which will, among other things, affect demand for multifamily
properties, availability and creditworthiness of prospective tenants, lease
rents and the availability of financing, adverse changes in the real estate
markets including, among other things, competition with other companies, risks
of real estate acquisition, governmental actions and initiatives, and
environmental/safety requirements. See "Risk Factors."
THE COMPANY
The Company is one of the largest developers, owners and operators of
multifamily, retail and office properties in the Southeastern United States.
The Company's common shares are traded on the New York Stock Exchange ("NYSE")
under the symbol "CLP." It is a fully-integrated real estate company, whose
activities as of September 30, 1997 included ownership of a diversified
portfolio of 83 properties located in Alabama, Florida, Georgia, Mississippi
and South Carolina, development of new properties, acquisitions of existing
properties and build-to-suit development. The Company is a self-administered
equity real estate investment trust ("REIT") that as of September 30, 1997
owned 46 garden-style multifamily apartment communities containing a total of
15,377 apartment units (the "Multifamily Properties"), 24 retail properties
(including six regional malls, two "power centers" and 16 neighborhood
shopping centers) containing a total of approximately 7.1 million square feet
of retail space (the "Retail Properties"), 13 office properties containing a
total of approximately 1.9 million square feet of office space (the "Office
Properties") and parcels of land adjacent to certain of these properties (the
"Land"). (The Multifamily Properties, the Retail Properties, the Office
Properties and the Land are referred to collectively as the "Properties").
The Company, through Colonial Properties Holding Company, Inc., a wholly
owned subsidiary ("CPHC"), is the sole general partner of, and, as of
September 30, 1997, holds approximately 69.6% of the interests in, Colonial
Realty Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"). The Operating Partnership owns, directly or indirectly, all of
the Properties (or interests therein). The Company conducts all of its
business through CPHC, the Operating Partnership and the Company's two
management subsidiaries, Colonial Properties Services Limited Partnership (the
"Management Partnership"), which provides management services for the
Company's properties, and Colonial Properties Services, Inc. (the "Management
Corporation"), which provides management services for properties owned by
third parties. As sole general partner of the Operating Partnership, the
Company, through CPHC, has the exclusive power to manage and conduct the
business of the Operating Partnership, subject to certain limited exceptions.
Since the Company's initial public offering in September 1993 (the "IPO"),
the Company has significantly expanded its portfolio of Properties and its
operating businesses. The Company's acquisitions and its expansion
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<PAGE>
and development activities have increased the Company's presence in Alabama,
Florida and Georgia, and the Company has expanded its operations into
Mississippi and South Carolina through acquisitions.
The Company's experienced staff of approximately 660 employees provides a
full range of real estate services from its headquarters in Birmingham,
Alabama and from six regional offices located in the Mobile, Huntsville and
Montgomery, Alabama, Orlando and Tampa, Florida and Atlanta, Georgia
metropolitan areas.
The Company is an Alabama REIT that was formed in July 1993. The principal
executive offices of the Company are located at 2101 Sixth Avenue North, Suite
750, Birmingham, Alabama 35203, and its telephone number is (205) 250-8700.
3
<PAGE>
RISK FACTORS
Prospective investors should carefully consider, among other factors, the
matters described below.
REAL ESTATE INVESTMENT RISKS
General. Real property investments are subject to varying degrees of risk.
The yields available from equity investments in real estate and the Company's
ability to service debt will depend in large part on the amount of income
generated, expenses incurred and capital expenditures required. The Company's
income from retail, multifamily or office properties may be adversely affected
by a number of factors, including the general economic climate and local real
estate conditions, such as an oversupply of, or a reduction in demand, for
retail, apartment or office space in the area and the attractiveness of the
properties to shoppers, residents and tenants. In addition, income from
properties and real estate values also are affected by such factors as the
cost of compliance with government regulation, including zoning and tax laws,
the potential for liability under applicable laws, interest rate levels and
the availability of financing. Certain significant expenditures associated
with each equity investment by the Company in a property (such as mortgage
payments, if any, real estate taxes and maintenance costs) also are generally
not reduced when circumstances cause a reduction in income from the property.
Debt Financing. The Company is subject to the risks associated with debt
financing, including the risk that the Company's cash provided by operating
activities will be insufficient to meet required payments of principal and
interest, the risks of rising interest rates on the Company's floating rate
debt, the risk that the Company will not be able to prepay or refinance
existing indebtedness on the Properties (which generally will not have been
fully amortized at maturity) or that the terms of such refinancing will not be
as favorable as the terms of existing indebtedness. In the event the Company
is unable to secure refinancing of such indebtedness on acceptable terms, the
Company might be forced to dispose of properties upon disadvantageous terms,
which might result in losses to the Company and might adversely affect the
cash flow available for distribution to equity holders or debt service. In
addition, if a property or properties are mortgaged to secure payment of
indebtedness and the Company is unable to meet mortgage payments, the mortgage
securing the property could be foreclosed upon by, or the property could be
otherwise transferred to, the mortgagee with a consequent loss of income and
asset value to the Company.
Renewal of Leases and Reletting of Space. The Company is subject to the
risks that upon expiration of leases for space located at the Properties, the
leases may not be renewed, the space may not be relet or the terms of the
renewal or reletting (including the cost of required renovations or
concessions to tenants) may be less favorable than current lease terms.
Although the Company has established an annual budget for renovation and
reletting expenses that it believes are reasonable in light of each Property's
situation, no assurance can be given that this budget will be sufficient to
cover these expenses. If the Company is unable to promptly relet or renew
leases for all or substantially all of the space at its Properties, if the
rental rates upon such renewal or reletting are significantly lower than
expected, or if the Company's reserves for these purposes prove inadequate,
then the Company's cash provided by operating activities and ability to make
expected distributions to shareholders or debt service payments could be
adversely affected.
Dependence on Primary Markets. All of the Company's Properties are located
in the Southeastern United States and 45 of the Properties are located in
Birmingham and Montgomery, Alabama, Orlando, Florida and Macon, Georgia. The
Company's performance and its ability to make distributions to shareholders or
debt service payments could be adversely affected by economic conditions in
the Southeast and in Birmingham, Montgomery, central Florida and Macon in
particular.
Possible Environmental Liabilities. Under various Federal, state and local
laws, ordinances and regulations, a current or previous owner or operator of
real estate may be required to investigate and clean up certain hazardous
substances released at the property, and may be held liable to a governmental
entity or to third parties for property damage and for investigation and
cleanup costs incurred by such parties in connection with the contamination.
In addition, some environmental laws create a lien on the contaminated site in
favor of the
4
<PAGE>
government for damages and costs it incurs in connection with the
contamination. The presence of contamination or the failure to remediate
contamination may adversely affect the owner's ability to sell or lease real
estate or to borrow using the real estate as collateral. The owner or operator
of a site may be liable under common law to third parties for damages and
injuries resulting from environmental contamination emanating from the site.
The Company has not been notified by any governmental authority of any
material non-compliance, liability or other claim in connection with any of
the Properties and the Company is not aware of any other environmental
condition with respect to any of the Properties that could be material. No
assurance, however, can be given that no prior owner created any material
environmental condition not known to the Company, that no material
environmental condition with respect to any Property has occurred during the
Company's ownership thereof, or that future uses or conditions (including,
without limitation, changes in applicable environmental laws and regulations)
will not result in imposition of environmental liability.
At one of the Company's Properties, the Gadsden Mall in Gadsden, Alabama,
four underground storage tanks were removed in 1989. In connection with the
removal of these gasoline storage tanks, associated petroleum contamination
was discovered in the soil and groundwater. The Company is currently working
with the state regulatory agency to remediate the contamination in accordance
with applicable requirements. Because the tanks were registered with the
Alabama Department of Environmental Management and the facility was in
compliance with regulations prior to the incident, the Company has been
reimbursed under the Alabama Underground Storage Tank Trust Fund for the costs
incurred to date in connection with the ongoing cleanup, and expects to be
reimbursed for the remaining costs as well. Currently, a free product recovery
program is underway.
CONFLICTS OF INTEREST
Certain members of the Company's Board of Trustees ("Board of Trustees") and
officers (including Thomas and James Lowder, Harold Ripps, Herbert Meisler and
William Johnson) own Units in the Operating Partnership and, thus, may have
interests that conflict with shareholders with respect to business decisions
affecting the Company and the Operating Partnership. In particular, a holder
of Units may suffer different and/or more adverse tax consequences than the
Company upon the sale or refinancing of some of the Properties as a result of
unrealized gain attributable to certain Properties. These Unit holders and the
Company, therefore, may have different objectives regarding the appropriate
pricing and timing of any sale or refinancing of Properties. Although the
Company (through CPHC), as the sole general partner of the Partnership, has
the exclusive authority as to whether and on what terms to sell or refinance
an individual Property, these Unit holders might seek to influence the Company
not to sell or refinance the Properties, even though such sale might otherwise
be financially advantageous to the Company, or may seek to influence the
Company to refinance a Property with a higher level of debt than would be in
the best interests of the Company. The Company has agreed to use its
reasonable efforts to minimize the adverse impact of any such refinancing upon
the former owners, and to take into account the tax consequences to such
former owners in deciding whether to sell a Property, which also may result in
decisions that are not in the best interest of all of the shareholders.
The Lowder family (which includes Thomas, James, Robert and Catherine Lowder
and their affiliates) holds interests in certain companies that in the past
have performed construction management, insurance brokerage and other services
with respect to the Properties. These companies may perform similar services
for the Company in the future. As a result of its financial interest in these
companies, the Lowder family may realize benefits from transactions between
such companies and the Company that are not realized by other shareholders of
the Company. In addition, Thomas Lowder and his brother, James Lowder, as
trustees of the Company, may be in a position to influence the Company to do
business with companies in which the Lowder family has a financial interest.
Although the Company has adopted certain policies designed to eliminate or
minimize potential conflicts of interest, including a policy which requires
that transactions in which a trustee or officer of the Company has a conflict
of interest be approved by a majority of the disinterested trustees, there can
be no assurance that these policies will be successful in eliminating the
influence of such conflicts, or that such transactions, if any, will be on
terms as favorable to the Company as could be obtained in an arms-length
transaction with a third party.
5
<PAGE>
DEVELOPMENT AND ACQUISITION RISKS
The Company intends to continue development of new multifamily, retail and
office properties (including expansions of existing Properties on the land
adjacent to those Properties) and to consider acquisitions of multifamily,
retail and office properties where it believes that such development or
acquisition is consistent with the business strategies of the Company. New
project development is subject to a number of risks, including construction
delays or cost overruns that may increase project costs, financing risks as
described above, the failure to meet anticipated occupancy or rent levels,
failure to receive required zoning, occupancy and other governmental permits
and authorizations and changes in applicable zoning and land use laws, which
may result in the incurrence of development costs in connection with projects
that are not pursued to completion. In addition, because the Company must
distribute 95% of its taxable income in order to maintain its qualification as
a REIT, the Company anticipates that new developments and acquisitions will be
financed primarily through lines of credit or other forms of secured or
unsecured construction financing. If permanent debt or equity financing is not
available on acceptable terms to refinance such new developments or
acquisitions are undertaken without permanent financing, further development
activities or acquisitions may be curtailed or cash available for distribution
to shareholders or to meet debt service obligations may be adversely affected.
Acquisitions entail risks that investments will fail to perform in accordance
with expectations and that judgments with respect to the costs of improvements
to bring an acquired property up to standards established for the market
position intended for that property will prove inaccurate, as well as general
investment risks associated with any new real estate investment. See "Real
Estate Investment Risks" above.
MANAGEMENT, LEASING AND BROKERAGE RISKS; CONTROL OF MANAGEMENT CORPORATION
The Company is subject to the risks associated with the property management,
leasing and brokerage businesses. These risks include the risk that management
contracts or service agreements with third-party owners will be lost to
competitors, that contracts will not be renewed upon expiration or will not be
renewed on terms consistent with current terms and that leasing and brokerage
activity generally may decline. Each of these developments could adversely
affect the ability of the Company to make expected distributions to
shareholders or debt service payments.
In order to maintain the Company's qualification as a REIT while realizing
income from the Company's third-party management business, the capital stock
of the Management Corporation (which conducts the Company's third-party
management, leasing and brokerage businesses) is divided into two classes.
Voting common stock, representing 1.01% of the total equity of the Management
Corporation, is held 99% by the Lowder family and 1% by the Company. Nonvoting
common stock, representing 98.99% of the total equity of the Management
Corporation, is held entirely by the Company. Although the Company holds a
total of 99% of the equity interests in the Management Corporation, the
Company is not able to elect directors of the Management Corporation and,
consequently, the Company's ability to influence the day-to-day decisions of
such entity is limited.
CHANGES IN POLICIES
The major policies of the Company, including its policies with respect to
development, acquisitions, financing, growth, operations, debt capitalization
and distributions, are determined by its Board of Trustees. Although it has no
present intention to do so, the Board of Trustees may amend or revise these
and other policies from time to time without a vote of the shareholders of the
Company. A change in these policies could adversely affect the Company's
financial condition, results of operations, funds available for distributions
to shareholders or debt service or the market price of the Securities. The
Company cannot change its policy of seeking to maintain its qualification as a
REIT without the approval of the holders of a majority of the Common Shares.
CERTAIN TAX RISKS
Tax Liabilities as a Consequence of the Failure to Qualify as a REIT. The
Company believes that it has operated so as to qualify as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"),
6
<PAGE>
commencing with its taxable year ended December 31, 1993, and intends to
continue to so operate. No assurance, however, can be given that the Company
has so qualified or will be able to remain so qualified. Qualification as a
REIT involves the application of highly technical and complex Code provisions
as to which there are only limited judicial and administrative
interpretations. Certain facts and circumstances that may be wholly beyond the
Company's control may affect its ability to qualify or to continue to qualify
as a REIT. In addition, no assurance can be given that new legislation,
Treasury Regulations, administrative interpretations or court decisions will
not significantly change the tax laws with respect to the qualification as a
REIT or the Federal income consequences of such qualification to the Company.
If the Company fails to qualify as a REIT, it will be subject to Federal
income tax (including any applicable alternative minimum tax) on its taxable
income at regular corporate rates. In addition, unless entitled to relief
under certain statutory provisions, the Company would be disqualified from
treatment as a REIT for the four taxable years following the year during which
qualification is lost. The additional tax incurred in such event would
significantly reduce the cash flow available for distribution to shareholders
and to meet debt service obligations. See "Federal Income Tax Considerations--
Taxation of the Company."
REIT Distribution Requirements and Potential Impact of Borrowings. To obtain
the favorable tax treatment associated with qualifying as a REIT under the
Code, the Company generally is required each year to distribute to its
shareholders at least 95% of its net taxable income. See "Federal Income Tax
Considerations--Taxation of the Company (Annual Distribution Requirements)."
The Company could be required to borrow funds on a short-term basis to meet
the distribution requirements that are necessary to achieve the tax benefits
associated with qualifying as a REIT, even if management believed that then
prevailing market conditions were not generally favorable for such borrowings.
Other Tax Liabilities. Even if the Company qualifies as a REIT, it will be
subject to certain Federal, state and local taxes on its income and property.
See "Federal Income Tax Considerations--Taxation of the Company and--Other Tax
Considerations." In particular, CPHC will be subject to income tax and certain
intangible property taxes in Alabama and the State of Alabama may seek to
contend that the Company is subject to such taxes as well.
PRICE FLUCTUATIONS OF THE COMMON SHARES AND TRADING VOLUME; SHARES AVAILABLE
FOR FUTURE SALE
A number of factors may adversely influence the price of the Company's
Common Shares in the public markets, many of which are beyond the control of
the Company. These factors include possible increases in market interest
rates, which may lead purchasers of Common Shares to demand a higher annual
yield from distributions by the Company in relation to the price paid for
Common Shares, the relatively low daily trading volume of REITs in general,
including the Common Shares and any inability of the Company to invest the
proceeds of a future offering of Securities in a manner that will increase
earnings per share. Sales of a substantial number of Common Shares, or the
perception that such sales could occur, could adversely affect prevailing
market prices for shares. The Company also may currently issue up to 9,143,590
Common Shares (subject to the Ownership Limit, as defined below) upon
redemption of Units issued in connection with the formation of the Company and
subsequent acquisitions. In addition, 1,375,000 Common Shares of the Company
have been issued or reserved for issuance pursuant to share option and
restricted share plans and other employee benefit plans, and these shares will
be available for sale in the public markets from time to time pursuant to
exemptions from registration requirements or upon registration. No prediction
can be made about the effect that future sales of Common Shares will have on
the market prices of shares.
POSSIBLE ADVERSE CONSEQUENCES OF LIMITS ON OWNERSHIP OF SHARES
In order to maintain its qualification as a REIT, the Company has limited
ownership of the issued and outstanding Common Shares by any single
shareholder (other than Lowder family members) to 5% of the outstanding Common
Shares (the "Ownership Limit"). The Board of Trustees could waive this
restriction if it were satisfied, based upon the advice of tax counsel, that
ownership in excess of the Ownership Limit would not
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jeopardize the Company's status as a REIT and the Board of Trustees otherwise
decided such action would be in the best interests of the Company. Common
Shares acquired or transferred in breach of the limitation may be redeemed by
the Company for the lesser of the price paid and the average closing price for
the ten trading days immediately preceding redemption. The Company may elect
to redeem such shares for Units, which are subject to certain limitations on
transfer. A transfer of Common Shares to a person who, as a result of the
transfer, violates the Ownership Limit will be void. See "Description of
Shares of Beneficial Interest--Restrictions on Transfer" for additional
information regarding the Ownership Limit. A similar restriction would be
imposed on any Preferred Shares or Debt Securities convertible into Preferred
or Common Shares that the Company may issue under this Prospectus.
RESTRICTIONS ON ACQUISITION AND CHANGE IN CONTROL
Various provisions of the Company's Declaration of Trust (the "Declaration
of Trust") restrict the possibility for acquisition or change in control of
the Company, even if such acquisition or change in control were in the
shareholders' interest, including the Ownership Limit, the staggered terms of
the Company's Trustees and the ability of the board to issue Preferred Shares.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the
Company intends to invest, contribute or otherwise transfer the net proceeds
of any sale of Securities to the Operating Partnership, which would use such
net proceeds for general business purposes, including, without limitation, the
development and acquisition of additional properties and other acquisition
transactions as suitable opportunities arise, the repayment of certain debt
outstanding at such time, capital expenditures, improvements to certain
properties in the Company's portfolio, working capital and other general
purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the years ended
December 31, 1993, 1994, 1995 and 1996 and the nine months ended September 30,
1997 was 1.31, 2.24, 1.92, 2.40 and 1.97, respectively.
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income (loss) before
gains from sales of property and extraordinary items plus fixed charges. Fixed
charges consist of interest expense (including interest costs capitalized) and
the amortization of debt issuance costs. To date, the Company has not issued
any Preferred Shares; therefore, the ratios of earnings to combined fixed
charges and preferred share dividends are unchanged from the ratios presented
in this section.
Prior to completion of the Company's IPO, certain of the predecessor
entities to the Company operated in a highly leveraged manner. As a result,
although the Properties have historically generated positive net cash flow,
the combined financial statements of the predecessor entities for the fiscal
year ended December 31, 1992 show net losses. Consequently, the computation of
the ratio of earnings to fixed charges for such period indicates that earnings
were inadequate to cover fixed charges by approximately $0.8 million.
The reorganization and recapitalization of the Company effected in
connection with the IPO permitted the Operating Partnership to deleverage the
Properties significantly, resulting in an improved ratio of earnings to fixed
charges for periods subsequent to the IPO.
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DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which this Prospectus and any applicable Prospectus
Supplement may relate. The particular terms of the Debt Securities being
offered and the extent to which such general provisions may apply will be set
forth in the applicable Indenture or in one or more indentures supplemental
thereto and described in a Prospectus Supplement relating to such Debt
Securities. The Forms of the Senior Indenture (as defined herein) and the
Subordinated Indenture (as defined herein) have been filed as exhibits to the
Registration Statement of which this Prospectus is a part.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company and
may be either senior Debt Securities ("Senior Securities") or subordinated
Debt Securities ("Subordinated Securities"). The Debt Securities will be
issued under one or more indentures (the "Indentures"). Senior Securities and
Subordinated Securities will be issued pursuant to separate indentures
(respectively, a "Senior Indenture" and a "Subordinated Indenture"), in each
case between the Company and a trustee (a "Trustee"). The Indentures will be
subject to and governed by the Trust Indenture Act of 1939, as amended (the
"TIA"). The statements made under this heading relating to the Debt Securities
and the Indentures are summaries of the anticipated provisions thereof, do not
purport to be complete and are qualified in their entirety by reference to the
Indentures and such Debt Securities. All section references appearing herein
are to sections of each Indenture unless otherwise indicated and capitalized
terms used but not defined below shall have the respective meanings set forth
in each Indenture.
The indebtedness represented by Subordinated Securities will be subordinated
in right of payment to the prior payment in full of the Senior Debt of the
Company as described under "--Subordination."
Except as set forth in the applicable Indenture or in one or more indentures
supplemental thereto and described in a Prospectus Supplement relating
thereto, the Debt Securities may be issued without limit as to aggregate
principal amount, in one or more series, in each case as established from time
to time in or pursuant to authority granted by a resolution of the Board of
Trustees of the Company or as established in the applicable Indenture or in
one or more indentures supplemental to such Indenture. All Debt Securities of
one series need not be issued at the same time and, unless otherwise provided,
a series may be reopened, without the consent of the Holders of the Debt
Securities of such series, for issuances of additional Debt Securities of such
series.
It is anticipated that each Indenture will provide that there may be more
than one Trustee thereunder, each with respect to one or more series of Debt
Securities. Any Trustee under an Indenture may resign or be removed with
respect to one or more series of Debt Securities, and a successor Trustee may
be appointed to act with respect to such series. In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a trustee of a trust under the
applicable Indenture separate and apart from the trust administered by any
other Trustee, and, except as otherwise indicated herein, any action described
herein to be taken by each Trustee may be taken by each such Trustee with
respect to, and only with respect to, the one or more series of Debt
Securities for which it is Trustee under the applicable Indenture.
The Prospectus Supplement relating to any series of Debt Securities being
offered will contain the specific terms thereof, including, without
limitation:
(1) The title of such Debt Securities and whether such Debt Securities
are Senior Securities or Subordinated Securities;
(2) The aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
(3) The percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof, the portion
of the principal amount thereof payable upon declaration of acceleration of
the maturity thereof;
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(4) If convertible in whole or in part into Common Shares or Preferred
Shares, the terms on which such Debt Securities are convertible, including
the initial conversion price or rate (or method for determining the same),
the portion that is convertible and the conversion period, and any
applicable limitations on the ownership or transferability of the Common
Shares or Preferred Shares receivable on conversion;
(5) The date or dates, or the method for determining such date or dates,
on which the principal of such Debt Securities will be payable;
(6) The rate or rates (which may be fixed or variable), or the method by
which such rate or rates shall be determined, at which such Debt Securities
will bear interest, if any;
(7) The date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the dates on which any such
interest will be payable, the regular record dates for such interest
payment dates, or the method by which such dates shall be determined, the
persons to whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day year of twelve
30-day months;
(8) The place or places where the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, where such Debt
Securities may be surrendered for conversion or registration of transfer or
exchange and where notices or demands to or upon the Company in respect of
such Debt Securities and the applicable Indenture may be served;
(9) The period or periods within which, the price or prices at which and
the other terms and conditions upon which such Debt Securities may be
redeemed, in whole or in part, at the option of the Company, if the Company
is to have such an option;
(10) The obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous provision or
at the option of a Holder thereof, and the period or periods within which
or the date and dates on which, the price or prices at which and the other
terms and conditions upon which such Debt Securities will be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation;
(11) If other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(12) Whether the amount of payments of principal of (and premium, if any)
or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies, currency unit
or units or composite currency or currencies) and the manner in which such
amounts shall be determined;
(13) Any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to Events of Default or covenants set
forth in the applicable Indenture;
(14) Whether such Debt Securities will be issued in certificate or book-
entry form;
(15) Whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the denominations
thereof and terms and conditions relating thereto;
(16) The applicability, if any, of the defeasance and covenant defeasance
provisions of Article Fourteen of the applicable Indenture;
(17) Whether and under what circumstances the Company will pay any
additional amounts on such Debt Securities in respect of any tax,
assessment or governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities in lieu of making such payment;
and
(18) Any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture (Section 301).
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The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Special federal income tax, accounting
and other considerations applicable to Original Issue Discount Securities will
be described in the applicable Prospectus Supplement.
Except as set forth in the applicable Indenture or in one or more indentures
supplemental thereto, the applicable Indenture will not contain any provisions
that would limit the ability of the Company to incur indebtedness or that
would afford Holders of Debt Securities protection in the event of a highly
leveraged or similar transaction involving the Company or in the event of a
change of control. Restrictions on ownership and transfers of the Company's
Common Shares, Preferred Shares and Depositary Shares are designed to preserve
its status as a REIT and, therefore, may act to prevent or hinder a change of
control. See "Description of Preferred Shares of Beneficial Interest--
Restrictions on Ownership" and "Description of Common Shares of Beneficial
Interest--Restrictions on Transfer." Reference is made to the applicable
Prospectus Supplement for information with respect to any deletions from,
modifications of or additions to the Events of Default or covenants of the
Company that are described below, including any addition of a covenant or
other provision providing event risk or similar protection.
"Significant Subsidiary" means any Subsidiary that is a "significant
subsidiary" (within the meaning of Regulation S-X promulgated under the
Securities Act) of the Company.
"Subsidiary" means a corporation or a partnership a majority of the
outstanding voting stock or partnership interests, as the case may be, of
which is owned or controlled, directly or indirectly, by the Company or by one
or more other Subsidiaries of the Company. For the purposes of this
definition, "voting stock" means stock having voting power for the election of
directors, or trustees, as the case may be, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series of
Debt Securities will be payable at the corporate trust office of the Trustee,
the address of which will be stated in the applicable Prospectus Supplement;
provided that, at the option of the Company, payment of interest may be made
by check mailed to the address of the person entitled thereto as it appears in
the applicable register for such Debt Securities or by wire transfer of funds
to such person at an account maintained within the United States (Sections
301, 305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable regular record
date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than ten days prior to such Special Record Date, or may be paid at any
time in any other lawful manner, all as more completely described in the
Indenture (Section 307).
Subject to certain limitations imposed upon Debt Securities issued in book-
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount
and tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the applicable Trustee referred to
above. In addition, subject to certain limitations imposed upon Debt
Securities issued in book-entry form, the Debt Securities of any series may be
surrendered for conversion or registration of transfer or exchange thereof at
the corporate trust office of the applicable Trustee. Every Debt Security
surrendered for conversion, registration of transfer or exchange must be duly
endorsed or accompanied
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by a written instrument of transfer. No service charge will be made for any
registration of transfer or exchange of any Debt Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. If the applicable Prospectus
Supplement refers to any transfer agent (in addition to the applicable
Trustee) initially designated by the Company with respect to any series of
Debt Securities, the Company may at any time rescind the designation of any
such transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each place of payment for such series. The Company may at
any time designate additional transfer agents with respect to any series of
Debt Securities (Section 1002).
Neither the Company nor any Trustee shall be required to (i) issue, register
the transfer of or exchange Debt Securities of any series during a period
beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business
on the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed
in part; or (iii) issue, register the transfer of or exchange any Debt
Security that has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so repaid (Section
305).
MERGER, CONSOLIDATION OR SALE
The Company will be permitted to consolidate with, or sell, lease or convey
all or substantially all of its assets to, or merge with or into, any other
entity provided that (a) either the Company shall be the continuing entity, or
the successor entity (if other than the Company) formed by or resulting from
any such consolidation or merger or which shall have received the transfer of
such assets shall expressly assume payment of the principal of (and premium,
if any) and interest on all of the Debt Securities and the due and punctual
performance and observance of all of the covenants and conditions contained in
each Indenture; (b) immediately after giving effect to such transaction and
treating any indebtedness that becomes an obligation of the Company or any
Subsidiary as a result thereof as having been incurred by the Company or
Subsidiary at the time of such transaction, no Event of Default under the
Indentures, and no event which, after notice or the lapse of time, or both,
would become such an Event of Default, shall have occurred and be continuing;
and (c) an officer's certificate and legal opinion covering such conditions
shall be delivered to each Trustee (Sections 801 and 803).
CERTAIN COVENANTS
Existence. Except as described above under "Merger, Consolidation or Sale",
the Company will be required to do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights (by
declaration of trust, by-laws and statute) and franchises; provided, however,
that the Company shall not be required to preserve any right or franchise if
it determines that the preservation thereof is no longer desirable in the
conduct of its business and that the loss thereof is not disadvantageous in
any material respect to the Holders of the Debt Securities.
Maintenance of Properties. The Company will be required to cause all of its
material properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times (Section 1007).
Insurance. The Company will be required to, and will be required to 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, if described in the applicable
Prospectus Supplement, having a specified rating from a recognized insurance
rating service (Section 1008).
Payment of Taxes and Other Claims. The Company will be required to pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges
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levied or imposed upon it or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (ii) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings (Section 1009).
Provision of Financial Information. Whether or not the Company is subject to
Section 13 or 15(d) of the Exchange Act, the Company will be required, to the
extent permitted under the Exchange Act, to file with the Commission the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to such Sections 13 or
15(d) if the Company were so subject (the "Financial Information"), such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Company would have been required so
to file such documents if the Company were so subject. The Company also will
in any event (x) within 15 days of each Required Filing Date (i) transmit by
mail to all Holders of Debt Securities, as their names and addresses appear in
the Security Register, without cost to such Holders, copies of the Financial
Information and (ii) to file with the Trustee copies of the Financial
Information, and (y) if filing such documents by the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, to
supply copies of such documents to any prospective Holder (Section 1010).
ADDITIONAL COVENANTS AND/OR MODIFICATION TO THE COVENANTS DESCRIBED ABOVE
Any additional covenants of the Company and/or modifications to the
covenants described above with respect to any Debt Securities or series
thereof, including any covenants relating to limitations on incurrence of
indebtedness or other financial covenants, will be set forth in the applicable
Indenture or an indenture supplemental thereto and described in the Prospectus
Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture will provide that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (i)
default for 30 days in the payment of any installment of interest on any Debt
Security of such series; (ii) default in the payment of principal of (or
premium, if any, on) any Debt Security of such series at its maturity; (iii)
default in making any sinking fund payment as required for any Debt Security
of such series; (iv) default in the performance or breach of any other
covenant or warranty of the Company contained in the applicable Indenture
(other than a covenant added to the Indenture solely for the benefit of a
series of Debt Securities issued thereunder other than such series), continued
for 60 days after written notice as provided in the applicable Indenture; (v)
default in the payment of an aggregate principal amount exceeding $10,000,000
of any indebtedness of the Company or any mortgage, indenture or other
instrument under which such indebtedness is issued or by which such
indebtedness is secured, such default having occurred after the expiration of
any applicable grace period and having resulted in the acceleration of the
maturity of such indebtedness, but only if such indebtedness is not discharged
or such acceleration is not rescinded or annulled; (vi) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Company or any Significant Subsidiary or either
of its property; and (vii) any other Event of Default provided with respect to
a particular series of Debt Securities (Section 501).
If an Event of Default under any Indenture with respect to Debt Securities
of any series at the time outstanding occurs and is continuing, then in every
such case the applicable Trustee or the Holders of not less than 25% of the
principal amount of the Outstanding Debt Securities of that series will have
the right to declare the principal amount (or, if the Debt Securities of that
series are Original Issue Discount Securities or indexed securities, such
portion of the principal amount as may be specified in the terms thereof) of
all the Debt Securities of that series to be due and payable immediately by
written notice thereof to the Company (and to the applicable Trustee if given
by the Holders). However, at any time after such a declaration of acceleration
with respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under any Indenture, as the case may be) has been made, but before
a judgment or decree for payment of the money due has been obtained by the
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applicable Trustee, the Holders of not less than a majority in principal
amount of Outstanding Debt Securities of such series (or of all Debt
Securities then Outstanding under the applicable Indenture, as the case may
be) may rescind and annul such declaration and its consequences if (a) the
Company shall have deposited with the applicable Trustee all required payments
of the principal of (and premium, if any) and interest on the Debt Securities
of such series (or of all Debt Securities then Outstanding under the
applicable Indenture, as the case may be), plus certain fees, expenses,
disbursements and advances of the applicable Trustee and (b) all events of
default, other than the non-payment of accelerated principal (or specified
portion thereof), with respect to Debt Securities of such series (or of all
Debt Securities then Outstanding under the applicable Indenture, as the case
may be) have been cured or waived as provided in such Indenture (Section 502).
Each Indenture also will provide that the Holders of not less than a majority
in principal amount of the Outstanding Debt Securities of any series (or of
all Debt Securities then Outstanding under the applicable Indenture, as the
case may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or (y) in
respect of a covenant or provision contained in the applicable Indenture that
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security affected thereby (Section 513).
Each Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the applicable Indenture unless
such default shall have been cured or waived; provided, however, that such
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except a default in the payment of
the principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any
Debt Security of such series) if specified responsible officers of such
Trustee consider such withholding to be in the interest of such Holders
(Section 601).
Each Indenture will provide that no Holders of Debt Securities of any series
may institute any proceedings, judicial or otherwise, with respect to such
Indenture or for any remedy thereunder, except in the cases of failure of the
applicable Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an Event of Default from the
Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it (Section 507). This provision will not prevent, however,
any Holder of Debt Securities from instituting suit for the enforcement of
payment of the principal of (and premium, if any) and interest on such Debt
Securities at the respective due dates thereof (Section 508).
Subject to provisions in each Indenture relating to its duties in case of
default, no Trustee will be under any obligation to exercise any of its rights
or powers under an Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under such Indenture, unless such
Holders shall have offered to the Trustee thereunder reasonable security or
indemnity (Section 602). The Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of any series (or of all Debt
Securities then Outstanding under an Indenture, as the case may be) shall have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the applicable Trustee, or of exercising any trust
or power conferred upon such Trustee. However, a Trustee may refuse to follow
any direction which is in conflict with any law or the applicable Indenture,
which may involve such Trustee in personal liability or which may be unduly
prejudicial to the Holders of Debt Securities of such series not joining
therein (Section 512).
Within 120 days after the close of each fiscal year, the Company will be
required to deliver to each Trustee a certificate, signed by one of several
specified officers, stating whether or not such officer has knowledge of any
default under the applicable Indenture and, if so, specifying each such
default and the nature and status thereof (Section 1011).
MODIFICATIONS OF THE INDENTURES
Modifications and amendments of an Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities issued under such Indenture which
are affected by such modification or amendment; provided, however, that no
such modification
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or amendment may, without the consent of the Holder of each such Debt Security
affected thereby, (a) change the stated maturity of the principal of, or any
installment of interest (or premium, if any) on, any such Debt Security; (b)
reduce the principal amount of, or the rate or amount of interest on, or any
premium payable on redemption of, any such Debt Security, or reduce the amount
of principal of an Original Issue Discount Security that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the
Holder of any such Debt Security; (c) change the place of payment, or the coin
or currency, for payment of principal or premium, if any, or interest on any
such Debt Security; (d) impair the right to institute suit for the enforcement
of any payment on or with respect to any such Debt Security; (e) reduce the
above-stated percentage of Outstanding Debt Securities of any series necessary
to modify or amend the applicable Indenture, to waive compliance with certain
provisions thereof or certain defaults and consequences thereunder or to
reduce the quorum or voting requirements set forth in the applicable
Indenture; or (f) modify any of the foregoing provisions or any of the
provisions relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect such action or
to provide that certain other provisions may not be modified or waived without
the consent of the Holder of such Debt Security (Section 902).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities of each series affected thereby will have the right to waive
compliance by the Company with certain covenants in such Indenture (Section
1013).
Modifications and amendments of an Indenture will be permitted to be made by
the Company and the respective Trustee thereunder without the consent of any
Holder of Debt Securities for any of the following purposes: (i) to evidence
the succession of another person to the Company as obligor under such
Indenture; (ii) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Company in the Indenture; (iii) to add Events of
Default for the benefit of the Holders of all or any series of Debt
Securities; (iv) to add or change any provisions of an Indenture to facilitate
the issuance of, or to liberalize certain terms of, Debt Securities in bearer
form, or to permit or facilitate the issuance of Debt Securities in
uncertificated form, provided that such action shall not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect; (v) to change or eliminate any provisions of an Indenture, provided
that any such change or elimination shall become effective only when there are
no Debt Securities Outstanding of any series created prior thereto which are
entitled to the benefit of such provision; (vi) to secure the Debt Securities;
(vii) to establish the form or terms of Debt Securities of any series,
including the provisions and procedures, if applicable, for the conversion of
such Debt Securities into Common Shares or Preferred Shares of the Company;
(viii) to provide for the acceptance of appointment by a successor Trustee or
facilitate the administration of the trusts under an Indenture by more than
one Trustee; (ix) to cure any ambiguity, defect or inconsistency in an
Indenture, provided that such action shall not adversely affect the interests
of Holders of Debt Securities of any series issued under such Indenture in any
material respect; or (x) to supplement any of the provisions of an Indenture
to the extent necessary to permit or facilitate defeasance and discharge of
any series of such Debt Securities, provided that such action shall not
adversely affect the interests of the Holders of the Debt Securities of any
series in any material respect (Section 901).
Each Indenture will provide that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be Outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination
upon declaration of acceleration of the maturity thereof, (ii) the principal
amount of any Debt Security denominated in a foreign currency that shall be
deemed Outstanding shall be the U.S. dollar equivalent, determined on the
issue date for such Debt Security, of the principal amount (or, in the case of
Original Issue Discount Security, the U.S. dollar equivalent on the issue date
of such Debt Security of the amount determined as provided in (i) above),
(iii) the principal amount of an indexed security that shall be deemed
Outstanding shall be the principal face amount of such indexed security at
original issuance, unless otherwise provided with respect to such indexed
security
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pursuant to the applicable Indenture, and (iv) Debt Securities owned by the
Company or any other obligor upon the Debt Securities or any affiliate of the
Company or of such other obligor shall be disregarded.
Each Indenture will contain provisions for convening meetings of the Holders
of Debt Securities of a series (Section 501). A meeting will be permitted to
be called at any time by the applicable Trustee, and also, upon request, by
the Company or the Holders of at least 10% in principal amount of the
Outstanding Debt Securities of such series, in any such case upon notice given
as provided in the Indenture. Except for any consent that must be given by the
Holder of each Debt Security affected by certain modifications and amendments
of an Indenture, any resolution presented at a meeting or adjourned meeting
duly reconvened at which a quorum is present may be adopted by the affirmative
vote of the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series; provided, however, that, except as referred to
above, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the Holders of a specified percentage, which is less than a majority,
in principal amount of the Outstanding Debt Securities of a series may be
adopted at a meeting or adjourned meeting or adjourned meeting duly reconvened
at which a quorum is present by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Debt Securities of
that series. Any resolution passed or decision taken at any meeting of Holders
of Debt Securities of any series duly held in accordance with an Indenture
will be binding on all Holders of Debt Securities of that series. The quorum
at any meeting called to adopt a resolution, and at any reconvened meeting,
will be persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which may
be given by the Holders of not less than a specified percentage in principal
amount of the Outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum.
Notwithstanding the foregoing provisions, each Indenture will provide that
if any action is to be taken at a meeting of Holders of Debt Securities of any
series with respect to any request, demand, authorization, direction, notice,
consent, waiver and other action that such Indenture expressly provides may be
made, given or taken by the Holders of a specified percentage in principal
amount of all Outstanding Debt Securities affected thereby, or the Holders of
such series and one or more additional series: (i) there shall be no minimum
quorum requirement for such meeting, and (ii) the principal amount of the
Outstanding Debt Securities of such series that vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or other action
shall be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been
made, given or taken under such Indenture.
SUBORDINATION
Upon any distribution to creditors of the Company in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
any Subordinated Securities will be subordinated to the extent provided in the
applicable Indenture in right of payment to the prior payment in full of all
Senior Debt (Sections 1601 and 1602 of the Subordinated Indenture), but the
obligation of the Company to make payment of the principal and interest on
such Subordinated Securities will not otherwise be affected (Section 1608 of
the Subordinated Indenture). No payment of principal or interest will be
permitted to be made on Subordinated Securities at any time if a default on
Senior Debt exists that permits the Holders of such Senior Debt to accelerate
its maturity and the default is the subject of judicial proceedings or the
Company receives notice of the default (Section 1602 of the Subordinated
Indenture). After all Senior Debt is paid in full and until the Subordinated
Securities are paid in full, Holders will be surrogated to the right of
Holders of Senior Debt to the extent that distributions otherwise payable to
Holders have been applied to the payment of Senior Debt (Section 1607 of the
Subordinated Indenture). By reason of such subordination, in the event of a
distribution of assets upon insolvency, certain general creditors of the
Company may recover more, ratably, than Holders of Subordinated Securities.
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Senior Debt will be defined in the Subordinated Indenture as the principal
of and interest on, or substantially similar payments to be made by the
Company in respect of, the following, whether outstanding at the date of
execution of the applicable Indenture or thereafter incurred, created or
assumed: (i) indebtedness of the Company for money borrowed or represented by
purchase-money obligations, (ii) indebtedness of the Company evidenced by
notes, debentures, or bonds or other securities issued under the provisions of
an indenture, fiscal agency agreement or other agreement, (iii) obligations of
the Company as lessee under leases of property either made as part of any sale
and leaseback transaction to which the Company is a party or otherwise, (iv)
indebtedness of partnerships and joint ventures which is included in the
consolidated financial statements of the Company, (v) indebtedness,
obligations and liabilities of others in respect of which the Company is
liable contingently or otherwise to pay or advance money or property or as
guarantor, endorser or otherwise or which the Company has agreed to purchase
or otherwise acquire, and (vi) any binding commitment of the Company to fund
any real estate investment or to fund any investment in any entity making such
real estate investment, in each case other than (1) any such indebtedness,
obligation or liability referred to in clauses (i) through (vi) above as to
which, in the instrument creating or evidencing the same pursuant to which the
same is outstanding, it is provided that such indebtedness, obligation or
liability is not superior in right of payment to the Subordinated Securities
or ranks pari passu with the Subordinated Securities, (2) any such
indebtedness, obligation or liability which is subordinated to indebtedness of
the Company to substantially the same extent as or to a greater extent than
the Subordinated Securities are subordinated, and (3) the Subordinated
Securities. As used in the preceding sentence, the term "purchase money
obligations" shall mean indebtedness or obligations evidenced by a note,
debenture, bond or other instrument (whether or not secured by any lien or
other security interest but excluding indebtedness or obligations for which
recourse is limited to the property purchased) issued or assumed as all or a
part of the consideration for the acquisition of property, whether by
purchase, merger, consolidation or otherwise, but shall not include any trade
accounts payable. There will not be any restrictions in an Indenture relating
to Subordinated Securities upon the creation of additional Senior Debt.
If this Prospectus is being delivered in connection with a series of
Subordinated Securities, the accompanying Prospectus Supplement or the
information incorporated herein by reference will contain the approximate
amount of Senior Debt outstanding as of the end of the Company's most recent
fiscal quarter.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may be permitted under the applicable Indenture to discharge
certain obligations to Holders of any series of Debt Securities issued
thereunder that have not already been delivered to the applicable Trustee for
cancellation and that either have become due and payable or will become due
and payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient
to pay the entire indebtedness on such Debt Securities in respect of principal
(and premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or
redemption date, as the case may be.
Each Indenture will provide that, if the provisions of Article Fourteen are
made applicable to the Debt Securities of or within any series pursuant to
Section 301 of such Indenture, the Company may elect either (a) to defease and
be discharged from any and all obligations with respect to such Debt
Securities (except for the obligation to pay additional amounts, if any, upon
the occurrence of certain events of tax, assessment or governmental charge
with respect to payments on such Debt Securities, and the obligations to
register the transfer or exchange of such Debt Securities, to replace
temporary or mutilated, destroyed, lost or stolen Debt Securities, to maintain
an office or agency in respect of such Debt Securities and to hold moneys for
payment in trust) ("defeasance") (Section 1402) or (b) to be released from its
obligations with respect to such Debt Securities under certain specified
sections of Article Ten of such Indenture as specified in the applicable
Prospectus Supplement and any omission to comply with such obligations shall
not constitute an Event of Default with respect to such Debt Securities
("covenant defeasance") (Section 1403), in either case upon the irrevocable
deposit by the Company with the applicable Trustee, in trust, of an amount, in
such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable at stated
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maturity, or Government Obligations (as defined below), or both, applicable to
such Debt Securities which through the scheduled payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient without reinvestment to pay the principal of (and premium, if any)
and interest on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Company has delivered to the applicable Trustee an opinion of
counsel (as specified in the applicable Indenture) to the effect that the
Holders of such Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such opinion of
counsel, in the case of defeasance, will be required to refer to and be based
upon a ruling of the Internal Revenue Service or a change in applicable U.S.
federal income tax law occurring after the date of the Indenture (Section
1404).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations
of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which
issued the foreign currency in which the Debt Securities of such series are
payable, the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation of the United States of America or such
government, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or principal of any
such Government Obligation held by such custodian for the account of the
Holder of a depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the Holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101 of each Indenture).
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the applicable Indenture or the terms of such Debt
Security to receive payment in a currency, currency unit or composite currency
other than that in which such deposit has been made in respect of such Debt
Security, or (b) a Conversion Event (as defined below) occurs in respect of
the currency, currency unit or composite currency in which such deposit has
been made, the indebtedness represented by such Debt Security will be deemed
to have been, and will be, fully discharged and satisfied through the payment
of the principal of (and premium, if any) and interest on such Debt Security
as they become due out of the proceeds yielded by converting the amount so
deposited in respect of such Debt Security into the currency, currency unit or
composite currency in which such Debt Security becomes payable as a result of
such election or such cessation of usage based on the applicable market
exchange rate. "Conversion Event" means the cessation of use of (i) a
currency, currency unit or composite currency both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international
banking community, (ii) the ECU both within the European Monetary System and
for the settlement of transactions by public institutions of or within the
European Communities or (iii) any currency unit or composite currency other
than the ECU for the purposes for which it was established. Unless otherwise
provided in the applicable Prospectus Supplement, all payments of principal of
(and premium, if any) and interest on any Debt Security that is payable in a
foreign currency that ceases to be used by its government of issuance shall be
made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because
of the occurrence of any Event of Default other than the Event of Default
described in clause (iv) under "Events of Default, Notice and Waiver" with
respect to certain
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specified sections of Article Ten of each Indenture (which sections would no
longer be applicable to such Debt Securities as a result of such covenant
defeasance) or described in clause (vii) under "Events of Default, Notice and
Waiver" with respect to any other covenant as to which there has been covenant
defeasance, the amount in such currency, currency unit or composite currency
in which such Debt Securities are payable, and Government Obligations on
deposit with the applicable Trustee, will be sufficient to pay amounts due on
such Debt Securities at the time of their stated maturity but may not be
sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting from such Default. However, the Company would remain
liable to make payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Shares or Preferred Shares will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Common Shares or Preferred
Shares, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option
of the Holders or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such Debt Securities and any restrictions on conversion,
including restrictions directed at maintaining the Company's REIT status.
REDEMPTION OF SECURITIES
The Indenture provides that the Debt Securities may be redeemed at any time
at the option of the Company, in whole or in part, at the Redemption Price,
except as may otherwise be provided in connection with any Debt Securities or
series thereof.
From and after notice has been given as provided in the Indenture, if funds
for the redemption of any Debt Securities called for redemption shall have
been made available on such redemption date, such Debt Securities will cease
to bear interest on the date fixed for such redemption specified in such
notice, and the only right of the Holders of the Debt Securities will be to
receive payment of the Redemption Price.
Notice of any optional redemption of any Debt Securities will be given to
Holders at their addresses, as shown in the Security Register, not more than
60 nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the Redemption Price and the
principal amount of the Debt Securities held by such Holder to be redeemed.
If the Company elects to redeem Debt Securities, it will notify the Trustee
at least 45 days prior to the redemption date (or such shorter period as
satisfactory to the Trustee) of the aggregate principal amount of Debt
Securities to be redeemed and the redemption date. If less than all the Debt
Securities are to be redeemed, the Trustee shall select the Debt Securities to
be redeemed pro rata, by lot or in such manner as it shall deem fair and
appropriate.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depository identified in the applicable
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
The specific terms of the depository arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such series.
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DESCRIPTION OF PREFERRED SHARES OF BENEFICIAL INTEREST
The Company is authorized to issue 10,000,000 Preferred Shares. As of
September 30, 1997, there were no Preferred Shares outstanding.
Under the Company's Declaration of Trust, the Board of Trustees may from
time to time establish and issue one or more series of Preferred Shares,
subject to any shareholder approval required by the Constitution of the State
of Alabama. The Trustees may classify or reclassify any unissued Preferred
Shares by setting or changing the number, designation, preference, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms or conditions of redemption of such series.
THE BOARD OF TRUSTEES
The following description of the Preferred Shares sets forth certain general
terms and provisions of the Preferred Shares to which any Prospectus
Supplement may relate. The statements below describing the Preferred Shares
are in all respects subject to and qualified in their entirety by reference to
the applicable provisions of the Company's Declaration of Trust and the
Company's bylaws (the "Bylaws").
GENERAL
The Board of Trustees is empowered by the Company's Declaration of Trust to
designate and issue from time to time one or more series of Preferred Shares.
On October 23, 1997, the Company's shareholders authorized the Board of
Trustees to designate and issue up to 10,000,000 Preferred Shares. The Board
of Trustees may determine the relative rights, preferences and privileges of
each series of Preferred Shares so issued. Because the Board of Trustees has
the power to establish the preferences and rights of each series of Preferred
Shares, it may afford the holders of any series of Preferred Shares
preferences, powers and rights, voting or otherwise, senior to the rights of
holders of Common Shares. The Preferred Shares will, when issued, be fully
paid and nonassessable.
The Prospectus Supplement relating to any Preferred Shares offered thereby
will contain the specific terms thereof, including, without limitation:
(l) The title and stated value of such Preferred Shares;
(2) The number of such Preferred Shares offered, the liquidation
preference per share and the offering price of such Preferred Shares;
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Shares;
(4) The date from which dividends on such Preferred Shares shall
accumulate, if applicable;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Shares;
(6) The provision for a sinking fund, if any, for such Preferred Shares;
(7) The provision for redemption, if applicable, of such Preferred
Shares;
(8) Any listing of such Preferred Shares on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred
Shares will be convertible into Common Shares of the Company, including the
conversion price (or manner of calculation thereof);
(10) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Shares;
(11) A discussion of federal income tax considerations applicable to such
Preferred Shares;
(12) The relative ranking and preferences of such Preferred Shares as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;
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(13) Any limitations on issuance of any series of Preferred Shares
ranking senior to or on a parity with such series of Preferred Shares as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;
(14) Whether interests in such Preferred Shares will be represented by
Depositary Shares; and
(15) Any limitations on direct or beneficial ownership and restrictions
on transfer, in each case as may be appropriate to preserve the status of
the Company as a REIT.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred
Shares will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company, rank (i) senior to all classes or
series of Common Shares of the Company, and to all equity securities ranking
junior to such Preferred Shares; (ii) on a parity with all equity securities
issued by the Company the terms of which specifically provide that such equity
securities rank on a parity with the Preferred Shares; and (iii) junior to all
equity securities issued by the Company the terms of which specifically
provide that such equity securities rank senior to the Preferred Shares. The
term "equity securities" does not include convertible debt securities.
DIVIDENDS
Holders of the Preferred Shares of each series will be entitled to receive,
when, as and if declared by the Board of Trustees of the Company, out of
assets of the Company legally available for payment, cash dividends (or
dividends in kind or in other property if expressly permitted and described in
the applicable Prospectus Supplement) at such rates and on such dates as will
be set forth in the applicable Prospectus Supplement. Each such dividend shall
be payable to holders of record as they appear on the share transfer books of
the Company on such record dates as shall be fixed by the Board of Trustees of
the Company.
Dividends on any series of Preferred Shares may be cumulative or non-
cumulative, as provided in the applicable Prospectus Supplement. Dividends, if
cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Trustees of the Company
fails to declare a dividend payable on a dividend payment date on any series
of the Preferred Shares for which dividends are non-cumulative, then the
holders of such series of the Preferred Shares will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment
date, and the Company will have no obligation to pay the dividend accrued for
such period, whether or not dividends on such series are declared payable on
any future dividend payment date.
Unless otherwise specified in the Prospectus Supplement, if any Preferred
Shares of any series are outstanding, no full dividends shall be declared or
paid or set apart for payment on any capital shares of the Company of any
other series ranking, as to dividends, on a parity with or junior to the
Preferred Shares of such series for any period unless (i) if such series of
Preferred Shares has a cumulative dividend, full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Preferred
Shares of such series for all past dividend periods and the then current
dividend period or (ii) if such series of Preferred Shares does not have a
cumulative dividend, full dividends for the then current dividend period have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Preferred
Shares of such series. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon Preferred Shares of
any series and the shares of any other series of Preferred Shares ranking on a
parity as to dividends with the Preferred Shares of such series, all dividends
declared upon Preferred Shares of such series and any other series of
Preferred Shares ranking on a parity as to dividends with such Preferred
Shares shall be declared pro rata so that the amount of dividends declared per
share of Preferred Shares of such series and such other series of Preferred
Shares shall in all cases bear to each other the same ratio that accrued
dividends per share on the Preferred Shares of such series (which shall not
include any accumulation in respect of unpaid
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dividends for prior dividend periods if such Preferred Shares do not have a
cumulative dividend) and such other series of Preferred Shares bear to each
other. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on Preferred Shares of such series
which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on the Preferred Shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and
the then current dividend period, and (ii) if such series of Preferred Shares
does not have a cumulative dividend, full dividends on the Preferred Shares of
such series have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for the
then current dividend period, no dividends (other than in Common Shares or
other capital shares ranking junior to the Preferred Shares of such series as
to dividends and upon liquidation) shall be declared or paid or set aside for
payment or other distribution upon the Common Shares, or any other capital
shares of the Company ranking junior to or on a parity with the Preferred
Shares of such series as to dividends or upon liquidation, nor shall any
Common Shares, or any other capital shares of the Company ranking junior to or
on a parity with the Preferred Shares of such series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any such shares) by the Company (except by conversion into or
exchange for other capital shares of the Company ranking junior to the
Preferred Shares of such series as to dividends and upon liquidation).
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred Shares
will be subject to mandatory redemption or redemption at the option of the
Company, in whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Shares that is
subject to mandatory redemption will specify the number of such Preferred
Shares that shall be redeemed by the Company in each year commencing after a
date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon
(which shall not, if such Preferred Shares do not have a cumulative dividend,
include any accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption. The redemption price may be payable in
cash or other property, as specified in the applicable Prospectus Supplement.
If the redemption price for Preferred Shares of any series is payable only
from the net proceeds of the issuance of capital shares of the Company, the
terms of such Preferred Shares may provide that, if no such capital shares
shall have been issued or to the extent the net proceeds from any issuance are
insufficient to pay in full the aggregate redemption price then due, such
Preferred Shares shall automatically and mandatorily be converted into the
applicable capital shares of the Company pursuant to conversion provisions
specified in the applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred Shares
has a cumulative dividend, full cumulative dividends on all Preferred Shares
of any series shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment
for all past dividend periods and the current dividend period and (ii) if such
series of Preferred Shares does not have a cumulative dividend, full dividends
of the Preferred Shares of any series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for the then current dividend period, no Preferred Shares of
any series shall be redeemed unless all outstanding Preferred Shares of such
series are simultaneously redeemed; provided, however, that the foregoing
shall not prevent the purchase or acquisition of Preferred Shares of such
series to preserve the REIT status of the Company or pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding Preferred
Shares of such series. In addition, unless (i) if such series of Preferred
Shares has a cumulative dividend, full cumulative dividends on all outstanding
shares of any series of Preferred Shares have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividends periods and the
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then current dividend period, and (ii) if such series of Preferred Shares does
not have a cumulative dividend, full dividends on the Preferred Shares of any
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for payment for the then
current dividend period, the Company shall not purchase or otherwise acquire
directly or indirectly any Preferred Shares of such series (except by
conversion into or exchange for capital shares of the Company ranking junior
to the Preferred Shares of such series as to dividends and upon liquidation);
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Shares of such series to preserve the REIT status of
the Company or pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding Preferred Shares of such series.
If fewer than all of the outstanding Preferred Shares of any series are to
be redeemed, the number of shares to be redeemed will be determined by the
Company and such shares may be redeemed pro rata from the holders of record of
such shares in proportion to the number of such shares held or for which
redemption is requested by such holder (with adjustments to avoid redemption
of fractional shares) or by lot in a manner determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Shares
of any series to be redeemed at the address shown on the share transfer books
of the Company. Each notice shall state: (i) the redemption date; (ii) the
number and series of Preferred Shares to be redeemed; (iii) the redemption to
be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi)
the date upon which the holder's conversion rights, if any, as to such shares
shall terminate. If fewer than all of the Preferred Shares of any series are
to be redeemed, the notice mailed to each such holder thereof shall also
specify the number of Preferred Shares to be redeemed from each such holder.
If notice of redemption of any Preferred Shares has been given and if the
funds necessary for such redemption have been set aside by the Company in
trust for the benefit of the holders of any Preferred Shares so called for
redemption, then from and after the redemption date dividends will cease to
accrue on such Preferred Shares, and all rights of the holders of such shares
will terminate, except the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Common Shares or any other class or series of
capital shares of the Company ranking junior to the Preferred Shares in the
distribution of assets upon any liquidation, dissolution or winding up of the
Company, the holders of each series of Preferred Shares shall be entitled to
receive out of assets of the Company legally available for distribution to
shareholders liquidating distributions in the amount of the liquidation
preference per share (set forth in the applicable Prospectus Supplement), plus
an amount equal to all dividends accrued and unpaid thereon (which shall not
include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Shares do not have a cumulative dividend). After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Preferred Shares will have no right or claim to any
of the remaining assets of the Company. In the event that, upon any such
voluntary or involuntary liquidation, dissolution or winding up, the available
assets of the Company are insufficient to pay the amount of the liquidating
distributions on all outstanding Preferred Shares and the corresponding
amounts payable on all shares of other classes or series of capital shares of
the Company ranking on a parity with the Preferred Shares in the distribution
of assets, then the holders of the Preferred Shares and all other such classes
or series of capital shares shall share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Shares, the remaining assets of the Company shall be distributed
among the holders of any other classes or series of capital shares ranking
junior to the Preferred Shares upon liquidation, dissolution or winding up,
according to their respective rights and preferences and in each case
according to their respective number of shares. For such purposes, the
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consolidation or merger of the Company with or into any other corporation,
trust or entity, or the sale, lease or conveyance of all or substantially all
of the property or business of the Company, shall not be deemed to constitute
a liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
Holders of Preferred Shares will not have any voting rights, except as set
forth below or as otherwise from time to time required by law or as indicated
in the applicable Prospectus Supplement.
Whenever dividends on any Preferred Shares shall be in arrears for six or
more consecutive quarterly periods, the holders of such Preferred Shares
(voting separately as a class with all other series of Preferred Shares upon
which like voting rights have been conferred and are exercisable) will be
entitled to vote for the election of two additional Trustees of the Company at
a special meeting called by the holders of record of at least ten percent
(10%) of any series of Preferred Shares so in arrears (unless such request is
received less than 90 days before the date fixed for the next annual or
special meeting of the shareholders) or at the next annual meeting of
shareholders, and at each subsequent annual meeting until (i) if such series
of Preferred Shares has a cumulative dividend, all dividends accumulated on
such shares of Preferred Shares for the past dividend periods and the then
current dividend period shall have been fully paid or declared and a sum
sufficient for the payment thereof set aside for payment or (ii) if such
series of Preferred Shares do not have a cumulative dividend, four consecutive
quarterly dividends shall have been fully paid or declared and a sum
sufficient for the payment thereof set aside for payment. In such case, the
entire Board of Trustees of the Company will be increased by two Trustees.
Unless provided otherwise for any series of Preferred Shares, so long as any
Preferred Shares remain outstanding, the Company will not, without the
affirmative vote or consent of the holders of at least two-thirds of each
series of Preferred Shares outstanding at the time, given in person or by
proxy, either in writing or at a meeting (such series voting separately as a
class), (i) authorize or create, or increase the authorized or issued amount
of, any class or series of capital shares ranking prior to such series of
Preferred Shares with respect to the payment of dividends or the distribution
of assets upon liquidation, dissolution or winding up or reclassify any
authorized capital shares of the Company into such shares, or create,
authorize or issue any obligation or security convertible into or evidencing
the right to purchase any such shares; or (ii) amend, alter or repeal the
provisions of the Company's Declaration of Trust or the Designating Amendment
for such series of Preferred Shares, whether by merger, consolidation or
otherwise (an "Event"), so as to materially and adversely affect any right,
preference, privilege or voting power of such series of Preferred Shares or
the holders thereof; provided, however, with respect to the occurrence of any
of the Events set forth in (ii) above, so long as the Preferred Shares remain
outstanding with the terms thereof materially unchanged, taking into account
that upon the occurrence of an Event, the Company may not be the surviving
entity, the occurrence of any such Event shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting power of
holders of Preferred Shares and provided further that (x) any increase in the
amount of the authorized Preferred Shares or the creation or issuance of any
other series of Preferred Shares, or (y) any increase in the amount of
authorized shares of such series or any other series of Preferred Shares, in
each case ranking on a parity with or junior to the Preferred Shares of such
series with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding Preferred Shares of such series shall have been
redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred Shares
is convertible into Common Shares will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the
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number of Common Shares into which the Preferred Shares are convertible, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of
the Preferred Shares or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such series of Preferred Shares.
SHAREHOLDER LIABILITY
As discussed below under "Description of Common Shares of Beneficial
Interest--General," applicable Alabama law provides that no shareholder,
including holders of Preferred Shares, shall be personally liable for the acts
and obligations of the Company and that the funds and property of the Company
shall be the only recourse for such acts or obligations.
RESTRICTIONS ON OWNERSHIP
As discussed below under "Description of Common Shares of Beneficial
Interest--Ownership Limits," for the Company to qualify as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"), not more than 50% in
value of its outstanding capital shares may be owned, directly or indirectly,
by five or fewer individuals (as defined in the Code to include certain
entities) during the last half of a taxable year. To assist the Company in
meeting this requirement, the Company may take certain actions to limit the
beneficial ownership, directly or indirectly, by a single person of the
Company's outstanding equity securities, including any Preferred Shares of the
Company. Therefore, the Designating Amendment for each series of Preferred
Shares may contain provisions restricting the ownership and transfer of
Preferred Shares.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Preferred Shares will be set forth
in the applicable Prospectus Supplement.
DESCRIPTION OF COMMON SHARES OF BENEFICIAL INTEREST
GENERAL
The authorized capital stock of the Company includes 65,000,000 common
shares of beneficial interest, $.01 par value per share ("Common Shares"). The
outstanding Common Shares entitle the holder to one vote on all matters
presented to shareholders for a vote. Holders of Common Shares have no
preemptive rights. At September 30, 1997, there were 20,934,059 Common Shares
outstanding.
Common Shares currently outstanding are listed for trading on the New York
Stock Exchange (the "NYSE"). The Company will apply to the NYSE to list the
additional Common Shares to be sold pursuant to any Prospectus Supplement, and
the Company anticipates that such shares will be so listed.
Both Alabama statutory law governing real estate investment trusts organized
under the laws of that state (the "Alabama REIT Law") and the Company's
Declaration of Trust provide that no shareholder of the Company will be
personally liable for any obligations of the Company. The Company's Bylaws
further provide that the Company shall indemnify each shareholder against any
claim or liability to which the shareholder may become subject by reason of
his being or having been a shareholder, and that the Company shall reimburse
each shareholder for all legal and other expenses reasonably incurred by him
in connection with any such claim or liability. In addition, it will be the
Company's policy to include a clause in its contracts which provides that
shareholders assume no personal liability for obligations entered into on
behalf of the Company. However, with respect to tort claims, contractual
claims where shareholder liability is not so negated, claims for taxes and
certain statutory liability, the shareholder may, in some jurisdictions, be
personally liable to the extent that such claims are not satisfied by the
Company. Inasmuch as the Company will carry public liability insurance which
it considers adequate, any risk of personal liability to shareholders is
limited to situations in which the Company's assets plus its insurance
coverage would be insufficient to satisfy the claims against the Company and
its shareholders.
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Subject to such preferential rights as may be granted by the Board of
Trustees in connection with the future issuance of Preferred Shares, holders
of Common Shares are entitled to one vote per share on all matters to be voted
on by shareholders and are entitled to receive ratably such dividends as may
be declared on the Common Shares by the Board of Trustees in its discretion
from funds legally available therefor. In the event of the liquidation,
dissolution or winding up of the Company, holders of Common Shares are
entitled to share ratably in all assets remaining after payment of all debts
and other liabilities and any liquidation preference of the holders of
Preferred Shares. Holders of Common Shares have no subscription, redemption,
conversion or preemptive rights. Matters submitted for shareholder approval
generally require a majority vote of the shares present and voting thereon.
Advance Notice of Trustee Nominations and New Business. The Bylaws of the
Company provide that, with respect to an annual meeting of shareholders, the
proposal of business to be considered by shareholders may be made only (i) by
or at the direction of the Board of Trustees or (ii) by a shareholder who has
complied with the advance notice procedures set forth in the Bylaws. In
addition, with respect to any meeting of shareholders, nominations of persons
for election to the Board of Trustees may be made only (i) by or at the
direction of the Board of Trustees or (ii) by any shareholder of the Company
who is entitled to vote at the meeting and has complied with the advance
notice provisions set forth in the Bylaws.
RESTRICTIONS ON TRANSFER
Ownership Limits. The Company's Declaration of Trust contains certain
restrictions on the number of Common Shares that individual shareholders may
own. For the Company to qualify as a REIT under the Code, no more than 50% in
value of its outstanding Common Shares may be owned, directly or indirectly,
by five or fewer individuals (as defined in the Code to include certain
entities) during the last half of a taxable year (other than the first year)
or during a proportionate part of a shorter taxable year. The Common Shares
must also be beneficially owned by 100 or more persons during at least 335
days of a taxable year or during a proportionate part of a shorter taxable
year. Because the Company intends to maintain its qualification as a REIT, the
Declaration of Trust of the Company contains restrictions on the ownership and
transfer of Common Shares intended to ensure compliance with these
requirements.
Subject to certain exceptions specified in the Declaration of Trust, no
holder may own, or be deemed to own by virtue of certain attribution
provisions of the Code, more than 5% (the "Common Shares Ownership Limit") of
the issued and outstanding Common Shares. Members of the Lowder family (which
includes Thomas and James Lowder, members of their family and various
corporations and partnerships owned by them) are not subject to the Common
Shares Ownership Limit, but they are prohibited from acquiring additional
Common Shares if, as a result of such acquisition, a single member of the
Lowder family would be considered to own beneficially more than 29% of the
outstanding Common Shares, or any two members of the Lowder family would be
considered to own beneficially more than 34% of the outstanding Common Shares,
or any three members of the Lowder family would be considered to own
beneficially more than 39% of the outstanding Common Shares or any four
members of the Lowder family would be considered to own beneficially more than
44% of the outstanding Common Shares (the "Excluded Holder Limit"). In
addition, they are prohibited from acquiring any Common Shares if such
acquisition would cause five beneficial owners of Common Shares to
beneficially own in the aggregate more than 50% in value of the outstanding
Common Shares.
In addition to the foregoing ownership limits, no holder may own, directly
or by attribution, more than 9.8% of the issued and outstanding Common Shares
and Preferred Shares on a combined basis (the "Aggregate Ownership Limit").
Also, no holder may own, directly or by attribution, more than 9.8% of any
class or series of Preferred Shares (the "Preferred Shares Ownership Limit").
(The Common Shares Ownership Limit, the Excluded Holder Limit, the Preferred
Shares Ownership Limit and the Aggregate Ownership Limit are referred to
collectively herein as the "Ownership Limits".)
The Board of Trustees may increase the Ownership Limits from time to time,
but may not do so to the extent that after giving effect to such increase five
beneficial owners of shares could beneficially own in the
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aggregate more than 49% of the outstanding Shares. The Board of Trustees may,
with a ruling from the IRS or an opinion of counsel satisfactory to it, waive
the Ownership Limits with respect to a holder if such holder's ownership will
not then or in the future jeopardize the Company's status as a REIT.
Excess Shares. If any person owns, either directly or constructively under
the applicable attribution rules of the Code, Shares in excess of any of the
Ownership Limits (which include limits where the acquisition or ownership of
Shares would cause the Company to fail to qualify as a REIT), such person will
be deemed to have exchanged the Shares that cause an Ownership Limit to be
exceeded for an equal number of Excess Shares. The Excess Shares will not be
deemed issued to the person who exceeded the Ownership Limit, but instead will
be held by the Company as trustee of a trust for the exclusive benefit of a
transferee (or transferees) to be designated by the Company, provided that
such designee is a person to whom an equal number of Shares could be
transferred without violating the Ownership Limits. In addition, any purported
transfer of Shares which would cause the transferee to hold Shares in excess
of the Ownership Limits, shall be null and void. In such cases, the intended
transferee will acquire no rights or economic interest in the Shares, and the
transferor will be deemed instead to have transferred such Shares to the
Company in exchange for Excess Shares, which will be deemed to be held by the
Company as trustee of a trust for the exclusive benefit of the person or
persons to whom the Shares can be transferred without violating the Ownership
Limits. The Company generally must designate a transferee within 30 days of an
event which results in the deemed exchange for Excess Shares.
A person who holds or acquires Shares that shall have been deemed exchanged
for Excess Shares will not be entitled to vote the Excess Shares and will not
be entitled to receive any distributions (any distribution paid on Shares
prior to the discovery by the Company that such Shares have been exchanged for
Excess Shares shall be repaid to the Company upon demand, and any distribution
declared but unpaid shall be rescinded). Such person shall be entitled to
receive consideration paid by the Company's designated transferee in an amount
that is equal to the lesser of (i) in the case of a deemed exchange for Excess
Shares resulting from a transfer for value, the price paid for the Shares in
such transfer, or, in the case of a deemed exchange for Excess Shares
resulting from some other event, the market price, on the date of the deemed
exchange, of the Shares deemed exchanged, and (ii) the market price of the
Shares for which such Excess Shares are deemed to be exchanged, on the date of
the designation of the transferee. Any amount paid by the designated
transferee in excess of the amount described in the preceding sentence will be
paid to the Company. For these purposes, the market price on a given date is
determined by reference to the average closing price of the Shares for the
five preceding days. The Excess Shares so transferred will automatically be
deemed to be exchanged for Shares. Excess Shares may be purchased by the
Company for the lesser of (i) in the case of a deemed exchange for Excess
Shares resulting from a transfer for value, the price paid for the Shares in
such transfer, or, in the case of a deemed exchange for Excess Shares
resulting from some other event, the market price, on the date of the deemed
exchange, of the Shares deemed exchanged, and (ii) the market price of the
Shares for which such Excess Shares are deemed to be exchanged, on the date
the Company purchases the Excess Shares.
The Board of Trustees has the authority at any time to waive the requirement
that Excess Shares be issued or be deemed outstanding in accordance with the
provisions of the Declaration of Trust if the issuance of such Excess Shares
or the fact that such Excess Shares are deemed to be outstanding would in the
opinion of counsel be satisfactory to jeopardize the status of the Company as
a REIT for Federal income tax purposes.
All certificates representing Common Shares will bear a legend referring to
the restrictions described above.
Every owner of more than 5% (or such lower percentage as required by the
Code or regulations thereunder) of the issued and outstanding Common Shares
must file a written notice with the Company containing the information
specified in the Declaration of Trust no later than December 31 of each year.
In addition, each shareholder shall upon demand be required to disclose to the
Company in writing such information as the Company may request in good faith
in order to determine the Company's status as a REIT.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Common Shares is BankBoston, N.A.
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DESCRIPTION OF COMMON SHARE WARRANTS
The Company may issue Common Share Warrants for the purchase of Common
Shares. Common Share Warrants may be issued independently or together with any
other Securities offered by any Prospectus Supplement and may be attached to
or separate from such Securities. Each series of Common Share Warrants will be
issued under a separate warrant agreement (each, a "Warrant Agreement") to be
entered into between the Company and a warrant agent specified in the
applicable Prospectus Supplement (the "Warrant Agent"). The Warrant Agent will
act solely as an agent of the Company in connection with the Common Share
Warrants of such series and will not assume any obligation or relationship of
agency or trust for or with any holders or beneficial owners of Common Share
Warrants. The following sets forth certain general terms and provisions of the
Common Share Warrants offered hereby. Further terms of the Common Share
Warrants and the applicable Warrant Agreements will be set forth in the
applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the Common
Share Warrants in respect of which this Prospectus is being delivered,
including, where applicable, the following:
(1) The title of such Common Share Warrants;
(2) The aggregate number of such Common Share Warrants;
(3) The price or prices at which such Common Share Warrants will be
issued;
(4) The designation, number and terms of the Common Shares purchasable
upon exercise of such Common Share Warrants;
(5) The designation and terms of the other Securities offered thereby
with which such Common Share Warrants are issued and the number of such
Common Share Warrants issued with each such Security offered thereby;
(6) The date, if any, on and after which such Common Share Warrants and
the related Common Stock will be separately transferable;
(7) The price at which each of the Common Shares purchasable upon
exercise of such Common Share Warrants may be purchased;
(8) The date on which the right to exercise such Common Share Warrants
shall commence and the date on which such right shall expire;
(9) The minimum or maximum number of such Common Share Warrants which may
be exercised at any one time;
(10) Information with respect to book entry procedures, if any;
(11) A discussion of certain federal income tax considerations; and
(12) Any other terms of such Common Share Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Common Share Warrants.
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DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular series of Preferred Shares, as specified in the applicable
Prospectus Supplement. Preferred Shares of each series represented by
Depositary Shares will be deposited under a separate Deposit Agreement (each,
a "Deposit Agreement") among the Company, the depositary named therein (the
"Preferred Share Depositary") and the holders from time to time of the
Depositary Receipts. Subject to the terms of the Deposit Agreement, each owner
of a Depositary Receipt will be entitled, in proportion to the fractional
interest of a share of a particular series of Preferred Shares represented by
the Depositary Shares evidenced by such Depositary Receipt, to all the rights
and preferences of the Preferred Shares represented by such Depositary Shares
(including dividend, voting, conversion, redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Shares by the Company to the Preferred
Share Depositary, the Company will cause the Preferred Share Depositary to
issue, on behalf of the Company, the Depositary Receipts. Copies of the
applicable form of Deposit Agreement and Depositary Receipt may be obtained
from the Company upon request, and the following summary of the form thereof
filed as an exhibit to the Registration Statement of which this Prospectus is
a part is qualified in its entirety by reference thereto.
DIVIDENDS
The Preferred Share Depositary will distribute all cash dividends received
in respect of the Preferred Shares to the record holders of Depositary
Receipts evidencing the related Depositary Shares in proportion to the number
of such Depositary Receipts owned by such holders, subject to certain
obligations of holders to file proofs, certificates and other information and
to pay certain charges and expenses to the Preferred Share Depositary.
In the event of a dividend other than in cash, the Preferred Share
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of
holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Preferred Share Depositary, unless the Preferred
Share Depositary determines that it is not feasible to make such distribution,
in which case the Preferred Share Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
No dividend will be made in respect of any Depositary Share to the extent
that it represents any Preferred Shares converted into Excess Shares.
WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Share Depositary (unless the related Depositary Shares have
previously been called for redemption or converted into Excess Shares), the
holders thereof will be entitled to delivery at such office, to or upon such
holder's order, of the number of whole or fractional Preferred Shares and any
money or other property represented by the Depositary Shares evidenced by such
Depositary Receipts. Holders of Depositary Receipts will be entitled to
receive whole or fractional shares of the related Preferred Shares on the
basis of the proportion of the Preferred Shares represented by each Depositary
Share as specified in the applicable Prospectus Supplement, but holders of
such Preferred Shares will not thereafter be entitled to receive Depositary
Shares therefor. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing the number of Preferred Shares to be withdrawn, the Preferred
Share Depositary will deliver to such holder at the same time a new Depositary
Receipt evidencing such excess number of Depositary Shares.
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REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems Preferred Shares held by the Preferred Share
Depositary, the Preferred Share Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the Preferred
Shares so redeemed, provided the Company shall have paid in full to the
Preferred Share Depositary the redemption price of the Preferred Shares to be
redeemed plus an amount equal to any accrued and unpaid dividends thereon to
the date fixed for redemption. The redemption price per Depositary Share will
be equal to the redemption price and any other amounts per share payable with
respect to the Preferred Shares. If fewer than all the Depositary Shares are
to be redeemed, the Depositary Shares to be redeemed will be selected pro rata
(as nearly as may be practicable without creating fractional Depositary
Shares) or by any other equitable method determined by the Company that will
not result in the issuance of any Excess Shares.
From and after the date fixed for redemption, all dividends in respect of
the Preferred Shares so called for redemption will cease to accrue, the
Depositary Shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the Depositary Receipts
evidencing the Depositary Shares so called for redemption will cease, except
the right to receive any monies payable upon such redemption and any money or
other property to which the holders of such Depositary Receipts were entitled
upon such redemption upon surrender thereof to the Preferred Share Depositary.
VOTING OF THE PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the Preferred
Shares are entitled to vote, the Preferred Share Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent such
Preferred Shares. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Shares) will be entitled to instruct the
Preferred Share Depositary as to the exercise of the voting rights pertaining
to the amount of Preferred Shares represented by such holder's Depositary
Shares. The Preferred Share Depositary will vote the amount of Preferred
Shares represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all reasonable action which
may be deemed necessary by the Preferred Share Depositary in order to enable
the Preferred Share Depositary to do so. The Preferred Share Depositary will
abstain from voting the amount of Preferred Shares represented by such
Depositary Shares to the extent it does not receive specific instructions from
the holders of Depositary Receipts evidencing such Depositary Shares. The
Preferred Share Depositary shall not be responsible for any failure to carry
out any instruction to vote, or for the manner or effect of any such vote
made, as long as any such action or non-action is in good faith and does not
result from negligence or willful misconduct of the Preferred Share
Depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each Depositary Receipt will
be entitled to the fraction of the liquidation preference accorded each
Preferred Share represented by the Depositary Share evidenced by such
Depositary Receipt, as set forth in the applicable Prospectus Supplement.
CONVERSION OF PREFERRED SHARES
The Depositary Shares, as such, are not convertible into Common Shares or
any other securities or property of the Company, except in connection with
certain conversions in connection with the preservation of the Company's
status as a REIT. Nevertheless, if so specified in the applicable Prospectus
Supplement relating to an offering of Depositary Shares, the Depositary
Receipts may be surrendered by holders thereof to the Preferred Share
Depositary with written instructions to the Preferred Share Depositary to
instruct the Company to cause conversion of the Preferred Shares represented
by the Depositary Shares evidenced by such Depositary Receipts into whole
Common Shares, other Preferred Shares (including Excess Shares) of the Company
or other shares of beneficial interest, and the Company has agreed that upon
receipt of such instructions and any amounts payable
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in respect thereof, it will cause the conversion thereof utilizing the same
procedures as those provided for delivery of Preferred Shares to effect such
conversion. If the Depositary Shares evidenced by a Depositary Receipt are to
be converted in part only, a new Depositary Receipt or Receipts will be issued
for any Depositary Shares not to be converted. No fractional Common Shares
will be issued upon conversion, and if such conversion will result in a
fractional share being issued, an amount will be paid in cash by the Company
equal to the value of the fractional interest based upon the closing price of
the Common Shares on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Shares and any provision of the Deposit Agreement may
at any time be amended by agreement between the Company and the Preferred
Share Depositary. However, any amendment that materially and adversely alters
the rights of the holders of Depositary Receipts or that would be materially
and adversely inconsistent with the rights granted to the holders of the
related Preferred Shares will not be effective unless such amendment has been
approved by the existing holders of at least a majority of the Depositary
Shares evidenced by the Depositary Receipts then outstanding. No amendment
shall impair the right, subject to certain exceptions in the Depositary
Agreement, of any holder of Depositary Receipts to surrender any Depositary
Receipt with instructions to deliver to the holder the related Preferred
Shares and all money and other property, if any, represented thereby, except
in order to comply with law. Every holder of an outstanding Depositary Receipt
at the time any such amendment becomes effective shall be deemed, by
continuing to hold such Depositary Receipt, to consent and agree to such
amendment and to be bound by the Deposit Agreement as amended thereby.
The Deposit Agreement may be terminated by the Company upon not less than 30
days' prior written notice to the Preferred Share Depositary if (i) such
termination is necessary to assist in maintaining the Company's status as a
REIT or (ii) a majority of each series of Preferred Shares affected by such
termination consents to such termination, whereupon the Preferred Share
Depositary shall deliver or make available to each holder of Depositary
Receipts, upon surrender of the Depositary Receipts held by such holder, such
number of whole or fractional Preferred Shares as are represented by the
Depositary Shares evidenced by such Depositary Receipts together with any
other property held by the Preferred Share Depositary with respect to such
Depositary Receipts. The Company has agreed that if the Deposit Agreement is
terminated to assist in maintaining the Company's status as a REIT, then, if
the Depositary Shares are listed on a national securities exchange, the
Company will use its best efforts to list the Preferred Shares issued upon
surrender of the related Depositary Shares on a national securities exchange.
In addition, the Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares shall have been redeemed, (ii) there shall have
been a final distribution in respect of the related Preferred Shares in
connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such Preferred Shares
or (iii) each share of the related Preferred Shares shall have been converted
into shares of beneficial interest of the Company not so represented by
Depositary Shares.
CHARGES OF PREFERRED SHARE DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Share Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay certain other transfer and
other taxes and governmental charges as well as the fees and expenses of the
Preferred Share Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Share Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time
remove the Preferred Share Depositary, any such resignation or
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removal to take effect upon the appointment of a successor Preferred Share
Depositary. A successor Preferred Share Depositary must be appointed within 60
days after delivery of the notice of resignation or removal and must be a bank
or trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Share Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Share Depositary with respect to the related Preferred Shares.
Neither the Preferred Share Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under the Deposit Agreement. The
obligations of the Company and the Preferred Share Depositary under the
Deposit Agreement will be limited to performing their duties thereunder in
good faith and without negligence (in the case of any action or inaction in
the voting of Preferred Shares represented by the Depositary Shares), gross
negligence or willful misconduct, and the Company and the Preferred Share
Depositary will not be obligated to prosecute or defend any legal proceeding
in respect of any Depositary Receipts, Depositary Shares or Preferred Shares
represented thereby unless satisfactory indemnity is furnished. The Company
and the Preferred Share Depositary may rely on written advice of counsel or
accountants, or information provided by persons presenting Preferred Shares
represented thereby for deposit, holders of Depositary Receipts or other
persons believed in good faith to be competent to give such information, and
on documents believed in good faith to be genuine and signed by a proper
party.
In the event the Preferred Share Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on
the one hand, and the Company, on the other hand, the Preferred Share
Depositary shall be entitled to act on such claims, requests or instructions
received from the Company.
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FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a description of certain Federal income tax considerations
to a holder of Common Shares. The applicable Prospectus Supplement will
contain information about additional Federal income tax considerations, if
any, relating to Securities other than Common Shares. The applicable
Prospectus Supplement will contain information about additional Federal income
tax considerations, if any, relating to Securities other than Common Shares.
The following discussion, which is not exhaustive of all possible tax
considerations, does not give a detailed discussion of any state, local or
foreign tax considerations. Nor does it discuss all of the aspects of Federal
income taxation that may be relevant to a prospective shareholder in light of
his or her particular circumstances or to certain types of shareholders
(including insurance companies, tax-exempt entities, financial institutions or
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) who are subject to special treatment under the
Federal income tax laws. As discussed below, the Taxpayer Relief Act of 1997
(the "1997 Act") contains certain changes to the REIT qualification
requirements and to the taxation of REITs that may be material to a holder of
Common Shares, but which will become effective only for the Company's taxable
years commencing on or after January 1, 1998. As used in this section, the
term "Company" refers solely to Colonial Properties Trust.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER IN LIGHT OF HIS
OR HER SPECIFIC OR UNIQUE CIRCUMSTANCES OF THE PURCHASE, OWNERSHIP AND SALE OF
SHARES IN AN ENTITY ELECTING TO BE TAXED AS A REIT, INCLUDING THE FEDERAL,
STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP,
SALE AND ELECTION AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
General. The Company elected to be taxed as a REIT under Sections 856
through 860 of the Code effective as of its taxable year ending December 31,
1993. The Company believes that it is organized and has operated in a manner
so as to qualify for taxation as a REIT under the Code, and the Company
intends to continue to operate in such a manner. No assurance, however, can be
given that the Company has operated in a manner so as to qualify as a REIT or
that it will continue to operate in such a manner in the future. Qualification
and taxation as a REIT depends upon the Company's ability to meet on a
continuing basis, through actual annual operating results, the various
requirements under the Code and described in the Prospectus with regard to,
among other things, the source of its gross income, the composition of its
assets, distribution levels and diversity of stock ownership. While the
Company intends to operate so that it qualifies as a REIT, given the highly
complex nature of the rules governing REITs, the ongoing importance of factual
determinations, and the possibility of future changes in circumstances of the
Company, no assurance can be given that the Company satisfies such tests or
will continue to do so. See "--Failure to Qualify" below.
The following is a general summary of the Code provisions that govern the
Federal income tax treatment of a REIT and its shareholders. These provisions
of the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, Treasury Regulations and
administrative and judicial interpretations thereof.
In any year in which the Company qualifies for taxation as a REIT, it
generally will not be subject to Federal corporate income taxes on that
portion of its REIT taxable income or capital gain that it currently
distributes to shareholders. This treatment substantially eliminates the
"double taxation" (at both the corporate and shareholder levels) that
generally results from the use of corporate investment vehicles. The Company
may, however, be subject to tax at normal corporate rates on any taxable
income or capital gain that it does not distribute.
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Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) that is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares of
stock, or by transferable certificates of beneficial interest; (3) that would
be taxable as a domestic corporation, but for Sections 856 through 859 of the
Code; (4) that is neither a financial institution nor an insurance company
subject to certain provisions of the Code; (5) the beneficial ownership of
which is held by 100 or more persons; (6) that during the last half of each
taxable year not more than 50% in value of the outstanding stock of which is
owned, directly or indirectly, by five or fewer individuals (as defined in the
Code to include certain entities); and (7) that meets certain other tests,
described below, regarding the nature of its income and assets. The Code
provides that conditions (1) through (4), inclusive, must be met during the
entire taxable year and that condition (5) must be met during at least 335
days of a taxable year of 12 months, or during a proportionate part of a
taxable year of less than 12 months. The Company's Declaration of Trust
contains restrictions regarding the transfer of its Common Shares that are
intended to assist the Company in continuing to satisfy the share ownership
requirements described in (5) and (6) above. See "Description of Shares of
Beneficial Interest--Restrictions on Transfer." Pursuant to the 1997 Act, for
the Company's taxable years commencing on or after January 1, 1998, if the
Company complies with regulatory rules pursuant to which it is required to
send annual letters to holders of Securities requesting information regarding
the actual ownership of Securities, but does not know, or exercising
reasonable diligence would not have known, whether it failed to meet the
requirement that it not be closely held, the Company will be treated as having
met the requirement.
Income Tests. In order to maintain qualification as a REIT, there are three
gross income requirements that must be satisfied annually. First, at least 75%
of the REIT's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived directly or indirectly
from investments relating to real property or mortgages on real property
(including "rents from real property" and, in certain circumstances, interest)
or from certain types of temporary investments. Second, at least 95% of the
REIT's gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived from the same items which qualify under the
75% income test, and from dividends, interest and gain from the sale or
disposition of stock or securities, or from any combination of the foregoing.
Third, short-term gain from the sale or other disposition of stock or
securities, gain from prohibited transactions and gain on the sale or other
disposition of real property held for less than four years (apart from
involuntary conversions and sales of foreclosure property) must represent less
than 30% of the REIT's gross income (including gross income from prohibited
transactions) for each taxable year. Pursuant to the 1997 Act, the Company
will not have to meet this third test for its taxable years commencing on or
after January 1, 1998.
Rents received from a tenant will not, however, qualify as rents from real
property in satisfying the 75% test or the 95% test if the Company, or an
owner of 10% or more of the Company, directly or constructively owns 10% or
more of such tenant. In addition, if rent attributable to personal property
leased in connection with a lease of real property is greater than 15% of the
total rent received under the lease, then the portion of rent attributable to
such personal property will not qualify as rents from real property. Moreover,
an amount received or accrued will not qualify as rents from real property (or
as interest income) for purposes of the 75% and 95% gross income tests if it
is based in whole or in part on the income or profits of any person. Finally,
for rents received to qualify as rents from real property, the Company
generally must not operate or manage the property or furnish or render
services to tenants, other than through an "independent contractor" from whom
the Company derives no revenue. The "independent contractor" requirement,
however, does not apply to the extent that the services provided by the
Company are "usually or customarily rendered" in connection with the rental of
space for occupancy only, and are not otherwise considered "rendered to the
occupant" ("Permissible Services"). Pursuant to the 1997 Act, however, for the
Company's taxable years commencing on or after January 1, 1998, rents received
generally will qualify as rents from real property notwithstanding the fact
that the Company provides services that are not Permissible Services so long
as the amount received for such services is de minimis. The Management
Partnership, which is not an "independent contractor," provides certain
services with respect to the Properties, but the Company believes that all
such services should be considered "usually or customarily rendered" in
connection with the rental of space for occupancy only, although there is no
assurance that the IRS might not contend otherwise. If the Operating
Partnership contemplates providing services which
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are not Permissible Services in the future that reasonably might be expected
not to meet the "usual or customary" standard, it will arrange to have such
services provided by an independent contractor from which the Operating
Partnership will receive no income.
The Operating Partnership and/or the Management Partnership may receive fees
in consideration of the performance of property management services with
respect to certain Properties not owned entirely by the Operating Partnership.
A portion of such fees (corresponding to that portion of a Property owned by a
third-party) will not qualify under the 75% or 95% gross income test. The
Operating Partnership also may receive certain other types of income with
respect to the Properties it owns that will not qualify for the 75% or 95%
gross income test. In addition, dividends on the Company's stock in the
Management Corporation and its share of interest on the Management Corporation
note will not qualify under the 75% gross income test. The Company believes,
however, that the aggregate amount of such fees and other non-qualifying
income in any taxable year will not cause the Company to exceed the limits on
nonqualifying income under the 75% and 95% gross income tests.
Even if the Company fails to satisfy one or both of the 75% or the 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code. It
is not possible, however, to state whether in all circumstances the Company
would be entitled to the benefit of these relief provisions. Even if these
relief provisions were to apply, however, the Company will be subject to a
100% tax based upon the greater of the amount by which it fails either the 75%
and 95% gross income test for that year, less certain adjustments.
Asset Tests. At the close of each quarter of its taxable year, the Company
also must satisfy three tests relating to the nature of its assets: (i) at
least 75% of the value of the Company's total assets must be represented by
"real estate assets", cash, cash items and government securities; (ii) not
more than 25% of the Company's total assets may be represented by securities
other than those in the 75% asset class; and (iii) of the investments included
in the 25% asset class, the value of any one issuer's securities (other than
an interest in a partnership, shares of a "qualified REIT subsidiary" or
another REIT) owned by the Company may not exceed 5% of the value of the
Company's total assets, and the Company may not own more than 10% of any one
issuer's outstanding voting securities (other than an interest in a
partnership, shares of a "qualified REIT subsidiary" or another REIT). The
Company owns 100% of the nonvoting stock and l% of the voting stock of the
Management Corporation. In addition, the Operating Partnership owns a note
issued by the Management Corporation, and by virtue of its ownership of Units,
the Company is considered to own its pro rata share of the note of the
Management Corporation. Neither the Company nor the Operating Partnership,
however, own more than 10% of the voting securities of the Management
Corporation. In addition, the Company and its senior management believe that
the Company's pro rata share of the value of the securities of the Management
Corporation (taking into account both the stock of the Management Corporation
held directly and the Company's pro rata share of the note of the Management
Corporation held by the Operating Partnership) do not exceed 5% of the total
value of the Company's assets. There can be no assurance, however, that the
IRS might not contend either that the value of the securities of the
Management Corporation held by the Company (directly and through the Operating
Partnership) exceeds the 5% value limitation or that the nonvoting stock of
the Management Corporation owned by the Operating Partnership should be
considered "voting stock" for this purpose.
The 5% value requirement must be satisfied each time the Company increases
its ownership of securities of the Management Corporation (including as a
result of increasing its interest in the Operating Partnership as limited
partners exercise their redemption rights or, for example, as a result of
investing the proceeds of sales of Common Shares in the Operating
Partnership). Although the Company plans to take steps to ensure that it
satisfies the 5% value test for any quarter with respect to which retesting is
to occur, there can be no assurance that such steps will always be successful
or will not require a reduction in the Company's overall interest in the
Management Corporation.
Annual Distribution Requirements. The Company, in order to qualify as a
REIT, is required to make dividend distributions (other than capital gain
dividends) to its shareholders each year in an amount at least equal to (A)
the sum of (i) 95% of the Company's REIT taxable income (computed without
regard to the dividends
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paid deduction and the Company's net capital gain) and (ii) 95% of the net
income (after tax), if any, from foreclosure property, minus (B) the sum of
certain items of non-cash income. Such distributions must be paid in the
taxable year to which they relate, or in the following taxable year if
declared before the Company timely files its tax return for such year and if
paid on or before the first regular dividend payment after such declaration.
To the extent that the Company does not distribute all of its net capital gain
or distributes at least 95%, but less than 100%, of its REIT taxable income,
as adjusted, it will be subject to tax on the undistributed amount at regular
capital gains or ordinary corporate tax rates, as the case may be.
The Company believes that it has made, and intends to continue to make,
timely distributions sufficient to satisfy the annual distribution
requirements. It is possible, however, that the Company, from time to time,
may not have sufficient cash or other liquid assets to meet the distribution
requirements. In that event, CPHC may cause the Operating Partnership to
arrange for short-term, or possibly long-term, borrowing to permit the
payments of required dividends.
Failure to Qualify. If the Company fails to qualify for taxation as a REIT
in any taxable year and the relief provisions do not apply, the Company will
be subject to tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates. Distributions to shareholders in
any year in which the Company fails to qualify will not be required and, if
made, will not be deductible by the Company. In such event, to the extent of
current and accumulated earnings and profits, all distributions to
shareholders will be taxable as ordinary income, and, subject to certain
limitations in the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific
statutory provisions, the Company also will be disqualified from taxation as a
REIT for the four taxable years following the year during which qualification
was lost. It is not possible to state whether in all circumstances the Company
would be entitled to such statutory relief.
TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN PARTNERSHIPS
General. The Company holds direct or indirect interests in the Operating
Partnership and the Management Partnership (each individually a "Partnership"
and, collectively, the "Partnerships"). The Company believes that each of the
Partnerships qualifies as a partnership (as opposed to an association taxable
as a corporation) for Federal income tax purposes. If any of the Partnerships
were to be treated as an association, it would be taxable as a corporation and
therefore subject to an entity-level tax on its income. In such a situation,
the character of the Company's assets and items of gross income would change,
which would preclude the Company from satisfying the asset tests and possibly
the income tests (see "Federal Income Tax Considerations--Taxation of the
Company--Asset Tests" and "--Gross Income Tests"), and in turn would prevent
the Company from qualifying as a REIT.
Tax Allocations with Respect to the Properties. Pursuant to Section 704(c)
of the Code, income, gain, loss and deduction attributable to appreciated or
depreciated property that is contributed to a partnership in exchange for an
interest in the partnership must be allocated in a manner such that the
contributing partner is charged with, or benefits from, respectively, the
unrealized gain or unrealized loss associated with the property at the time of
the contribution. The amount of such unrealized gain or unrealized loss is
generally equal to the difference between the fair market value and the
adjusted tax basis of contributed property at the time of contribution (a
"Book-Tax Difference"). Such allocations are solely for Federal income tax
purposes and do not affect the book capital accounts or other economic or
legal arrangements among the partners. The Operating Partnership was formed by
way of contributions of appreciated property. Consequently, the Operating
Partnership partnership agreement requires such allocations to be made in a
manner consistent with Section 704(c). As a result, certain limited partners
of the Operating Partnership will be allocated lower amounts of depreciation
deductions for tax purposes and increased taxable income and gain on sale by
the Partnerships of the contributed assets. These allocations will tend to
eliminate the Book-Tax Difference over the life of the Partnerships. However,
the special allocation rules of Section 704(c) as applied by the Company do
not always entirely rectify the Book-Tax Difference on an annual basis or with
respect to a specific taxable transaction such as a sale. Thus, the carryover
basis of the contributed assets in the hands of the Partnership will cause the
Company to be allocated lower depreciation and other deductions, and possibly
greater amounts of taxable income in the event of a sale of such
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contributed assets in excess of the economic or book income allocated to its
as a result of such sale. This may cause the Company to recognize taxable
income in excess of cash proceeds, which might adversely affect the Company's
ability to comply with the REIT distribution requirements. See "Federal Income
Tax Considerations--Taxation of the Company--Annual Distribution
Requirements."
Sale of the Properties. The Company's share of any gain realized by the
Operating Partnership on the sale of any dealer property generally will be
treated as income from a prohibited transaction that is subject to a 100%
penalty tax. See "Federal Income Tax Considerations--Taxation of the Company--
Gross Income Tests--The 95% Test." Under existing law, whether property is
dealer property is a question of fact that depends on all the facts and
circumstances with respect to the particular transaction. The Operating
Partnership has held and intends to continue to hold the Properties for
investment with a view to long-term appreciation, to engage in the business of
acquiring, developing, owning and operating the Properties and to make such
occasional sales of the Properties as are consistent with the Company's
investment objectives. Based upon such investment objectives, the Company
believes that in general the Properties should not be considered dealer
property and that the amount of income from prohibited transactions, if any,
will not be material.
TAXATION OF TAXABLE DOMESTIC HOLDERS OF COMMON SHARES
General. As long as the Company qualifies as a REIT, distributions made to
the Company's taxable domestic shareholders out of current or accumulated
earnings and profits (and not designated as capital gain dividends) will be
taken into account by them as ordinary income, and corporate shareholders will
not be eligible for the dividends received deduction as to such amounts. For
purposes of determining whether distributions on the Common Shares are out of
current or accumulated earnings and profits, the earnings and profits of the
Company will be allocated first to Preferred Shares, if any, and second to the
Common Shares. There can be no assurance that the Company will have sufficient
earnings and profits to cover distributions on any Preferred Shares.
Distributions that are designated as capital gain dividends will be taxed as
long-term capital gains (to the extent they do not exceed the Company's actual
net capital gain for the taxable year) without regard to the period for which
the shareholder has held its stock. However, corporate shareholders may be
required to treat up to 20% of certain capital gain dividends as ordinary
income. Distributions in excess of current or accumulated earnings and profits
will not be taxable to a shareholder to the extent that they do not exceed the
adjusted basis of the shareholder's Common Shares, but rather will reduce the
adjusted basis of such Common Shares. To the extent that such distributions
exceed the adjusted basis of a shareholder's Common Shares, they will be
taxable as capital gains, assuming the Common Shares are a capital asset in
the hands of the shareholder.
In general, any loss upon a sale or exchange of Securities by a shareholder
who has held such Securities for six months or less (after applying certain
holding period rules) will be treated as a long-term capital loss, to the
extent of distributions from the Company received by such shareholder are
required to be treated by such shareholder as long-term capital gains.
Pursuant to the 1997 Act, for the Company's taxable years commencing on or
after January 1, 1998, the Company may elect to require holders of Securities
to include the Company's undistributed net capital gains in their income. If
the Company makes such an election, holders of Securities will (i) include in
their income as long-term capital gains their proportionate share of such
undistributed capital gains and (ii) be deemed to have paid their
proportionate share of the tax paid by the Company on such undistributed
capital gains and thereby receive a credit or refund for such amount. A holder
of Securities will increase the basis in its Securities by the difference
between the amount of capital gain included in its income and the amount of
tax it is deemed to have paid. The earnings and profits of the Company will be
adjusted appropriately. The 1997 Act, however, did not change the 4% excise
tax imposed upon a failure to make required distributions.
Additional Tax Consequences for Holders of Preferred Shares and Depositary
Shares. If the Company offers one or more series of Preferred Shares or
Depositary Shares, then there may be additional tax consequences for the
holders of such Preferred Shares or Depositary Shares. For a discussion of any
such additional consequences, see the applicable Prospectus Supplement.
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TAXATION OF TAX-EXEMPT SHAREHOLDERS
Most tax-exempt employees' pension trusts are not subject to Federal income
tax except to the extent of their receipt of "unrelated business taxable
income" as defined in Section 512(a) of the Code ("UBTI"). Distributions by
the Company to a shareholder that is a tax-exempt entity should not constitute
UBTI, provided that the tax-exempt entity has not financed the acquisition of
its Securities with "acquisition indebtedness" within the meaning of the Code
and the Securities are not otherwise used in an unrelated trade or business of
the tax-exempt entity. In addition, for taxable years beginning on or after
January 1, 1994, certain pension trusts that own more than 10% of a "pension-
held REIT" must report a portion of the distribution that they receive from
such a REIT as UBTI. The Company has not been and does not expect to be
treated as a pension-held REIT for purposes of this rule.
TAXATION OF FOREIGN SHAREHOLDERS
The following is a discussion of certain anticipated U.S. Federal income tax
consequences of the ownership and disposition of Securities applicable to Non-
U.S. Holders of such Securities. A "Non-U.S. Holder" is any person other than
(i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in the United States or under the laws of the
United States, or of any state thereof, or (iii) an estate or trust whose
income is includable in gross income for U.S. Federal income tax purposes
regardless of its source. The discussion is based on current law and is for
general information only.
Distributions From the Company. 1. Ordinary Dividends. The portion of
dividends received by Non-U.S. Holders payable out of the Company's earnings
and profits which are not attributable to capital gains of the Company or of
the Operating Partnership and which are not effectively connected with a U.S.
trade or business of the Non-U.S. Holder will be subject to U.S. withholding
tax at the rate of 30% (unless reduced by an applicable treaty). In general,
Non-U.S. Holders will not be considered engaged in a U.S. trade or business
solely as a result of their ownership of Securities. In cases where the
dividend income from a Non-U.S. Holder's investment in Securities is (or is
treated as) effectively connected with the Non-U.S. Holder's conduct of a U.S.
trade or business, the Non-U.S. Holder generally will be subject to U.S. tax
at graduated rates, in the same manner as U.S. shareholders are taxed with
respect to such dividends (and may also be subject to the 30% branch profits
tax in the case of a Non-U.S. Holder that is a foreign corporation).
2. Non-Dividend Distributions. Distributions in excess of current or
accumulated earnings and profits of the Company will not be taxable to a Non-
U.S. Holder to the extent that they do not exceed the adjusted basis of the
shareholder's Common Shares, but rather will reduce the adjusted basis of such
Common Shares. To the extent that such distributions exceed the adjusted basis
of a Non-U.S. Holder's Common Shares, they will give rise to gain from the
sale or exchange of its Common Shares, the tax treatment of which is described
below. As a result of a legislative change made by the Small Business Job
Protection Act of 1996, it appears that the Company will be required to
withhold 10% of any distribution in excess of the Company's current and
accumulated earnings and profits. Consequently, although the Company intends
to withhold at a rate of 30% on the entire amount of any distribution (or a
lower applicable treaty rate), to the extent that the Company does not do so,
any portion of distribution not subject to withholding at a rate of 30% (or a
lower applicable treaty rate) will be subject to withholding at a rate of 10%.
However, the Non-U.S. Holder may seek a refund of such amounts from the
Internal Revenue Service if it subsequently determined that such distribution
was, in fact, in excess of current or accumulated earnings and profits of the
Company, and the amount withheld exceeded the Non-U.S. Holder's United States
tax liability, if any, with respect to the distribution.
3. Capital Gain Dividends. Under the Foreign Investment in Real Property Tax
Act of 1980 ("FIRPTA"), a distribution made by the Company to a Non-U.S.
Holder, to the extent attributable to gains from dispositions of United States
Real Property Interests ("USRPIs") such as the Properties beneficially owned
by the Company ("USRPI Capital Gains"), will be considered effectively
connected with a U.S. trade or business of the Non-U.S. Holder and subject to
U.S. income tax at the rate applicable to U.S. individuals or corporations,
without regard to whether such distribution is designated as a capital gain
dividend. In addition, the Company will be required to withhold tax equal to
35% of the amount of dividends to the extent such dividends constitute USRPI
Capital
38
<PAGE>
Gains. Distributions subject to FIRPTA may also be subject to a 30% branch
profits tax in the hands of a foreign corporate shareholder that is not
entitled to treaty exemption.
Dispositions of Securities. Unless Securities constitute a USRPI, a sale of
Securities by a Non-U.S. Holder generally will not be subject to U.S. taxation
under FIRPTA. The Securities will not constitute a USRPI if the Company is a
"domestically controlled REIT." A domestically controlled REIT is a REIT in
which, at all times during a specified testing period, less than 50% in value
of its Securities is held directly or indirectly by Non-U.S. Holders. The
Company believes that it has been and anticipates that it will continue to be
a domestically controlled REIT, and therefore that the sale of Securities will
not be subject to taxation under FIRPTA. Because the Securities will be
publicly traded, however, no assurance can be given that the Company will
continue to be a domestically controlled REIT. If the Company does not
constitute a domestically controlled REIT, a Non-U.S. Holder's sale of
Securities generally still will not be subject to tax under FIRPTA as a sale
of a USRPI provided that (i) the Securities are "regularly traded" (as defined
by applicable Treasury regulations) on an established securities market and
(ii) the selling Non-U.S. Holder held 5% or less of the Company's outstanding
Securities at all times during a specified testing period.
If gain on the sale of Securities were subject to taxation under FIRPTA, the
Non-U.S. Holder would be subject to the same treatment as a U.S. shareholder
with respect to such gain (subject to applicable alternative minimum tax and a
special alternative minimum tax in the case of nonresident alien individuals)
and the purchaser of Securities could be required to withhold 10% of the
purchase price and remit such amount to the Internal Revenue Service. Capital
gains not subject to FIRPTA will nonetheless be taxable in the United States
to a Non-U.S. Holder in two cases: (i) if the Non-U.S. Holder's investment in
Securities is effectively connected with a U.S. trade or business conducted by
such Non-U.S. Holder, the Non-U.S. Holder will be subject to the same
treatment as a U.S. shareholder with respect to such gain, or (ii) if the Non-
U.S. Holder is a nonresident alien individual who was present in the United
States for 183 days or more during the taxable year and has a "tax home" in
the United States, the nonresident alien individual will be subject to a 30%
tax on the individual's capital gain.
RECENT LEGISLATION
As described above, the 1997 Act contains certain changes to the REIT
qualification requirements and to the taxation of REITs. The 1997 Act also
contains certain changes to the taxation of capital gains of individuals,
trusts and estates.
Capital Gain Rates. Subject to certain exceptions, for individuals, trusts
and estates, the maximum rate of tax on the net capital gain from a sale or
exchange occurring after July 28, 1997 of a capital asset held for more than
18 months has been reduced from 28% to 20%. The maximum rate has been reduced
to 18% for capital assets acquired after December 21, 2000 and held for more
than five years. The maximum rate for capital assets held for more than one
year but not more than 18 months remains at 28%. The maximum rate for net
capital gains attributable to the sale of depreciable real property held for
more than 18 months is 25% to the extent of the prior deductions for
depreciation with respect to such property. Capital gain from the sale of
depreciable real property held for more than 18 months allocated by the
Company to a non-corporate shareholder will be subject to the 25% rate to the
extent that the capital gain on the real property sold by the Company does not
exceed prior depreciation deductions with respect to such property. With
respect to any depreciable real property held by the Company for more than one
year but not more than 18 months, prior depreciation deductions claimed in
excess of the depreciation that would have been allowed if computed on a
straight-line basis will be taxed at the rates applicable to ordinary income
with the remaining gain being taxed at a maximum rate of 28%. The 1997 Act
provides the Internal Revenue Service with authority to issue regulations that
could, among other things, apply these rates on a look-through basis in the
case of "pass-through" entities such as the Company. The taxation of capital
gains of corporations was not changed by the 1997 Act.
REIT Provisions. In addition to the provisions discussed above, the 1997 Act
contains a number of technical provisions that either (i) reduce the risk that
the Company will inadvertently cease to qualify as a REIT,
39
<PAGE>
or (ii) provide additional flexibility with which the Company can meet the
REIT qualification requirements. These provisions are effective for the
Company's taxable years commencing on or after January 1, 1998.
Management Corporation. A portion of the amount distributed by the Company
to shareholders comes from the Management Corporation, through dividends on
stock to the Operating Partnership held by the Company and payments on the
note held by the Operating Partnership. The Management Corporation does not
qualify as a REIT and thus pays Federal, state and local income taxes on its
net income at normal corporate rates. As a result of interest and amortization
deductions, the Management Corporation does not pay significant income taxes
currently. There can be no assurance, however, that the IRS will not challenge
these deductions. In any event, future increases in the income of the
Management Corporation will be subject to income tax. Any Federal, state or
local income taxes that the Management Corporation is required to pay will
reduce the cash available for distribution by the Company to its shareholders.
In addition, as described above, the value of the securities of the Management
Corporation held by the Company cannot exceed 5% of the value of the Company's
assets at a time when a Partner exercises his redemption right (or the Company
otherwise is considered to acquire additional securities of the Management
Corporation, including as the result of the sale of Common Shares, Preferred
Shares, or Common Share Warrants pursuant to this Prospectus). See "Taxation
of the Company--Asset Tests." This limitation may restrict the ability of the
Management Corporation to increase the size of its respective business unless
the value of the assets of the Company is increasing at a commensurate rate.
State and Local Taxes. The Company and its shareholders may be subject to
state or local taxation in various state or local jurisdictions, including
those in which it or they transact business or reside. The state and local tax
treatment of the Company and its shareholders may not conform to the Federal
income tax consequences discussed above. Consequently, prospective
shareholders should consult their own tax advisors regarding the effect of
state and local tax laws on an investment in the Common Shares, Preferred
Shares, Depositary Shares or Common Share Warrants of the Company.
The Alabama Real Estate Investment Trust Act (the "Act"), which was enacted
in July 1995, generally conforms the treatment of REITs (such as the Company)
and qualified REIT subsidiaries (such as CPHC) under Alabama tax law to
federal law for tax years beginning after December 31, 1994. In particular,
the Act specifically permits REITs to deduct dividends paid in computing
taxable income for Alabama income tax purposes. In addition, the Act provides
that neither REITs nor qualified REIT subsidiaries will be subject to a tax on
the value of their shares in Alabama. Under Alabama law, each beneficiary of a
REIT is required to report and pay Alabama tax on its share of the REIT's
income to the extent described below. An individual who is an Alabama resident
is required to report and pay tax on all of its share of the REIT's income,
regardless of the source of that income. An individual who is not resident in
Alabama for Alabama state income tax purposes is required to report and pay
tax only on income considered to be Alabama source income (i.e., income that
would be subject to tax in Alabama if received directly by the individual).
For this purpose, however, income derived by a REIT with respect to stock or
securities is not considered to be Alabama source income merely because the
securities are issued by a corporation organized under Alabama law or doing
business in Alabama. Similar treatment applies to a corporate beneficiary of a
REIT that is not organized or otherwise engaged in a trade or business" in
Alabama. The Company has received an opinion from special Alabama tax counsel
to the effect that so long as the Company's sole assets consist of stock and
securities of other corporations (i.e., CPHC and the Management Corporation),
(i) individual shareholders of the Company who are not residents of Alabama
for Alabama state income tax purposes and who do not otherwise receive taxable
income from property owned or business transacted in Alabama and (ii)
corporate shareholders not organized in Alabama that do not otherwise receive
income from sources within, or business transacted in, Alabama will not be
required to file tax returns in Alabama or pay tax in Alabama as a result of
investing in Common Shares, Preferred Shares or Common Share Warrants of the
Company.
The state of Alabama imposes a franchise tax on corporations organized under
Alabama law. The Company is organized as an Alabama real estate investment
trust under the Act and believes that it is not subject to the domestic
franchise tax. Nevertheless, there can be no assurance that the state of
Alabama will not contend that the Alabama franchise tax applies to the
Company. Any Alabama franchise tax that the Company is required to pay will
reduce the cash available for distribution by the Company to shareholders.
40
<PAGE>
The Alabama Department of Revenue initiated a tax audit with respect to the
Company and CPHC for periods prior to the effective date of the Act. In
meetings with the Company and CPHC, the Alabama Department of Revenue
initially raised questions about whether the Company was subject to Alabama
franchise tax as a Maryland REIT and whether CPHC is entitled to certain
substantial deductions claimed by CPHC for Alabama income tax purposes for
interest payments made by CPHC to the Company. Under the Act, CPHC will not be
subject to a franchise tax liability for tax years beginning after December
31, 1994. The Company is unable at this time to predict whether any liability
will result from this audit proceeding or, if so, the amount thereof.
PLAN OF DISTRIBUTION
The Company may sell Securities in or through underwriters for public offer
and sale by them, and also may sell Securities offered hereby to investors
directly or through agents. Any such underwriter or agent involved in the
offer and sale of the Securities will be named in the applicable Prospectus
Supplement.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the
time of sale or at negotiated prices. The Company may also offer and sell the
Securities in exchange for one or more of its then outstanding issues of debt
or convertible debt securities. The Company also may, from time to time,
authorize underwriters acting as the Company's agents to offer and sell
Securities upon terms and conditions set forth in the applicable Prospectus
Supplement. In connection with the sale of the Securities, underwriters may be
deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Securities may be deemed to
be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements to be
entered into with the Company, to indemnification against and contribution
toward certain civil liabilities, including liabilities under the Securities
Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
at the public offering price set forth in such Prospectus Supplement pursuant
to delayed delivery contracts ("Contracts") providing for payment and delivery
on the date or dates stated in such Prospectus Supplement. Each Contract will
be for an amount not less than, and the aggregate principal amount of
Securities sold pursuant to Contracts shall be not less nor more than, the
respective amounts stated in the applicable Prospectus Supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
will in all cases be subject to the approval of the Company. Contracts will
not be subject to any conditions except (i) the purchase by an institution of
the Securities covered by its Contracts shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which
such institution is subject, and (ii) if the Securities are being sold to
underwriters, the Company shall have sold to such underwriters the total
principal amount of the Securities less the principal amount thereof covered
by Contracts.
Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for the Company and its Subsidiaries
in the ordinary course of business.
41
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected at the Public Reference Section maintained
by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549
and the following regional offices of the Commission: 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, the Company's Common
Shares are listed on the New York Stock Exchange and such reports, proxy
statements and other information concerning the Company can be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement"), of which this Prospectus is a part, under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other documents are not necessarily complete, and in each instance, reference
is made to the copy of such contract or documents filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the Securities, reference is hereby made to the
Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment
of the fees prescribed by the Commission. The Commission maintains a "web
site' that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the Commission.
The address of such site is "http://www.sec.gov".
42
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the Exchange
Act with the Commission and are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996 (the "10-K").
2. The Company's current reports on Form 8-K filed on January 31, 1997,
July 21, 1997 and July 30, 1997.
3. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997.
4. The Company's Registration Statement on Form 8-A, which incorporates
by reference a description of the Common Shares from the Company's
Registration Statement on Form S-11 (File No. 33-65954) including an
amendment or report filed for the purpose of updating such description.
All documents filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to termination
of the offering of all Securities to which this Prospectus relates shall be
deemed to be incorporated by reference in this Prospectus and shall be part
hereof from the date of filing of such document.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in
this Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of
Securities or in any other subsequently filed document that is also
incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus or any accompanying Prospectus Supplement. Subject to the
foregoing, all information appearing in this Prospectus and each accompanying
Prospectus Supplement is qualified in its entirety by the information
appearing in the documents incorporated by reference.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon their
written or oral request, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference in such documents).
Written requests for such copies should be addressed to Douglas B. Nunnelley,
the Company's Senior Vice President and Secretary at 2101 Sixth Avenue North,
Suite 750, Birmingham, Alabama 35203, telephone number (205) 250-8700.
LEGAL MATTERS
The legality of the Debt Securities, the Preferred Shares, the Common
Shares, the Common Share Warrants and the Depositary Shares offered hereby and
certain tax matters will be passed upon for the Company by Hogan & Hartson
L.L.P., Washington, D.C. Certain Alabama tax matters will be passed on for the
Company by Sirote & Permutt, P.C., Birmingham, Alabama.
EXPERTS
The consolidated financial statements and the related financial statement
schedules of the Company for the years ended December 31, 1996, 1995, and
1994, which are incorporated by reference in the Company's Form 10-K
(incorporated herein by reference); the historical summary of revenues and
direct operating expenses of Acquired Properties--Riverchase Center Building
2100, Beechwood Shopping Center, Brookwood Mall, The Meadows at Trussville,
and the Proposed Office and Retail Merger; all of which are included in the
Company's Form 8-K filed with the Commission on December 18, 1996
(incorporated herein by reference), have been incorporated by reference herein
in reliance upon the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of said firm as experts in accounting and
auditing.
43
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being
registered.
<TABLE>
<S> <C>
Registration Fee................................................. $ 90,123
Fees of Rating Agencies.......................................... 20,000
Printing and Duplicating Expenses................................ 150,000
Legal Fees and Expenses.......................................... 150,000
Accounting Fees and Expenses..................................... 50,000
NASD Fees........................................................ 30,241
Blue Sky Fees and expenses....................................... 15,000
Miscellaneous.................................................... 50,000
--------
Total.......................................................... $555,364
========
</TABLE>
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS
Under the Alabama Real Estate Investment Trust Act of 1995 (the "Alabama
REIT law"), a real estate investment trust formed in Alabama is permitted to
eliminate, by provision in its declaration of trust, the liability of trustees
and officers to the trust and its shareholders for money damages except for
liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services or (b) acts or omissions established by a final
judgment as involving active and deliberate dishonesty and being material to
the matter giving rise to the proceeding. The Company's Declaration of Trust
includes such a provision eliminating such liability to the maximum extent
permitted by the Alabama REIT law.
The Alabama REIT law permits an Alabama real estate investment trust to
indemnify and advance expenses to its trustees, officers, employees and agents
to the same extent as permitted by Sections 10-2B-8.50 to 10-2B-8.58,
inclusive, of the Code of Alabama, 1975 (the "Alabama Corporate Code") for
directors and officers of Alabama corporations. In accordance with the Alabama
Corporate Code, the Company's Bylaws require it to indemnify (a) any present
or former trustee, officer or shareholder or any individual who, while a
trustee, officer or shareholder, served or is serving as a trustee, officer,
director, shareholder or partner of another entity at the Company's express
request who has been successful, on the merits or otherwise, in the defense of
a proceeding to which he was made a party by reason of service in such
capacity, against reasonable expenses incurred by him in connection with the
proceeding, (b) any present or former trustee or officer or any individual
who, while a trustee or officer served or is serving as a trustee, officer,
director, shareholder or partner of another entity at the Company's express
request, who is made a party to a proceeding by reason of service in such
capacity, against reasonable expenses incurred by him in connection with the
proceeding if (i) he conducted himself in good faith, (ii) he reasonably
believed (A) in the case of conduct in his official capacity with the Company,
that the conduct was in the Company's best interest and (B) in all other
cases, that the conduct was at least not opposed to its best interests, and
(iii) in the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful, provided, however, that the indemnification
provided for in this clause (b) will not be available if it is established
that (1) in connection with a proceeding by or in the right of the Company, he
was adjudged liable to the Company, or (2) in connection with any other
proceeding charging improper personal benefit to him, whether or not involving
action in his official capacity, he was adjudged liable on the basis that
personal benefit was improperly received by him, and (c) any present or former
shareholder or any individual who, while a trustee, officer or shareholder,
served or is serving as a trustee, officer, director, shareholder or partner
of another entity at the Company's express request against any claim or
liability to which he may become subject by reason of such status. In
addition, the Company's Bylaws require the Company to pay or reimburse, in
advance of final disposition of a proceeding, reasonable expenses incurred by
a trustee, officer or shareholder or former trustee, officer or shareholder
made a party to a proceeding by reason of such
II-1
<PAGE>
status; provided, that in the case of a trustee or officer, (i) the Company
shall have received a written affirmation by the trustee or officer of his
good faith belief that he has met the applicable standard of conduct necessary
for indemnification by the Company as authorized by the Bylaws, (ii) the
Company shall have received a written undertaking by or on his behalf to repay
the amount paid or reimbursed by the Company if it shall ultimately be
determined that the applicable standard of conduct was not met and (iii) a
determination shall have been made, in accordance with Section 8.55 of the
Alabama Corporate Code, that the facts then known to those making the
determination would not preclude indemnification under the provisions of the
Bylaws. The Company may, with the approval of the trustees, provide such
indemnification and payment or reimbursement of expenses to any trustee,
officer or shareholder or any former trustee, officer or shareholder who
served a predecessor of the Company and to any employee or agent of the
Company or a predecessor of the Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to trustees and officers of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that, although the
validity and scope of the governing statute have not been tested in court, in
the opinion of the Commission, such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In addition,
indemnification may be limited by state securities laws. In the event that a
claim for indemnification against such liabilities (other than payment by the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in connection with the
Common Shares being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification is
against public policy as expressed in such Act and will be governed by the
final adjudication of such issue.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
4.1* Declaration of Trust of the Company
4.2** Bylaws of the Company
4.3** Specimen Certificate of Common Shares of the Company
4.4*** Form of Senior Indenture
4.5*** Form of Subordinated Indenture
4.6 Form of Deposit Agreement
5 Opinion of Hogan & Hartson L.L.P. regarding the legality of the
securities being registered
8.1* Tax Opinion of Hogan & Hartson L.L.P.
8.2* Tax Opinion of Sirote & Permutt P.C.
12 Calculation of Ratio of Earnings to fixed charges
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Awareness Letter of Coopers & Lybrand L.L.P.
23.3 Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 5)
23.4 Consent of Sirote & Permutt P.C. (included as part of Exhibit 8.2)
24**** Power of Attorney
</TABLE>
- --------
* To be filed by amendment.
** Incorporated by reference to the same-numbered exhibit to Registration
Statement No. 33-89612 filed on December 21, 1995.
*** Incorporated by reference to the same-numbered exhibit to Registration
Statement No. 33-89612 filed on February 17, 1995.
**** Filed as part of the signature page of this Registration Statement.
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<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in the periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the Securities offered
herein, and the offering of such Securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the Securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the Debt Securities offered herein, and the offering of such Debt
Securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance under Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that and insofar as
indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described under Item 15 above or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the Securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
The undersigned Registrant hereby undertakes to file an application for
purposes of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE ACT, THE COMPANY CERTIFIES THAT IT HAS
REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING
ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
BIRMINGHAM, STATE OF ALABAMA, ON OCTOBER , 1997.
Colonial Properties Trust
By: /s/ Thomas H. Lowder
---------------------------------
THOMAS H. LOWDER PRESIDENT, CHIEF
EXECUTIVE OFFICER AND CHAIRMAN OF
THE BOARD
POWER OF ATTORNEY
WE, THE UNDERSIGNED TRUSTEES AND OFFICERS OF COLONIAL PROPERTIES TRUST, DO
HEREBY CONSTITUTE AND APPOINT THOMAS H. LOWDER AND DOUGLAS B. NUNNELLEY, AND
EACH AND EITHER OF THEM, OUR TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, TO
DO ANY AND ALL ACTS AND THINGS IN OUR NAMES AND ON OUR BEHALF IN OUR
CAPACITIES AS TRUSTEES AND OFFICERS AND TO EXECUTE ANY AND ALL INSTRUMENTS FOR
US AND IN OUR NAME IN THE CAPACITIES INDICATED BELOW, WHICH SAID ATTORNEYS AND
AGENTS, OR EITHER OF THEM, MAY DEEM NECESSARY OR ADVISABLE TO ENABLE SAID
REGISTRANT TO COMPLY WITH THE SECURITIES ACT OF 1933 AND ANY RULES,
REGULATIONS AND REQUIREMENTS OF THE SECURITIES AND EXCHANGE COMMISSION, IN
CONNECTION WITH THIS REGISTRATION STATEMENT, OR ANY REGISTRATION STATEMENT FOR
THIS OFFERING THAT IS TO BE EFFECTIVE UPON FILING PURSUANT TO RULE 462(B)
UNDER THE SECURITIES ACT OF 1933, INCLUDING SPECIFICALLY, BUT WITHOUT
LIMITATION, ANY AND ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS)
HERETO; AND WE HEREBY RATIFY AND CONFIRM ALL THAT SAID ATTORNEYS AND AGENTS,
OR EITHER OF THEM, SHALL DO OR CAUSE TO BE DONE BY VIRTUE THEREOF.
PURSUANT TO THE REQUIREMENTS OF THE ACT, THIS REGISTRATION STATEMENT HAS
BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES OCTOBER , 1997.
SIGNATURE TITLE
/s/ Thomas H. Lowder President, Chief Executive
- --------------------------------------- Officer and Chairman of the
THOMAS H. LOWDER Board
/s/ Howard B. Nelson, Jr. Senior Vice President and
- ------------------------------------- Chief Financial Officer
HOWARD B. NELSON, JR. (Principal Financial Officer)
/s/ Kenneth E. Howell Vice President and Controller
- ------------------------------------- (Principal Accounting Officer)
KENNETH E. HOWELL
II-4
<PAGE>
SIGNATURE TITLE
--------- -----
/s/ James K. Lowder Trustee
- -------------------------------------
JAMES K. LOWDER
/s/ Carl F. Bailey Trustee
- -------------------------------------
CARL F. BAILEY
/s/ M. Miller Gorrie Trustee
- -------------------------------------
M. MILLER GORRIE
/s/ Donald T. Senterfitt Trustee
- -------------------------------------
DONALD T. SENTERFITT
/s/ Claude B. Nielsen Trustee
- -------------------------------------
CLAUDE B. NIELSEN
/s/ Harold W. Ripps Trustee
- -------------------------------------
HAROLD W. RIPPS
/s/ Herbert A. Meisler Trustee
- -------------------------------------
HERBERT A. MEISLER
/s/ William M. Johnson Trustee
- -------------------------------------
WILLIAM M. JOHNSON
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
------- ------- ------
<C> <S> <C>
4.1* Declaration of Trust of the Company.........................
4.2** Bylaws of the Company.......................................
4.3** Specimen Certificate of Common Shares of the Company........
4.4*** Form of Senior Indenture....................................
4.5*** Form of Subordinated Indenture..............................
4.6 Form of Deposit Agreement...................................
5 Opinion of Hogan & Hartson L.L.P. regarding the legality of
the securities being registered............................
8.1* Tax Opinion of Hogan & Hartson L.L.P. ......................
8.2* Tax Opinion of Sirote & Permutt P.C. .......................
12 Calculation of Ratio of Earnings to fixed charges...........
23.1 Consent of Coopers & Lybrand LLP............................
23.2 Awareness Letter of Coopers & Lybrand L.L.P. ...............
23.3 Consent of Hogan & Hartson L.L.P. (included as part of
Exhibit 5)..................................................
23.4 Consent of Sirote & Permutt P.C. (included as part of
Exhibit 8.2)................................................
24 **** Power of Attorney...........................................
</TABLE>
- --------
* To be filed by amendment.
** Incorporated by reference to the same-numbered exhibit to Registration
Statement No. 33-89612 filed on December 21, 1995.
*** Incorporated by reference to the same-numbered exhibit to Registration
Statement No. 33-89612 filed on February 17, 1995.
**** Filed as part of the signature page of this Registration Statement.
<PAGE>
Exhibit 4.6
DEPOSIT AGREEMENT
BETWEEN
COLONIAL PROPERTIES TRUST
AND
[DEPOSITARY]
, 1997
------------- ---
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. DEFINITIONS.......................................................................................1
2. FORM OF RECEIPTS, DEPOSIT OF PREFERRED SHARES, EXECUTION AND DELIVERY,
TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS.................................................3
2.1. Form and Transferability of Receipts......................................................3
2.2. Deposit of Preferred Shares; Execution and Delivery of Receipts in Respect Thereof........4
2.3. Optional Redemption of Preferred Shares for Cash..........................................5
2.4. Registration of Transfers of Receipts.....................................................7
2.5. Combinations and Split-ups of Receipts....................................................7
2.6. Surrender of Receipts and Withdrawal of Preferred Shares..................................7
2.7. Limitations on Execution and Delivery, Transfer, Split-up, Combination, Surrender and
Exchange of Receipts..................................................................8
2.8. Lost Receipts, etc........................................................................9
2.9. Cancellation and Destruction of Surrendered Receipts......................................9
2.10. Conversion of Preferred Shares into Excess Preferred Shares..............................9
3. CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE COMPANY........................................10
3.1. Filing Proofs, Certificates and Other Information.........................................10
3.2. Payment of Fees and Expenses..............................................................10
3.3. Representations and Warranties as to Preferred Shares.....................................11
3.4. Representation and Warranty as to Receipts and Depositary Shares..........................11
4. THE PREFERRED SHARES; NOTICES.....................................................................11
4.1. Cash Distributions........................................................................11
4.2. Distributions Other Than Cash.............................................................12
4.3. Subscription Rights, Preferences or Privileges............................................12
4.4. Notice of Dividends; Fixing of Record Date for Holders of Receipts........................14
4.5. Voting Rights.............................................................................14
4.6. Changes Affecting Preferred Shares and Reclassifications, Recapitalization, etc...........15
4.7. Inspection of Reports.....................................................................16
4.8. Lists of Receipt Holders..................................................................16
4.9. Tax and Regulatory Compliance.............................................................16
4.10. Withholding..............................................................................16
5. THE DEPOSITARY AND THE COMPANY....................................................................17
5.1. Maintenance of Offices, Agencies and Transfer Books by the Depositary and the
Registrar.............................................................................17
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
5.2. Prevention or Delay in Performance by the Depositary, the Depositary's Agents, the
Registrar or the Company..............................................................17
5.3. Obligations of the Depositary, the Depositary's Agents, the Registrar and the Company.....18
5.4. Resignation and Removal of the Depositary; Appointment of Successor Depositary............20
5.5. Notices, Reports and Documents............................................................20
5.6. Indemnification by the Company............................................................21
5.7. Fees, Charges and Expenses................................................................21
6. AMENDMENT AND TERMINATION.........................................................................22
6.1. Amendment.................................................................................22
6.2. Termination...............................................................................22
7. MISCELLANEOUS.....................................................................................23
7.1. Counterparts..............................................................................23
7.2. Exclusive Benefits of Parties.............................................................23
7.3. Invalidity of Provisions..................................................................23
7.4. Notices...................................................................................23
7.5. Depositary's Agents.......................................................................24
7.6. Holders of Receipts Are Parties...........................................................25
7.7. Governing Law.............................................................................25
7.8. Inspection of Deposit Agreement and Articles Supplementary................................25
7.9. Headings..................................................................................25
</TABLE>
-ii-
<PAGE>
DEPOSIT AGREEMENT
THIS DEPOSIT AGREEMENT, dated as of ____________, 1997 among COLONIAL
PROPERTIES TRUST, an Alabama real estate investment trust (the "Company"), and
___________________________________, a national banking association, as
Depositary, and all holders from time to time of Receipts (as hereinafter
defined) issued hereunder.
WITNESSETH:
WHEREAS, it is desired to provide, as hereinafter set forth in this Deposit
Agreement, for the deposit of the Company's Preferred Shares (as hereinafter
defined) with the Depositary for the purposes set forth in this Deposit
Agreement and for the issuance hereunder of the Receipts evidencing Depositary
Shares representing a fractional interest in the Preferred Shares deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit A
---------
annexed to this Deposit Agreement, with appropriate insertions, modifications
and omissions, as hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises contained herein, it is
agreed by and among the parties hereto as follows:
ARTICLES
1. DEFINITIONS
The following definitions shall apply to the respective terms (in the
singular and plural forms of such terms) used in this Deposit Agreement and the
Receipts:
"ARTICLES SUPPLEMENTARY" shall mean the Articles Supplementary filed with
the Office of the Judge of Probate of Jefferson County, Alabama establishing the
Preferred Shares as a series of Preferred Shares of the Company.
"COMMON SHARES" shall mean the Company's common shares of beneficial
interest, $.01 par value per share.
"COMPANY" shall mean Colonial Properties Trust, an Alabama real estate
investment trust, and its successors.
"CORPORATE OFFICE" shall mean the corporate office of the Depositary at
which at any particular time its business in respect of matters governed by this
Deposit Agreement shall be administered, which at the date of this Deposit
Agreement is located at _____________________________.
<PAGE>
"DECLARATION OF TRUST" shall mean the Declaration of Trust, as amended from
time to time, of the Company.
"DEPOSIT AGREEMENT" shall mean this agreement, as the same may be amended,
modified or supplemented from time to time.
"DEPOSITARY" shall mean ______________, a company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000, and any successor as depositary hereunder.
"DEPOSITARY SHARE" shall mean a fractional interest of 1/10 of a Preferred
Share deposited with the Depositary hereunder and the same proportionate
interest in any and all other property received by the Depositary in respect of
such Preferred Share and held under this Deposit Agreement, all as evidenced by
the Receipts issued hereunder. Subject to the terms of this Deposit Agreement,
each owner of a Depositary Share is entitled, proportionately, to all the
rights, preferences and privileges of the Preferred Share represented by such
Depositary Share, including the dividend, voting, redemption, conversion and
liquidation rights contained in the Articles Supplementary.
"DEPOSITARY'S AGENT" shall mean an agent appointed by the Depositary as
provided, and for the purposes specified, in Section 7.5.
"EXCESS PREFERRED SHARES" shall mean shares of the Company's Series A
Excess Preferred Shares to be issued pursuant to Section 2.10.
"PREFERRED SHARES" shall mean the Company's Series A Cumulative Redeemable
Preferred Shares of Beneficial Interest, $0.01 par value per share, heretofore
validly issued, fully paid and nonassessable.
"RECEIPT" shall mean a Depositary Receipt issued hereunder to evidence one
or more Depositary Shares, whether in definitive or temporary form,
substantially in the form set forth as Exhibit A hereto.
---------
"RECORD DATE" shall mean the date fixed pursuant to Section 4.4.
"RECORD HOLDER" or "HOLDER" as applied to a Receipt shall mean the person
in whose name a Receipt is registered on the books maintained by the Depositary
for such purpose.
"REGISTRAR" shall mean ________________ or any bank or trust company
appointed to register ownership and transfers of Receipts, the deposited
Preferred Shares or Excess Preferred Shares, as the case may be, as herein
provided.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
-2-
<PAGE>
"TRANSFER AGENT" shall mean ________________ or any bank or trust company
appointed to transfer the Receipts, the deposited Preferred Shares or Excess
Preferred Shares, as the case may be, as herein provided.
2. FORM OF RECEIPTS, DEPOSIT OF PREFERRED SHARES, EXECUTION AND DELIVERY,
TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS
2.1. FORM AND TRANSFERABILITY OF RECEIPTS.
Definitive Receipts shall be engraved or printed or lithographed with
steel-engraved borders and underlying tint and shall be substantially in the
form set forth in Exhibit A annexed to this Deposit Agreement, with appropriate
---------
insertions, modifications and omissions, as hereinafter provided. Pending the
preparation of definitive Receipts, the Depositary, upon the written order of
the Company, delivered in compliance with Section 2.2, shall execute and deliver
temporary Receipts which may be printed, lithographed, typewritten, mimeographed
or otherwise substantially of the tenor of the definitive Receipts in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the persons executing such Receipts may
determine, as evidenced by their execution of such Receipts. If temporary
Receipts are issued, the Company and the Depositary will cause definitive
Receipts to be prepared without unreasonable delay. After the preparation of
definitive Receipts, the temporary Receipts shall be exchangeable for definitive
Receipts upon surrender of the temporary Receipts at the Corporate office or
such other offices, if any, as the Depositary may designate, without charge to
the holder. Upon surrender for cancellation of any one or more temporary
Receipts, the Depositary shall execute and deliver in exchange therefor
definitive Receipts representing the same number of Depositary Shares as
represented by the surrendered temporary Receipt or Receipts. Such exchange
shall be made at the Company's expense and without any charge therefor. Until
so exchanged, the temporary Receipts shall in all respects be entitled to the
same benefits under this Deposit Agreement, and with respect to the Preferred
Shares deposited, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual or facsimile
signature of a duly authorized signatory of the Depositary; provided that if a
Registrar (other than the Depositary) shall have been appointed then such
Receipts shall also be countersigned by manual signature of a duly authorized
signatory of the Registrar. No Receipt shall be entitled to any benefits under
this Deposit Agreement or be valid or obligatory for any purpose unless it shall
have been executed as provided in the preceding sentence. The Depositary shall
record on its books each Receipt executed as provided above and delivered as
hereinafter provided.
-3-
<PAGE>
Except as the Depositary may otherwise determine, Receipts shall be in
denominations of any number of whole Depositary Shares. All Receipts shall be
dated the date of their issuance.
Receipts may be endorsed with or have incorporated in the text thereof such
legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or regulation or with the rules and emulations of any
securities exchange upon which the Preferred Shares, the Depositary Shares or
the Receipts may be listed or to conform with any usage with respect thereto, or
to indicate any special limitations or restrictions to which any particular
Receipts are subject.
Title to any Receipt (and to the Depositary Shares evidenced by such
Receipt), that is properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement shall be transferable by delivery with the
same effect as in the case of a negotiable instrument; provided, however, that
until a Receipt shall be transferred on the books of the Depositary as provided
in Section 2.4, the Depositary may, notwithstanding any notice to the contrary,
treat the record holder thereof at such time as the absolute owner thereof for
the purpose of determining the person entitled to distribution of dividends or
other distributions, the exercise of any conversion rights or to any notice
provided for in this Deposit Agreement and for all other purposes.
2.2. DEPOSIT OF PREFERRED SHARES; EXECUTION AND DELIVERY OF RECEIPTS IN
RESPECT THEREOF.
Concurrently with the execution of this Deposit Agreement, the Company is
delivering to the Depositary a certificate or certificates, registered in the
name of the Depositary and evidencing [ l Preferred Shares, properly endorsed
or accompanied, if required by the Depositary, by a duly executed instrument of
transfer or endorsement, in form satisfactory to the Depositary, together with
(i) all such certifications as may be required by the Depositary in accordance
with the provisions of this Deposit Agreement and (ii) a written order of the
Company directing the Depositary to execute and deliver to, or upon the written
order of, the person or persons stated in such order a Receipt or Receipts for
the Depositary Shares representing such deposited Preferred Shares. The
Depositary acknowledges receipt of the deposited Preferred Shares and related
documentation and agrees to hold such deposited Preferred Shares in an account
to be established by the Depositary at the Corporate Office or at such other
office as the Depositary shall determine. The Company hereby appoints the
Depositary as the Registrar and Transfer Agent for Preferred Shares deposited
hereunder and any Excess Preferred Shares issued pursuant to Section 2.10 and
the Depositary hereby accepts such appointment and, as such, will reflect
changes in the number of shares (including any fractional shares) of deposited
Preferred Shares held by it by notation, book-entry or other appropriate method.
-4-
<PAGE>
If required by the Depositary, Preferred Shares presented for deposit by
the Company at any time, whether or not the register of shareholders of the
Company is closed, shall also be accompanied by an agreement or assignment, or
other instrument satisfactory to the Depositary, that will provide for the
prompt transfer to the Depositary or its nominee of any dividend or right to
subscribe for additional Preferred Shares or to receive other property that any
person in whose name the Preferred Shares are or have been registered may
thereafter receive upon or in respect of such deposited Preferred Shares, or in
lieu thereof such agreement of indemnity or other agreement as shall be
satisfactory to the Depositary.
Upon receipt by the Depositary of a certificate or certificates for
Preferred Shares deposited hereunder, together with the other documents
specified above, and upon registering such Preferred Shares in the name of the
Depositary, the Depositary, subject to the terms and conditions of this Deposit
Agreement, shall execute and deliver to, or upon the order of, the person or
persons named in the written order delivered to the Depositary referred to in
the first paragraph of this Section 2.2, a Receipt or Receipts for the number of
whole Depositary Shares representing the Preferred Shares so deposited and
registered in such name or names as may be requested by such person or persons.
The Depositary shall execute and deliver such Receipt or Receipts at the
Corporate Office, except that, at the request, risk and expense of any person
requesting such delivery, such delivery may be made at such other place as may
be designated by such person.
Other than in the case of splits, combinations or other reclassifications
affecting the Preferred Shares, or in the case of dividends or other
distributions of Preferred Shares, if any, there shall be deposited hereunder
not more than the number of shares constituting the Preferred Shares as set
forth in the Articles Supplementary, as such may be amended.
The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary to
perform its obligations under this Deposit Agreement.
2.3. OPTIONAL REDEMPTION OF PREFERRED SHARES FOR CASH.
Whenever the Company shall elect to redeem deposited Preferred Shares for
cash in accordance with the provisions of the Articles Supplementary, it shall
(unless otherwise agreed in writing with the Depositary) give the Depositary not
less than 60 days' prior written notice of the date of such proposed redemption
and of the number of such Preferred Shares held by the Depositary to be redeemed
and the applicable redemption price, as set forth in the Articles Supplementary,
including the amount, if any, of accrued and unpaid dividends to the date of
such redemption. The Depositary shall mail, first-class postage prepaid, notice
of the redemption of Preferred Shares and the proposed simultaneous redemption
of the Depositary Shares representing the Preferred Shares to be redeemed, not
less than
-5-
<PAGE>
30 and not more than 60 days prior to the date fixed for redemption of such
Preferred Shares and Depositary Shares (the "cash redemption date"), to the
holders of record on the record date fixed for such redemption pursuant to
Section 4.4 hereof of the Receipts evidencing the Depositary Shares to be so
redeemed, at the addresses of such holders as the same appear on the records of
the Depositary; but neither failure to mail any such notice to one or more such
holders nor any defect in any such notice shall affect the sufficiency of the
proceedings for redemption as to other holders. The Company shall provide the
Depositary with such notice, and each such notice shall state: the cash
redemption date; the cash redemption price; the number of deposited Preferred
Shares and Depositary Shares to be redeemed; if fewer than all the Depositary
Shares held by any holder are to be redeemed, the number of such Depositary
Shares held by such holder to be so redeemed; the place or places where Receipts
evidencing Depositary Shares to be redeemed are to be surrendered for payment of
the cash redemption price; and that from and after the cash redemption date
dividends in respect of the Preferred Shares represented by the Depositary
Shares to be redeemed will cease to accrue. If fewer than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed shall
be selected pro rata (as nearly as may be practicable without creating
fractional Depositary Shares) or by any other equitable method determined by the
Company that will not result in the issuance of any Excess Preferred Shares.
The Company shall also cause notice of redemption to be published in a newspaper
of general circulation in The City of [New York] at least once a week for two
successive weeks commencing not less than 30 nor more than 60 days prior to the
cash redemption date.
In the event that notice of redemption has been made as described in the
immediately preceding paragraph and the Company shall then have paid in full to
the Depositary the cash redemption price (determined pursuant to the Articles
Supplementary) of the Preferred Shares deposited with the Depositary to be
redeemed (including any accrued and unpaid dividends to the date of redemption),
the Depositary shall redeem the number of Depositary Shares representing such
Preferred Shares so called for redemption by the Company and from and after the
cash redemption date (unless the Company shall have failed to redeem the
Preferred Shares to be redeemed by it as set forth in the Company's notice
provided for in the preceding paragraph), all dividends in respect of the
Preferred Shares called for redemption shall cease to accrue, the Depositary
Shares called for redemption shall be deemed no longer to be outstanding and all
rights of the holders of Receipts evidencing such Depositary Shares (except the
right to receive the cash redemption price and any money or other property to
which holders of such Receipts were entitled upon such redemption) shall, to the
extent of such Depositary Shares, cease and terminate. Upon surrender in
accordance with said notice of the Receipts evidencing such Depositary Shares
(properly endorsed or assigned for transfer, if the Depositary shall so
require), such Depositary Shares shall be redeemed at a cash redemption price of
$25.00 per Depositary Share plus any other money and other property payable in
respect of such Preferred Shares. The
-6-
<PAGE>
foregoing shall be further subject to the terms and conditions of the Articles
Supplementary.
If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with payment of the cash
redemption price for and all other amounts payable in respect of the Depositary
Shares called for redemption, a new Receipt evidencing the Depositary Shares
evidenced by such prior Receipt and not called for redemption.
2.4. REGISTRATION OF TRANSFERS OF RECEIPTS.
The Company hereby appoints the Depositary as the Registrar and Transfer
Agent for the Receipts and the Depositary hereby accepts such appointment and,
as such, shall register on its books from time to time transfers of Receipts
upon, any surrender thereof by the holder in person or by a duly authorized
attorney, properly endorsed or accompanied by a properly executed instrument of
transfer or endorsement, together with evidence of the payment of any transfer
taxes as may be required by law. Upon such surrender, the Depositary shall
execute a new Receipt or Receipts and deliver the same to or upon the order of
the person entitled thereto evidencing the same aggregate number of Depositary
Shares evidenced by the Receipt or Receipts surrendered.
2.5. COMBINATIONS AND SPLIT-UPS OF RECEIPTS.
Upon surrender of a Receipt or Receipts at the Corporate Office or such
other office as the Depositary may designate for the purpose of effecting a
split-up or combination of Receipts, subject to the terms and conditions of this
Deposit Agreement, the Depositary shall execute and deliver a new Receipt or
Receipts in the authorized denominations requested evidencing the same aggregate
number of Depositary Shares evidenced by the Receipt or Receipts surrendered.
2.6. SURRENDER OF RECEIPTS AND WITHDRAWAL OF PREFERRED SHARES.
Any holder of a Receipt or Receipts may withdraw any or all of the
deposited Preferred Shares represented by the Depositary Shares evidenced by
such Receipt or Receipts and all money and other property, if any, represented
by such Depositary Shares by surrendering such Receipt or Receipts at the
Corporate Office or at such other office as the Depositary may designate for
such withdrawals; provided that a holder of a Receipt or Receipts may not
withdraw such Preferred Shares (or money and other property, if any, represented
thereby) which has previously been called for redemption or which has been
converted to Excess Preferred Shares in accordance with Section 2.10. After
such surrender, without unreasonable delay, the Depositary shall deliver to such
holder, or to the person or
-7-
<PAGE>
persons designated by such holder as hereinafter provided, the number of whole
or fractional shares of such Preferred Shares and all such money and other
property, if any, represented by the Depositary Shares evidenced by the Receipt
or Receipts so surrendered for withdrawal, but holders of such whole or
fractional Preferred Shares will not thereafter be entitled to deposit such
Preferred Shares hereunder or to receive Depositary Shares therefor. If the
Receipt or Receipts delivered by the holder to the Depositary in connection with
such withdrawal shall evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole or fractional
shares of deposited Preferred Shares to be withdrawn, the Depositary shall at
the same time, in addition to such number of whole or fractional Preferred
Shares and such money and other property, if any, to be withdrawn, deliver to
such holder, or (subject to Section 2.4) upon his order, a new Receipt or
Receipts evidencing such excess number of Depositary Shares. Delivery of such
Preferred Shares and such money and other property being withdrawn may be made
by the delivery of such certificates, documents of title and other instruments
as the Depositary may deem appropriate, which, if required by the Depositary,
shall be properly endorsed or accompanied by proper instruments of transfer.
If the deposited Preferred Shares and the money and other property being
withdrawn are to be delivered to a person or persons other than the record
holder of the Receipt or Receipts being surrendered for withdrawal of Preferred
Shares, such holder shall execute and deliver to the Depositary a written order
so directing the Depositary and the Depositary may require that the Receipt or
Receipts surrendered by such holder for withdrawal of such Preferred Shares be
properly endorsed in blank or accompanied by a properly executed instrument of
transfer or endorsement in blank.
The Depositary shall deliver the deposited Preferred Shares and the money
and other property, if any, represented by the Depositary Shares evidenced by
Receipts surrendered for withdrawal at the Corporate Office, except that, at the
request, risk and expense of the holder surrendering such Receipt or Receipts
and for the account of the holder thereof, such delivery may be made at such
other place as may be designated by such holder.
2.7. LIMITATIONS ON EXECUTION AND DELIVERY, TRANSFER, SPLIT-UP,
COMBINATION, SURRENDER AND EXCHANGE OF RECEIPTS.
As a condition precedent to the execution and delivery, transfer, split-up,
combination, surrender or exchange of any Receipt, the Depositary, any of the
Depositary's Agents or the Company may require any or all of the following: (i)
payment to it of a sum sufficient for the payment (or, in the event that the
Depositary or the Company shall have made such payment, the reimbursement to it)
of any tax or other governmental charge with respect thereto (including any such
tax or charge with respect to the Preferred Shares being deposited or
withdrawn);
-8-
<PAGE>
(ii) the production of proof satisfactory to it as to the identity and
genuineness of any signature (or the authority of any signature); and (iii)
compliance with such regulations, if any, as the Depositary or the Company may
establish consistent with the provisions of this Deposit Agreement as may be
required by any securities exchange upon which the deposited Preferred Shares,
the Depositary Shares or the Receipts may be included for quotation or listed.
The deposit of Preferred Shares may be refused, the delivery of Receipts
against Preferred Shares may be suspended, the transfer of Receipts may be
refused, and the transfer, split-up, combination, surrender, exchange or
redemption of outstanding Receipts may be suspended (i) during any period when
the register of shareholders of the Company is closed or (ii) if any such action
is deemed reasonably necessary or advisable by the Depositary, any of the
Depositary's Agents or the Company at any time or from time to time because of
any requirement of law or of any government or governmental body or commission,
or under any provision of this Deposit Agreement.
2.8. LOST RECEIPTS, ETC.
In case any Receipt shall be mutilated or destroyed or lost or stolen, the
Depositary in its discretion may execute and deliver a Receipt of like form and
tenor in exchange and substitution for such mutilated Receipt or in lieu of and
in substitution for such destroyed, lost or stolen Receipt; provided that the
holder thereof provides the Depositary with (i) evidence reasonably satisfactory
to the Depositary of such destruction, loss or theft of such Receipt, of the
authenticity thereof and of his ownership thereof and (ii) reasonable
indemnification satisfactory to the Depositary and the Company.
2.9. CANCELLATION AND DESTRUCTION OF SURRENDERED RECEIPTS.
All Receipts surrendered to the Depositary or any Depositary's Agent shall
be canceled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy such Receipts so canceled.
2.10. CONVERSION OF PREFERRED SHARES INTO EXCESS PREFERRED SHARES
As provided in the Articles Supplementary, upon the happening of certain
events, Preferred Shares (in whole or fractional parts) shall be automatically
converted into Excess Preferred Shares. In the event of such a conversion, the
Receipt representing the deposited Preferred Shares so converted shall no longer
represent, to the extent of the shares so converted, such deposited Preferred
Shares. Promptly upon its knowledge of the conversion of such deposited
Preferred Shares into Excess Preferred Shares, the Company shall notify the
Depositary of such conversion, the number of deposited Preferred Shares so
converted, and the identity
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of the holder of the Receipt so affected, whereupon the Depositary shall
promptly notify the holder of such Receipt of the foregoing information and the
requirement for the holder to surrender such Receipt to the Depositary for
cancellation of the number of Depositary Shares evidenced thereby equal to the
converted deposited Preferred Shares represented thereby.
If fewer than all of the Depositary Shares evidenced by a Receipt are
required to be surrendered for cancellation, the Depositary will deliver to the
holder of such Receipt upon its surrender to the Depositary a new Receipt
evidencing the Depositary Shares evidenced by such prior Receipt and not
required to be surrendered for cancellation. Upon the conversion of the
deposited Preferred Shares and cancellation of the Depositary Shares represented
thereby, the Depositary will make appropriate adjustments in its records (as
contemplated in Section 2.2) to reflect such conversion and cancellation
(including the reduction of any fractional share of deposited Preferred Shares
and the issuance of any Excess Preferred Shares).
3. CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE COMPANY
3.1. FILING PROOFS, CERTIFICATES AND OTHER INFORMATION.
Any person presenting Preferred Shares for deposit or any holder of a
Receipt may be required from time to time to file such proof of residence or
other information, to execute such certificates and to make such representations
and warranties as the Depositary or the Company may reasonably deem necessary or
proper. The Depositary or the Company may withhold or delay the delivery of any
Receipt, the transfer, redemption or exchange of any Receipt, the withdrawal of
the deposited Preferred Shares represented by the Depositary Shares evidenced by
any Receipt, the distribution of any dividend or other distribution or the sale
of any rights or of the proceeds thereof, until such proof or other information
is filed, such certificates are executed or such representations and warranties
are made.
3.2. PAYMENT OF FEES AND EXPENSES.
Holders of Receipts shall be obligated to make payments to the Depositary
of certain fees and expenses, as provided in Section 5.7, or provide evidence
reasonably satisfactory to the Depositary that such fees and expenses have been
paid. Until such payment is made, transfer of any Receipt or any withdrawal of
the Preferred Shares or money or other property, if any, represented by the
Depositary Shares evidenced by such Receipt may be refused, any dividend or
other distribution may be withheld, and any part or all of the Preferred Shares
or other property represented by the Depositary Shares evidenced by such Receipt
may be sold for the account of the holder thereof (after attempting by
reasonable means to
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notify such holder a reasonable number of days prior to such sale). Any
dividend or other distribution so withheld and the proceeds of any such sale may
be applied to any payment of such fees or expenses, the holder of such Receipt
remaining liable for any deficiency.
3.3. REPRESENTATIONS AND WARRANTIES AS TO PREFERRED SHARES.
In the case of the initial deposit of the Preferred Shares hereunder, the
Company and, in the case of subsequent deposits thereof, each person so
depositing Preferred Shares under this Deposit Agreement shall be deemed thereby
to represent and warrant that such Preferred Shares and each certificate
therefor are valid and that the person making such deposit is duly authorized to
do so. The Company hereby further represents and warrants that such Preferred
Shares, when issued, will be validly issued, fully paid and nonassessable. Such
representations and warranties shall survive the deposit of the Preferred Shares
and the issuance of Receipts.
3.4. REPRESENTATION AND WARRANTY AS TO RECEIPTS AND DEPOSITARY SHARES.
The Company hereby represents and warrants that the Receipts, when issued,
will evidence legal and valid interests in the Depositary Shares and each
Depositary Share will represent a legal and valid 1/10 fractional interest in a
deposited Preferred Share. Such representation and warranty shall survive the
deposit of the Preferred Shares and the issuance of Receipts evidencing the
Depositary Shares.
4. THE PREFERRED SHARES; NOTICES
4.1. CASH DISTRIBUTIONS.
Whenever the Depositary shall receive any cash dividend or other cash
distribution on the deposited Preferred Shares, including any cash received upon
redemption of any Preferred Shares pursuant to Section 2.3, the Depositary
shall, subject to Section 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of such sum as are, as
nearly as practicable, in proportion to the respective numbers of Depositary
Shares evidenced by the Receipts held by such holders; provided, however, that
(i) in case the Company or the Depositary shall be required to and shall
withhold from any cash dividend or other cash distribution in respect of the
Preferred Shares represented by the Receipts held by any holder an amount on
account of taxes, the amount made available for distribution or distributed in
respect of Depositary Shares represented by such Receipts subject to such
withholding shall be reduced accordingly and (ii) no cash dividends will be
paid in respect of any Depositary Share to the extent that it
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represents any Preferred Shares converted into Excess Preferred Shares. The
Depositary shall distribute or make available for distribution, as the case may
be, only such amount, however, as can be distributed without attributing to any
holder of Receipts a fraction of one cent, and any balance not so distributable
shall be held by the Depositary (without liability for interest thereon) and
shall be added to and be treated as part of the next sum received by the
Depositary for distribution to record holders of Receipts then outstanding.
4.2. DISTRIBUTIONS OTHER THAN CASH.
Whenever the Depositary shall receive any distribution other than cash on
the deposited Preferred Shares, the Depositary shall, subject to Section 3.2,
distribute to record holders of Receipts on the record date fixed pursuant to
Section 4.4 such amounts of the securities or property received by it as are, as
nearly as practicable, in proportion to the respective numbers of Depositary
Shares evidenced by the Receipts held by such holders, in any manner, that the
Depositary and the Company may deem equitable and practicable for accomplishing
such distribution, except that no distribution will be made in respect of any
Depositary Share to the extent that it represents any Preferred Shares converted
into Excess Preferred Shares. If, in the opinion of the Depositary after
consultation with the Company, such distribution cannot be made proportionately
among such record holders, or if for any other reason (including any requirement
that the Company or the Depositary withhold an amount on account of taxes), the
Depositary deems, after consultation with the Company, such distribution not to
be feasible, the Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the purpose of effecting such
distribution, including the sale (at public or private sale) of the securities
or property thus received or any part thereof, at such place or places and upon
such terms as it may deem proper. The net proceeds of any such sale shall,
subject to Section 3.2, be distributed or made available for distribution, as
the case may be, by the Depositary to record holders of Receipts as provided by
Section 4.1 in the case of a distribution received in cash. The Company shall
not make any distribution of such securities or property to the holders of
Receipts unless the Company shall have provided to the Depositary an opinion of
counsel stating that such securities or property have been registered under the
Securities Act or do not need to be registered.
4.3. SUBSCRIPTION RIGHTS, PREFERENCES OR PRIVILEGES.
If the Company shall at any time offer or cause to be offered to the
persons in whose names deposited Preferred Shares are registered on the books of
the Company any rights, preferences or privileges to subscribe for or to
purchase any securities or any rights, preferences or privileges of any other
nature, such rights, preferences or privileges shall in each such instance be
made available by the Depositary to the record holders of Receipts in such
manner as the Company shall
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instruct (including by the issue to such record holders of warrants representing
such rights, preferences or privileges); provided, however, that (a) if at the
time of issue or offer of any such rights, preferences or privileges the Company
determines upon advice of its legal counsel that it is not lawful or feasible to
make such rights, preferences or privileges available to the holders of Receipts
(by the issue of warrants or otherwise) or (b) if and to the extent instructed
by holders of Receipts who do not desire to exercise such rights, preferences or
privileges, the Depositary shall then, if so instructed to the Company, and if
applicable laws or the terms of such rights, preferences or privileges so
permit, sell such rights, preferences or privileges of such holders at public or
private sale, at such place or places and upon such terms as it may deem proper.
The net proceeds of any such sale shall, subject to Section 3.1 and Section 3.2,
be distributed by the Depositary to the record holders of Receipts entitled
thereto as provided by Section 4.1 in the case of a distribution received in
cash. The Company shall not make any distribution of such rights, preferences
or privileges, unless the Company shall have provided to the Depositary an
opinion of counsel stating that such rights, preferences or privileges have been
registered under the Securities Act or do not need to be registered.
If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company agrees that it will promptly file a
registration statement pursuant to the Securities Act with respect to such
rights, preferences or privileges and securities and use its best efforts and
take all steps available to it to cause such registration statement to become
effective sufficiently in advance of the expiration of such rights, preferences
or privileges to enable such holders to exercise such rights, preferences or
privileges. In no event shall the Depositary make available to the holders of
Receipts any right, preference or privilege to subscribe for or to purchase any
securities unless and until such a registration statement shall have become
effective or unless the offering and sale of such securities to such holders are
exempt from registration under the provisions of the Securities Act and the
Company shall have provided to the Depositary an opinion of counsel to such
effect.
If any other action under the law of any jurisdiction or any governmental
or administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to holders of Receipts,
the Company agrees to use its best efforts to take such action or obtain such
authorization, consent or permit sufficiently in advance of the expiration of
such rights, preferences or privileges to enable such holders to exercise such
rights, preferences or privileges.
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4.4. NOTICE OF DIVIDENDS; FIXING OF RECORD DATE FOR HOLDERS OF RECEIPTS.
Whenever any cash dividend or other cash distribution shall become payable,
any distribution other than cash shall be made, or any rights, preferences or
privileges shall at any time be offered, with respect to the deposited Preferred
Shares, or whenever the Depositary shall receive notice of (i) any meeting at
which holders of such Preferred Shares are entitled to vote or of which holders
of such Preferred Shares are entitled to notice or (ii) any election on the part
of the Company to redeem any such Preferred Shares, the Depositary shall in each
such instance fix a record date (which shall be the same date as the record date
fixed by the Company with respect to the Preferred Shares) for the determination
of the holders of Receipts who shall be entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof, to give instructions for the exercise of voting rights at any such
meeting or to receive notice of such meeting or whose Depositary Shares are to
be so redeemed.
4.5. VOTING RIGHTS.
Upon receipt of notice of any meeting at which the holders of deposited
Preferred Shares are entitled to vote, the Depositary shall, as soon as
practicable thereafter, mail to the record holders of Receipts a notice, which
shall be provided by the Company and which shall contain (i) such information as
is contained in such notice of meeting, (ii) a statement that the holders of
Receipts at the close of business on a specified record date fixed pursuant to
Section 4.4 will be entitled, subject to any applicable provision of law, to
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Preferred Shares represented by their respective Depositary Shares
and (iii) a brief statement as to the manner in which such instructions may be
given. Upon the written request of a holder of a Receipt on such record date,
the Depositary shall vote or cause to be voted the amount of Preferred Shares
represented by the Depositary Shares evidenced by such Receipt in accordance
with the instructions set forth in such request. To the extent such
instructions request the voting of a fractional interest of a share of deposited
Preferred Shares, the Depositary shall aggregate such interest with all other
fractional interests resulting from requests with the same voting instructions
and shall vote the number of whole votes resulting from such aggregation in
accordance with the instructions received in such requests. Each Preferred
Share is entitled to 10 votes and, accordingly, each Depositary Share is
entitled to one vote. The Company hereby agrees to take all reasonable action
that may be deemed necessary by the Depositary in order to enable the Depositary
to vote such Preferred Shares or cause such Preferred Shares to be voted. In
the absence of specific instructions from the holder of a Receipt, the
Depositary will abstain from voting to the extent of the Preferred Shares
represented by the Depositary Shares evidenced by such Receipt. The Depositary
shall not be required
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to exercise discretion in voting any Preferred Shares represented by the
Depositary Shares evidenced by such Receipt.
4.6. CHANGES AFFECTING PREFERRED SHARES AND RECLASSIFICATIONS,
RECAPITALIZATION, ETC.
Upon any change in par or stated value, split-up, combination or any other
reclassification of Preferred Shares, or upon any recapitalization,
reorganization, merger, amalgamation or consolidation affecting the Company or
to which it is a party or sale of all or substantially all of the Company's
assets, the Depositary shall, upon the instructions of the Company: (i) make
such adjustments in (a) the fraction of an interest represented by one
Depositary Share in one Preferred Share and (b) the ratio of the redemption
price per Depositary Share to the redemption price of a Preferred Share, in each
case as may be required by or as is consistent with the provisions of the
Articles Supplementary to fully reflect the effects of such change in
liquidation value, split-up, combination or other reclassification of Shares, or
of such recapitalization, reorganization, merger, consolidation or sale and (ii)
treat any shares or other securities or property (including cash) that shall be
received by the Depositary in exchange for or upon conversion of or in respect
of the Preferred Shares as new deposited property under this Deposit Agreement,
and Receipts then outstanding shall thenceforth represent the proportionate
interests of holders thereof in the new deposited property so received in
exchange for or upon conversion or in respect of such Preferred Shares. In any
such case the Depositary may, in its discretion, with the approval of the
Company, execute and deliver additional Receipts, or may call for the surrender
of all outstanding Receipts to be exchanged for new Receipts specifically
describing such new deposited property. Anything to the contrary herein
notwithstanding, holders of Receipts shall have the right from and after the
effective date of any such change in par or stated value, split-up, combination
or other reclassification of the Preferred Shares or any such recapitalization,
reorganization, merger, amalgamation or consolidation or sale of substantially
all the assets of the Company to surrender such Receipts to the Depositary with
instructions to convert, exchange or surrender the Preferred Shares represented
thereby only into or for, as the case may be, the kind and amount of shares and
other securities and property and cash into which the deposited Preferred Shares
evidenced by such Receipts might have been converted or for which such Preferred
Shares might have been exchanged or surrendered immediately prior to the
effective date of such transaction. The Company shall cause effective provision
to be made in the charter of the resulting or surviving corporation (if other
than the Company) for protection of such rights as may be applicable upon
exchange of the deposited Preferred Shares for securities or property or cash of
the surviving corporation in connection with the transactions set forth above.
The Company shall cause any such surviving corporation (if other than the
Company) expressly to assume the obligations of the Company hereunder.
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4.7. INSPECTION OF REPORTS.
The Depositary shall make available for inspection by holders of Receipts
at the Corporate Office and at such other places as it may from time to time
deem advisable during normal business hours any reports and communications
received from the Company that are both received by the Depositary as the holder
of deposited Preferred Shares and made generally available to the holders of the
Preferred Shares. In addition, the Depositary shall transmit certain notices
and reports to the holders of Receipts as provided in Section 5.5.
4.8. LISTS OF RECEIPT HOLDERS.
Promptly upon request from time to time by the Company, the Depositary
shall furnish to the Company a list, as of a recent date specified by the
Company, of the names, addresses and holdings of Depositary Shares of all
persons in whose names Receipts are registered on the books of the Depositary.
4.9. TAX AND REGULATORY COMPLIANCE.
The Depositary shall be responsible for (i) preparation and mailing of form
1099s for all open and closed accounts, (ii) foreign tax withholding, (iii)
withholding 31% (or any withholding as may be required at the then applicable
rate) of dividends from eligible holders of Receipts, (iv) mailing W-9 forms to
new holders of Receipts without a certified taxpayer identification number, (v)
processing certified W-9 forms, (vi) preparation and filing of state information
returns and (vii) escheatment services.
4.10. WITHHOLDING.
Notwithstanding any other provision of this Deposit Agreement, in the event
that the Depositary determines that any distribution in property is subject to
any tax which the Depositary is obligated by law to withhold, the Depositary may
dispose of all or a portion of such property in such amounts and in such manner
as the Depositary deems necessary and practicable to pay such taxes, by public
or private sale, and the Depositary shall distribute the net proceeds of any
such sale or the balance of any such property after deduction of such taxes to
the holders of Receipts entitled thereto in proportion to the number of
Depositary Shares held by them respectively.
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5. THE DEPOSITARY AND THE COMPANY
5.1. MAINTENANCE OF OFFICES, AGENCIES AND TRANSFER BOOKS BY THE
DEPOSITARY AND THE REGISTRAR.
The Depositary shall maintain at the Corporate Office facilities for the
execution and delivery, transfer, surrender and exchange, split-up, combination
and redemption of Receipts and deposit and withdrawal of Preferred Shares and at
the offices of the Depositary's Agents, if any, facilities for the delivery,
transfer, surrender and exchange, split-up, combination and redemption of
Receipts and deposit and withdrawal of Preferred Shares, all in accordance with
the provisions of this Deposit Agreement.
The Depositary shall keep books at the Corporate Office for the
registration and transfer of Receipts, which books at all reasonable times shall
be open for inspection by the record holders of Receipts as provided by
applicable law. The Depositary may close such books, at any time or from time
to time, when deemed expedient by it in connection with the performance of its
duties hereunder.
If the Receipts or the Depositary Shares evidenced thereby or the Preferred
Shares represented by such Depositary Shares shall be listed in the New York
Stock Exchange, Inc. or any other stock exchange, the Depositary may, with the
approval of the Company, appoint a Registrar (acceptable to the Company) for
registration of such Receipts or Depositary Shares in accordance with the
requirements of such Exchange. Such Registrar (which may be the Depositary if
so permitted by the requirements of such Exchange) may be removed and a
substitute registrar appointed by the Depositary upon the request or with the
approval of the Company. If the Receipts, such Depositary Shares or such
Preferred Shares are listed on one or more other stock exchanges, the Depositary
will, at the request and expense of the Company, arrange such facilities for the
delivery, transfer, surrender, redemption and exchange of such Receipts, such
Depositary Shares or such Preferred Shares as may be required by law or
applicable stock exchange regulations.
5.2. PREVENTION OR DELAY IN PERFORMANCE BY THE DEPOSITARY, THE DEPOSITARY'S
AGENTS, THE REGISTRAR OR THE COMPANY.
Neither the Depositary, any Depositary's Agent, any Registrar nor the
Company shall incur any liability to any holder of any Receipt, if by reason of
any provision of any present or future law or regulation thereunder of the
United States of America or of any other governmental authority or, in the case
of the Depositary, the Depositary's Agent or the Registrar, by reason of any
provision, present or future, of the Declaration of Trust or the Articles
Supplementary or, in the case of the Company, the Depositary, the Depositary's
Agent or the Registrar, by reason of any act of God or war or other circumstance
beyond the control of the relevant
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party, the Depositary, any Depositary's Agent, the Registrar or the Company
shall be prevented or forbidden from doing or performing any act or thing that
the terms of this Deposit Agreement provide shall be done or performed; nor
shall the Depositary, any Depositary's Agent, any Registrar or the Company incur
any liability to any holder of a Receipt by reason of any nonperformance or
delay, caused as aforesaid, in the performance of any act or thing that the
terms of this Deposit Agreement provide shall or may be done or performed, or by
reason of any exercise of, or failure to exercise, any discretion provided for
in this Deposit Agreement.
5.3. OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S AGENTS, THE REGISTRAR
AND THE COMPANY.
Neither the Depositary, any Depositary's Agent, any Registrar nor the
Company assumes any obligation or shall be subject to any liability under this
Deposit Agreement or any Receipt to holders of Receipts other than from acts or
omissions arising out of conduct constituting bad faith, negligence (in the case
of any action or inaction with respect to the voting of the deposited Preferred
Shares), gross negligence or willful misconduct in the performance of such
duties as are specifically set forth in this Deposit Agreement.
Neither the Depositary, any Depositary's Agent, any Registrar nor the
Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding with respect to the deposited Preferred Shares,
Depositary Shares or Receipts that in its reasonable opinion may involve it in
expense or liability unless indemnity reasonably satisfactory to it against all
expense and liability be furnished as often as may be required.
Neither the Depositary, any Depositary's Agent, any Registrar nor the
Company shall be liable for any action or any failure to act by it in reliance
upon the written advice of legal counsel or accountants, or information provided
by any person presenting Preferred Shares for deposit, any holder of a Receipt
or any other person believed by it in good faith to be competent to give such
information. The Depositary, any Depositary's Agent, any Registrar and the
Company may each rely and shall each be protected in acting upon any written
notice, request, direction or other document believed by it in good faith to be
genuine and to have been signed or presented by the proper party or parties.
In the event the Depositary shall receive conflicting claims, requests or
instructions from any holders of Receipts, on the one hand, and the Company, on
the other hand, the Depositary shall be entitled to act on such claims, requests
or instructions received from the Company, and shall be entitled to the full
indemnification set forth in Section 5.6 hereof in connection with any action so
taken.
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<PAGE>
The Depositary shall not be responsible for any failure to carry out any
instruction to vote any of the deposited Preferred Shares or for the manner or
effect of any such vote made, as long as any such action or non-action is in
good faith and does not result from negligence or willful misconduct of the
Depositary. The Depositary undertakes, and any Registrar shall be required to
undertake, to perform such duties and only such duties as are specifically set
forth in this Deposit Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Depositary or any Registrar.
The Depositary, its parent, affiliate, or subsidiaries, any Depositary's
Agent, and any Registrar may own, buy, sell or deal in any class of securities
of the Company and its affiliates and in Receipts or Depositary Shares or become
pecuniarily interested in any transaction in which the Company or its affiliates
may be interested or contract with or lend money to or otherwise act as fully or
as freely as if it were not the Depositary or the Depositary's Agent hereunder.
The Depositary may also act as transfer agent or registrar of any of the
securities of the Company and its affiliates or act in any other capacity for
the Company or its affiliates.
It is intended that neither the Depositary nor any Depositary's Agent shall
be deemed to be an "issuer" of the securities under the federal securities laws
or applicable state securities laws, it being expressly understood and agreed
that the Depositary and any Depositary's Agent are acting only in a ministerial
capacity as Depositary for the deposited Preferred Shares; provided, however,
that the Depositary agrees to comply with all information reporting and
withholding requirements applicable to it under law or this Deposit Agreement in
its capacity as Depositary.
Neither the Depositary (or its officers, directors, employees or agents)
nor any Depositary's Agent makes any representation or has any responsibility as
to the validity of the registration statement pursuant to which the Depositary
Shares are registered under the Securities Act, the deposited Preferred Shares,
the Depositary Shares, the Receipts (except its countersignature thereon) or any
instruments referred to therein or herein, or as to the correctness of any
statement made therein or herein; provided, however, that the Depositary is
responsible for its representations in this Deposit Agreement and for the
validity of any action taken or required to be taken by the Depositary in
connection with this Deposit Agreement.
The Company agrees that it will register the deposited Preferred Shares and
the Depositary Shares in accordance with the applicable securities laws.
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5.4. RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF SUCCESSOR
DEPOSITARY.
The Depositary may at any time resign as Depositary hereunder by notice of
its election to do so delivered to the Company, such resignation to take effect
upon the appointment of a successor depositary and its acceptance of such
appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of such
removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If a successor depositary shall not have been appointed in 60
days, the resigning Depositary may petition a court of competent jurisdiction to
appoint a successor depositary. Every successor depositary shall execute and
deliver to its predecessor and to the Company an instrument in writing accepting
its appointment hereunder, and thereupon such successor depositary, without any
further act or deed, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor and for all purposes shall be the
Depositary under this Deposit Agreement, and such predecessor, upon payment of
all sums due it and on the written request of the Company, shall promptly
execute and deliver an instrument transferring to such successor all rights and
powers of such predecessor hereunder, shall duly assign, transfer and deliver
all rights, title and interest in the deposited Preferred Shares and any moneys
or property held hereunder to such successor and shall deliver to such successor
a list of the record holders of all outstanding Receipts. Any successor
depositary shall promptly mail notice of its appointment to the record holders
of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act. Such successor
depositary may execute the Receipts either in the name of the predecessor
depositary or in the name of the successor depositary.
5.5. NOTICES, REPORTS AND DOCUMENTS.
The Company agrees that it will deliver to the Depositary, and the
Depositary will, promptly after receipt thereof, transmit to the record holders
of Receipts, in each case at the address recorded in the Depositary's books,
copies of all
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<PAGE>
notices and reports (including financial statements) required by law, by the
rules of any national securities exchange upon which the Preferred Shares, the
Depositary Shares or the Receipts are included for quotation or listed or by the
Declaration of Trust and the Articles Supplementary to be furnished by the
Company to holders of the deposited Preferred Shares and, if requested by the
holder of any Receipt, a copy of this Deposit Agreement, the form of Receipt,
the Articles Supplementary and the form of Preferred Shares. Such transmission
will be at the Company's expense and the Company will provide the Depositary
with such number of copies of such documents as the Depositary may reasonable
request. In addition, the Depositary will transmit to the record holders of
Receipts at the Company's expense such other documents as may be requested by
the Company.
5.6. INDEMNIFICATION BY THE COMPANY.
The Company agrees to indemnify the Depositary, any Depositary's Agent and
any Registrar against, and hold each of them harmless from, any liability, costs
and expenses (including reasonable attorneys' fees) that may arise out of, or in
connection with, its acting as Depositary, Depositary's Agent or Registrar,
respectively, under this Deposit Agreement and the Receipts, except for any
liability arising out of the willful misconduct, gross negligence, negligence
(in the case of any action or inaction with respect to the voting of the
deposited Preferred Shares) or bad faith on the part of any such person or
persons. The obligations of the Company set forth in this Section 5.6 shall
survive any succession of any Depositary, Depositary's Agent of Registrar or
termination of this Deposit Agreement.
5.7. FEES, CHARGES AND EXPENSES.
No charges and expenses of the Depositary or any Depositary's Agent
hereunder shall be payable by any person, except as provided in this Section
5.7. The Company shall pay all transfer and other taxes and governmental
charges arising solely from the existence of this Deposit Agreement. The
Company shall also pay all fees and expenses of the Depositary in connection
with the initial deposit of the Preferred Shares and the initial issuance of the
Depositary Shares evidenced by the Receipts, any redemption of the Preferred
Shares at the option of the Company and all withdrawals of the Preferred Shares
by holders of Depositary Shares. If a holder of Receipts requests the
Depositary to perform duties not required under this Deposit Agreement, the
Depositary shall notify the holder of the cost of the performance of such duties
prior to the performance thereof. Such holder will be liable for the charges
and expenses related to such performance. All other fees and expenses of the
Depositary and any Depositary's Agent hereunder and of any Registrar (including,
in each case, fees and expenses of counsel) incident to the performance of their
respective obligations hereunder will be promptly paid as previously agreed
between the Depositary and the Company. The Depositary shall
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<PAGE>
present its statement for fees and expenses to the Company every month or at
such other intervals as the Company and the Depositary may agree.
6. AMENDMENT AND TERMINATION
6.1. AMENDMENT.
The form of the Receipts and any provision of this Deposit Agreement may at
any time and from time to time be amended by agreement between the Company and
the Depositary in any respect that they may deem necessary or desirable;
provided, however, that no such amendment (other than any change in the fees of
any Depositary, Registrar or Transfer Agent) which (i) shall materially and
adversely alter the rights of the holders of Receipts or (ii) would be
materially and adversely inconsistent with the rights granted to the holders of
the Preferred Shares pursuant to the Articles Supplementary shall be effective
unless such amendment shall have been approved by the holders of at least a
majority of the Depositary Shares then outstanding. In no event shall any
amendment impair the right, subject to the provisions of Section 2.6 and Section
2.7 and Article III, of any holder of any Depositary Shares to surrender the
Receipt evidencing such Depositary Shares with instructions to the Depositary to
deliver to the holder the deposited Preferred Shares and all money and other
property, if any, represented thereby, except in order to comply with mandatory
provisions of applicable law. Every holder of an outstanding Receipt at the
time any such amendment becomes effective shall be deemed, by continuing to hold
such Receipt, to consent and agree to such amendment and to be bound by this
Deposit Agreement as amended thereby.
6.2. TERMINATION.
This Deposit Agreement may be terminated by the Company upon not less than
30 days' prior written notice to the Depositary if (i) such termination is
necessary to preserve the Company's status as a real estate investment trust
under the Internal Revenue Code of 1986, as amended (or any successor
provisions), or (ii) the holders of a majority of the Preferred Shares consent
to such termination, whereupon the Depositary shall deliver or make available to
each holder of a Receipt, upon surrender of the Receipt held by such holder,
such number of whole or fractional shares of deposited Preferred Shares as are
represented by the Depositary Shares evidenced by such Receipt, together with
any other property held by the Depositary in respect of such Receipt. In the
event that this Deposit Agreement is terminated pursuant to clause (i) of the
immediately preceding sentence, the Company hereby agrees to use its best
efforts to list the Preferred Shares issued upon surrender of the Receipt
evidencing the Depositary Shares represented thereby on a national securities
exchange. This Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares shall have
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<PAGE>
been redeemed pursuant to Section 2.3 or (ii) there shall have been made a final
distribution in respect of the deposited Preferred Shares in connection with any
liquidation, dissolution or winding up of the Company and such distribution
shall have been distributed to the holders of Receipts entitled thereto.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Section 5.6 and Section 5.7.
7. MISCELLANEOUS
7.1. COUNTERPARTS.
This Deposit Agreement may be executed in any number of counterparts, and
by each of the parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed an original, but
all such counterparts taken together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Deposit Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agents and
shall be open to inspection during business hours at the Corporate Office and
the respective offices of the Depositary's Agents, if any, by any holder of a
Receipt.
7.2. EXCLUSIVE BENEFITS OF PARTIES.
This Deposit Agreement is for the exclusive benefit of the parties hereto,
and their respective successors hereunder, and shall not be deemed to give any
legal or equitable right, remedy or claim to any other person whatsoever.
7.3. INVALIDITY OF PROVISIONS.
In case any one or more of the provisions contained in this Deposit
Agreement or in the Receipts should be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall in no way be affected,
prejudiced or disturbed thereby.
7.4. NOTICES.
Any and all notices to be given to the Company hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
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<PAGE>
personally delivered or sent by mail, or by telegram or facsimile transmission
confirmed by letter, addressed to the Company at:
COLONIAL PROPERTIES TRUST
2101 Sixth Avenue North
Suite 750
Birmingham, Alabama 35202
Attention: Thomas H. Lowder
Telephone No.: (205) 250-8700
or at any other address of which the Company shall have notified the Depositary
in writing.
Any notices to be given to the Depositary hereunder or under the Receipts
shall be in writing and shall be deemed to have been duly given if personally
delivered or sent by mail, or by telegram or telex or telecopier confirmed by
letter, addressed to the Depositary at the Corporate Office.
Any notices given to any record holder of a Receipt hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to such record holder at the address of such
record holder as it appears on the books of the Depositary or, if such holder
shall have filed with the Depositary in a timely manner a written request that
notices intended for such holder be mailed to some other address, at the address
designated in such request.
Delivery of a notice sent by mail, or by telegram or telex or telecopier
shall be deemed to be effected at the time when a duly addressed letter
containing the same (or a confirmation thereof in the case of a telegram or
telex or telecopier message) is deposited, postage prepaid, in a post office
letter box. The Depositary or the Company may, however, act upon any telegram
or telex or telecopier message received by it from the other or from any holder
of a Receipt, notwithstanding that such telegram or telex or telecopier message
shall not subsequently be confirmed by letter as aforesaid.
7.5. DEPOSITARY'S AGENTS.
The Depositary may from time to time appoint Depositary's Agents to act in
any respect for the Depositary for the purposes of this Deposit Agreement and
may at any time appoint additional Depositary's Agents and vary or terminate the
appointment of such Depositary's Agents. The Depositary will notify the Company
of any such action.
- 24 -
<PAGE>
7.6. HOLDERS OF RECEIPTS ARE PARTIES.
The holders of Receipts from time to time shall be deemed to be parties to
this Deposit Agreement and shall be bound by all of the terms and conditions
hereof and of the Receipts by acceptance of delivery thereof.
7.7. GOVERNING LAW.
This Deposit Agreement and the Receipts and all rights hereunder and
thereunder and provisions hereof and thereof shall be governed by, and construed
in accordance with, the law of the State of New York applicable to agreements
made and to be performed in said State, without giving effect to the conflict of
law provisions thereof.
7.8. INSPECTION OF DEPOSIT AGREEMENT AND ARTICLES SUPPLEMENTARY.
Copies of this Deposit Agreement and the Articles Supplementary shall be
filed with the Depositary and the Depositary's Agents and shall be open to
inspection during business hours at the Corporate Office and the respective
offices of the Depositary's Agents, if any, by any holder of any Receipt.
7.9. HEADINGS.
The headings of articles and sections in this Deposit Agreement and in the
form of the Receipt set forth in Exhibit A hereto have been inserted for
---------
convenience only and are not to be regarded as a part of this Deposit Agreement
or to have any bearing upon the meaning or interpretation of any provision
contained herein or in the Receipts.
* * * * *
- 25 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Deposit
Agreement as of the day and year first above set forth and all holders of
Receipts shall become parties hereto by and upon acceptance by them of delivery
of Receipts issued in accordance with the terms hereof.
COLONIAL PROPERTIES TRUST
By:
-----------------------------------
Attest: Authorized Officer
---------------------
[DEPOSITARY]
By:
-----------------------------------
Attest: Authorized Signatory
----------------------
- 26 -
<PAGE>
Exhibit A
The Depositary Shares evidenced by this Depositary Receipt are subject
to restrictions on ownership and transfer for the purpose of the Company's
maintenance of its status as a Real Estate Investment Trust under the Internal
Revenue Code of 1986, as amended. No person may own, Beneficially Own, or
Constructively Own Depositary Shares representing Series A Cumulative Redeemable
Preferred Shares in excess of 9.8% of the outstanding Series A Cumulative
Redeemable Preferred Shares and any Series A Excess Preferred Shares of the
Company with certain further restrictions and exceptions set forth in the
Company's Articles Supplementary for the Series A Cumulative Redeemable
Preferred Shares. Any Person who attempts to own, Beneficially Own or
Constructively Own Depositary Shares representing Series A Cumulative Redeemable
Preferred Shares in excess of the above limitations must immediately notify the
Company. All capitalized terms in this legend have the meanings defined in the
Company's Articles Supplementary for the Series A Cumulative Redeemable
Preferred Shares. Transfers in violation of the restrictions described above
shall be void ab initio.
-- ------
In addition, if the restrictions on ownership are violated, the Series
A Cumulative Redeemable Preferred Shares represented by the Depositary Shares
evidenced by this Depositary Receipt will be automatically exchanged for Series
A Excess Preferred Shares which will be held in trust by the Company. As
specified in the Articles Supplementary for the Series A Cumulative Redeemable
Preferred Shares, the Company has an option to acquire Series A Excess Preferred
Shares under certain circumstances and an obligation to acquire Series A Excess
Preferred Shares in certain other circumstances. The Company will furnish to the
holder hereof upon request and without charge a complete written statement of
the terms and conditions of the Series A Cumulative Redeemable Preferred Shares
and the Series A Excess Preferred Shares. Requests for such statement may be
directed to the Secretary of the Company.
[FORM OF FACE OF RECEIPT]
DR-
CERTIFICATE FOR NOT MORE THAN _______ DEPOSITARY SHARES
CUSIP ____
RECEIPT FOR DEPOSITARY SHARES,
EACH REPRESENTING 1/10 OF A SERIES A CUMULATIVE
REDEEMABLE PREFERRED SHARE OF BENEFICIAL INTEREST OF
COLONIAL PROPERTIES TRUST
(an Alabama real estate investment trust)
__________________________, as Depositary (the "Depositary"), hereby
certificates that _________________________ is the registered owner of
_______________ DEPOSITARY SHARES ("Depositary Shares"), each Depositary Share
representing 1/10 of one Series A Cumulative Redeemable Preferred Share of
Beneficial Interest, $0.01 par value per share (the "Shares"), of Colonial
Properties Trust, an Alabama real estate investment trust (the "Company"), on
deposit with the Depositary, subject to the terms and entitled to the benefits
of the Deposit Agreement dated as of October ___, 1997 (the "Deposit
Agreement"), among the Company, the Depositary and the holders from time to time
of Receipts for Depositary Shares. By accepting this Receipt, the holder hereof
becomes a party to and agrees to be bound by all the terms and conditions of the
Deposit Agreement. This Receipt shall not be valid or obligatory for any purpose
or entitled to any benefits under the Deposit Agreement unless it shall have
been executed by the Depositary by the manual or facsimile signature of a duly
authorized officer or, if a Registrar in respect of the Receipts (other than the
Depositary) shall have been appointed, by the manual signature of a duly
authorized officer of such Registrar.
Dated:
[Countersigned:
--------------------------
By: ] By:
---------------------- ----------------------------
Authorized Signatory
<PAGE>
[FORM OF REVERSE RECEIPT]
COLONIAL PROPERTIES TRUST
COLONIAL PROPERTIES TRUST WILL FURNISH WITHOUT CHARGE TO EACH REGISTERED
HOLDER OF RECEIPTS WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A COPY OF
THE ARTICLES SUPPLEMENTARY WITH RESPECT TO THE SERIES A CUMULATIVE REDEEMABLE
PREFERRED SHARES OF BENEFICIAL INTEREST OF COLONIAL PROPERTIES TRUST. ANY SUCH
REQUEST SHALL BE ADDRESSED TO THE DEPOSITARY NAMED ON THE FACE OF THIS RECEIPT.
--------------------
The following abbreviations when used in the instructions on the face of
this Receipt shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenant in common UNIF GIFT MIN ACT - _______ Custodian _______
(Cust) (Minor)
TEN ENT - as tenants by the Under Uniform Gifts to Minors Act
entireties
JT TEN - as joint tenants with
right of survivorship
and not as tenants in
common ----------------------
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
For value received, ___________________ hereby sells(s), assigns(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
--------------------------------------------------
__________________ Depositary Shares represented by the within Receipt, and
do(es) hereby irrevocably constitute and appoint ______________________ Attorney
to transfer the said Depositary Shares on the books of the within named
Depositary with full power of substitution in the premises.
Dated:
-------------------- --------------------------------------------
NOTICE: The signature to the assignment must
correspond with the name as written
upon the face of this Receipt in
every particular, without alteration
or enlargement or any change whatever.
<PAGE>
Exhibit 5
[Letterhead of Hogan & Hartson L.L.P.]
October 23, 1997
Board of Trustees
Colonial Properties Trust
2101 Sixth Avenue North
Suite 750
Birmingham, Alabama 35202
Ladies and Gentlemen:
We are acting as counsel to Colonial Properties Trust, an Alabama real
estate investment trust (the "Company"), in connection with its registration
statement on Form S-3 (the "Registration Statement") filed with the Securities
and Exchange Commission relating to the proposed public offering of up to
$297,406,250 in aggregate amount of one or more series of (i) unsecured debt
securities (the "Debt Securities"), (ii) preferred shares of beneficial interest
(the "Preferred Shares"), (iii) common shares of beneficial interest, $.01 par
value (the "Common Shares"), (iv) warrants to purchase Common Shares (the
"Common Share Warrants") or (v) depositary shares representing fractional
interests in Preferred Shares (the "Depositary Shares" and, together with the
Debt Securities, Preferred Shares, Common Shares and Common Share Warrants, the
"Securities"), all of which Securities may be offered and sold by the Company
from time to time as set forth in the prospectus which forms a part of the
Registration Statement (the "Prospectus"), and as to be set forth in one or more
supplements to the Prospectus (each, a "Prospectus Supplement"). This opinion
letter is furnished to you at your request to enable you to fulfill the
requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. (S) 229.601(b)(5),
in connection with the Registration Statement.
<PAGE>
Board of Trustees
Colonial Properties Trust
October 23, 1997
Page 2
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. The Declaration of Trust of the Company (the "Declaration of
Trust"), as certified by the Secretary of State of the State of
Alabama on October 7, 1997 and as certified by the Secretary of
the Company on the date hereof as then being complete, accurate
and in effect.
3. The Bylaws of the Company, as certified by the Secretary of the
Company on the date hereof as then being complete, accurate and
in effect.
4. The forms of Indenture between the Company and the Bank to be
named therein, incorporated by reference as Exhibits 4.4 and 4.5,
respectively, to the Registration Statement (the "Indentures").
5. The form of Deposit Agreement between the Company and the
Depositary to be named therein included as Exhibit 4.6 to the
Registration Statement (a "Deposit Agreement").
6. Resolutions of the Board of Trustees of the Company adopted on
October 23, 1997, as certified by the Secretary of the Company on
the date hereof as then being complete, accurate and in effect,
relating to the filing of the Registration Statement and related
matters.
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of all natural persons, the
accuracy and completeness of all documents submitted to us, the authenticity of
all original documents and the conformity to authentic original documents of all
documents submitted to us as copies (including telecopies). This opinion letter
is given, and all statements herein are made, in the context of the foregoing.
In rendering this opinion letter, we are relying, with your approval to the
extent that the laws of Alabama are relevant (without any independent
verification or investigation), upon an opinion letter of Sirote & Permutt,
P.C., special counsel to the Company in the
<PAGE>
Board of Trustees
Colonial Properties Trust
October 23, 1997
Page 3
State of Alabama, addressed to you and of even date herewith, with respect to
the matters addressed therein.
For purposes of this opinion letter, we have assumed that (i) the
issuance, sale, amount and terms of the Securities to be offered from time to
time will be duly authorized and established by proper action of the Board of
Trustees of the Company consistent with the procedures and terms described in
the Registration Statement (each, a "Board Action") and in accordance with the
Company's Declaration of Trust, as amended (the "Declaration of Trust"), and
applicable Alabama law; (ii) any senior Debt Securities will be issued pursuant
to a "Senior Indenture" and any subordinated Debt Securities will be issued
pursuant to a "Subordinated Indenture," the forms of which are incorporated by
reference as Exhibits 4.4 and 4.5, respectively, to the Registration Statement;
(iii) any Common Share Warrants will be issued under one or more common share
warrant agreements (each, a "Warrant Agreement"), each to be between the Company
and a financial institution identified therein as a warrant agent (each, a
"Warrant Agent"); (iv) prior to any issuance of Preferred Shares or Depositary
Shares, appropriate articles supplementary shall be filed for recordation with
the Office of the Judge of Probate of Jefferson County, Alabama (each "Articles
Supplementary"); and (v) any Depositary Shares will be issued by the Depositary
(as defined below) under one or more Deposit Agreements, each to be between the
Company and a financial institution identified therein as the depositary (each,
a "Depositary").
This opinion letter is based as to matters of law solely on applicable
provisions of (i) the Alabama Business Corporation Act, (ii) the laws of the
State of Alabama relating to the creation and enforceability of contracts (but
not including any laws, statutes, ordinances, administrative decisions, rules or
regulations of any political subdivision of the State of Alabama), and (iii) the
laws of the State of New York relating to the creation and enforceability of
contracts (but not including any laws, statutes, ordinances, administrative
decisions, rules or regulations of any political subdivision of the State of New
York). We express no opinion herein as to any other laws, statutes, ordinances,
rules or regulations (such as federal or state securities or "blue sky" laws).
<PAGE>
Board of Trustees
Colonial Properties Trust
October 23, 1997
Page 4
Based upon, subject to and limited by the foregoing, we are of the
opinion that, as of the date hereof:
1. When (i) the Registration Statement has become effective under the
Securities Act of 1933, as amended (the "Act"), (ii) an applicable
Indenture has been duly executed and delivered by the Company and the
Trustee named therein, (iii) by applicable Board Action, the issuance of
any series of Debt Securities has been duly authorized and the terms
thereof have been duly established in accordance with the provisions of the
Indenture, and (iv) such Debt Securities have been duly authenticated by
the Trustee and duly executed and delivered on behalf of the Company
against payment therefor in accordance with the terms of such Board Action,
any applicable underwriting agreement or purchase agreement, the applicable
Indenture and any applicable supplemental indenture, and as contemplated by
the Registration Statement and/or the applicable Prospectus Supplement,
such Debt Securities will constitute binding obligations of the Company,
enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally (including, without limitation, the effect of
statutory and other law regarding fraudulent conveyances, fraudulent
transfers and preferential transfers) and as may be limited by the exercise
of judicial discretion and the application of principles of equity,
including, without limitation, requirements of good faith, fair dealing,
conscionability and materiality (regardless of whether the Debt Securities
are considered in a proceeding in equity or at law).
2. When (i) the Registration Statement has become effective under the
Act, (ii) a series of the Preferred Shares has been duly authorized and
established by applicable Board Action, in accordance with the terms of the
Declaration of Trust and applicable law, (iii) appropriate Articles
Supplementary have been filed, and (iv) the issuance of such Preferred
Shares has been appropriately authorized by applicable Board Action, and,
upon issuance and delivery of certificates for such series of Preferred
Shares against payment therefor in accordance with the terms of such Board
Action and any applicable underwriting or purchase agreement, and as
contemplated by the Registration Statement and/or the applicable Prospectus
Supplement, such Preferred Shares will be validly issued, fully paid and
non-assessable.
<PAGE>
Board of Trustees
Colonial Properties Trust
October 23, 1997
Page 5
3. When the Registration Statement has become effective under the
Act, upon due authorization by Board Action of an issuance of Common
Shares, and upon issuance and delivery of certificates for Common Shares
against payment therefor in accordance with the terms of such Board Action
and any applicable underwriting agreement or purchase agreement, and as
contemplated by the Registration Statement and/or the applicable Prospectus
Supplement or upon the exercise of any Common Share Warrants in accordance
with the terms thereof, or conversion or exchange of Preferred Shares that,
by their terms, are convertible into or exchangeable for Common Shares, and
receipt by the Company of any additional consideration payable upon such
conversion, exchange or exercise, the Common Shares represented by such
certificates will be validly issued, fully paid and non-assessable.
4. When (i) the Registration Statement has become effective under the
Act , (ii) a Warrant Agreement conforming to the description thereof in the
Registration Statement and/or the applicable Prospectus Supplement has been
duly authorized by applicable Board Action and delivered by the Company and
the Warrant Agent named therein, (iii) Common Share Warrants conforming to
the requirements of the related Warrant Agreement have been duly
authenticated by the Warrant Agent and duly executed and delivered on
behalf of the Company against payment therefor in accordance with the terms
of such Board Action, any applicable underwriting agreement or purchase
agreement and the applicable Warrant Agreement and as contemplated by the
Registration Statement and/or the applicable Prospectus Supplement, the
Common Share Warrants will constitute binding obligations of the Company,
enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights (including, without limitation, the effect of statutory
and other law regarding fraudulent conveyances, fraudulent transfers and
preferential transfers) and as may be limited by the exercise of judicial
discretion and the application of principles of equity, including, without
limitation, requirements of good faith, fair dealing, conscionability and
materiality (regardless of whether the Common Share Warrants are considered
in a proceeding in equity or at law).
5. When (i) the Registration Statement has become effective under the
Act, (ii) a series of Preferred Shares underlying a series of Depositary
Shares has been duly authorized and established by applicable Board Action,
<PAGE>
Board of Trustees
Colonial Properties Trust
October 23, 1997
Page 6
in accordance with the terms of the Declaration of Trust and applicable
law, (iii) appropriate Articles Supplementary have been filed with respect
to such Preferred Shares, (iv) an applicable Deposit Agreement relating to
the Depositary Shares has been duly executed and delivered by the Company
and the Depositary named therein, (v) the terms of the Depositary Shares
and their issuance and sale have been duly established by applicable Board
Action in conformity with the Deposit Agreement so as not to violate any
applicable law or the Declaration of Trust or Bylaws of the Company or
result in a default under or breach of any agreement or instrument binding
upon the Company and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the
Company, (vi) the related Preferred Shares which are represented by the
Depositary Shares have been duly authorized, validly issued and delivered,
if applicable, to the Depositary for deposit in accordance with the laws of
all applicable jurisdictions, and (vii) the depositary receipts evidencing
the Depositary Shares (the "Depositary Receipts") in the form contemplated
and authorized by a Deposit Agreement have been duly issued against deposit
of the Preferred Shares in accordance with the terms of the Deposit
Agreement and any applicable underwriting or purchase agreement, as
contemplated by the Registration Statement and/or the applicable Prospectus
Supplement, such Depositary Receipts, to the extent governed by Alabama and
New York law, will be validly issued and will entitle the holders thereof
to the rights specified therein and in the Deposit Agreement.
To the extent that the obligations of the Company under an Indenture
may be dependent upon such matters, we assume for purposes of this opinion that
the Trustee is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization; that the Trustee is duly qualified to
engage in the activities contemplated by the Indenture; that the Indenture has
been duly authorized, executed and delivered by the Trustee and constitutes the
legally valid and binding obligation of the Trustee enforceable against the
Trustee in accordance with its terms; that the Trustee is in compliance, with
respect to acting as a trustee under the Indenture, with all applicable laws and
regulations; and that the Trustee has the requisite organizational and legal
power and authority to perform its obligations under the Indenture.
To the extent that the obligations of the Company under any Warrant
Agreement may be dependent upon such matters, we assume for purposes of this
<PAGE>
Board of Trustees
Colonial Properties Trust
October 23, 1997
Page 7
opinion that the applicable Warrant Agent is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization; that
the Warrant Agent is duly qualified to engage in the activities contemplated by
the Warrant Agreement; that the Warrant Agreement has been duly authorized,
executed and delivered by the Warrant Agent and constitutes the legally valid
and binding obligation of the Warrant Agent enforceable against the Warrant
Agent in accordance with its terms; that the Warrant Agent is in compliance,
with respect to acting as a Warrant Agent under the Warrant Agreement, with all
applicable laws and regulations; and that the Warrant Agent has the requisite
organizational and legal power and authority to perform its obligations under
the Warrant Agreement.
To the extent that the obligations of the Company and the rights of
any holder of Depositary Shares under any Deposit Agreement may be dependent
upon such matters, we assume for purposes of this opinion that the applicable
Depositary is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization; that the Depositary is duly qualified
to engage in the activities contemplated by the Deposit Agreement; that the
Deposit Agreement has been duly authorized, executed and delivered by the
Depositary and constitutes a valid and binding obligation of the Depositary
enforceable against the Depositary and the Company in accordance with its terms;
that the Depositary is in compliance, with respect to acting as a Depositary
under the Deposit Agreement, with all applicable laws and regulations; and that
the Depositary has the requisite organizational and legal power and authority to
perform its obligations under the Deposit Agreement.
The opinions expressed in Paragraphs (1) and (4) above shall be
understood to mean only that if there is a default in performance of an
obligation, (i) if a failure to pay or other damage can be shown and (ii) if the
defaulting party can be brought into a court which will hear the case and apply
the governing law, then, subject to the availability of defenses and to the
exceptions set forth in Paragraphs (1) and (4), the court will provide a money
damage (or perhaps injunctive or specific performance) remedy.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared solely for your use in connection with the filing of the Registration
Statement on the date of this opinion letter and should not be quoted in whole
or in
<PAGE>
Board of Trustees
Colonial Properties Trust
October 23, 1997
Page 8
part or otherwise be referred to, nor filed with or furnished to any
governmental agency or other person or entity, without the prior written consent
of this firm.
We hereby consent to the filing of this opinion letter as Exhibit 5 to
the Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus constituting a part of the Registration
Statement. In giving this consent, we do not thereby admit that we are an
"expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
HOGAN & HARTSON L.L.P.
<PAGE>
EXHIBIT 12
COLONIAL PROPERTIES TRUST
RATIO OF EARNINGS TO FIXED CHARGES
(all amounts in thousands, except ratios)
<TABLE>
<CAPTION>
For the Nine For the Year Ended
Months Ended ----------------------------------------------------------------------
Description 09/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges:
- -------------
Interest expense $ 28,796 $ 24,584 $ 24,060 $ 10,877 $ 12,722 $ 14,509
Capitalized interest 2,973 3,745 868 333 0 132
Debt costs amortization 1,192 707 2,446 2,244 737 249
--------- --------- --------- --------- --------- ---------
Total Fixed Charges $ 32,961 $ 29,036 $ 27,374 $ 13,454 $ 13,509 $ 14,890
Earnings Plus Fixed Charges:
- ---------------------------
Income before property sales
and extraordinary items $ 31,870 $ 40,779 $ 25,304 $ 16,645 $ 4,220 $ (780)
Fixed Charges 32,961 29,036 27,374 13,454 13,509 14,890
--------- --------- --------- --------- --------- ---------
Total $ 64,831 $ 69,815 $ 52,678 $ 30,099 $ 17,729 $ 14,110
Ratio of Earnings to
Fixed Charges 1.97 2.40 1.92 2.24 1.31 0.95
========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
Consent of Independent Accountants
We consent to the incorporation by reference in this registration statement of
Colonial Properties Trust on Form S-3 filed with the Securities and Exchange
Commission on October 23, 1997, of our report, dated January 24, 1997, on our
audits of the consolidated financial statements of Colonial Properties Trust as
of December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995,
and 1994 which report is included in the 1996 Annual Report incorporated by
reference on Form 10-K. We also consent to the incorporation by reference in
this registration statement on Form S-3 of our report dated February 2, 1997 on
our audit of the Historical Summary of Revenues and Direct Operating Expenses of
Acquired Property - Riverchase Center Building 2100; our report dated April 24,
1997 on our audit of the Historical Summary of Revenues and Direct Operating
Expenses of Acquired Property - Beechwood Shopping Center; our report dated June
18, 1997 on our audit of the Historical Summary of Revenues and Direct Operating
Expenses of Acquired Property - Brookwood Mall; our report dated June 16, 1997
on our audit of the Historical Summary of Revenues and Direct Operating Expenses
of Acquired Property - The Meadows at Trussville; our report dated June 23, 1997
on our audit of the Historical Summary of Revenues and Direct Operating Expenses
of Acquired Property - Proposed Office and Retail Merger; which reports are
included in Form 8-K filed July 21, 1997, and incorporated by reference herein.
We also consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Birmingham, Alabama
October 23, 1997
<PAGE>
Exhibit 23.2
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Colonial Properties Trust
(File No. 333-_____________)
Registration on Form S-3
We are aware that our reports dated April 18, 1997 and July 15, 1997 on our
reviews of interim financial information of Colonial Properties Trust (the
Company) for the periods ended March 31, 1997 and June 30, 1997, respectively,
and included in the Company's quarterly reports on Forms 10-Q for the quarters
then ended, are incorporated by reference in this registration statement on Form
S-3 as filed with the Securities and Exchange Commission on October 23, 1997.
Pursuant to Rule 436(c) under the Securities Act of 1933, these reports should
not be considered a part of the registration statement prepared or certified by
us within the meaning of Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
October 23, 1997
