<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-12528
SPIEKER PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 94-3185802
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2180 SAND HILL ROAD, MENLO PARK, CA 94025
(Address of principal executive offices) (Zip code)
(415) 854-5600
-----------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
31,792,861 shares of Common Stock, $0.0001 par value as of August 5, 1996.
2,000,000 shares of Class B Common Stock, $0.0001 par value as of August 5,
1996.
1,176,470 shares of Class C Common Stock, $0.0001 par value as of August 5,
1996.
<PAGE> 2
SPIEKER PROPERTIES, INC.
QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION> Page
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements ..................................................................................3
Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995 4
Consolidated Statements of Operations for the Three Month and Six Month Periods
Ended June 30, 1996 and June 30, 1995...............................................................6
Consolidated Statement of Stockholders' Equity for the Six Month Period Ended June 30, 1996............7
Consolidated Statements of Cash Flows for the Six Month Periods Ended June 30, 1996
and June 30, 1995...................................................................................8
Notes to Consolidated Financial Statements.............................................................9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................16
PART II. OTHER INFORMATION
Item 2. Changes in Securities...........................................................................21
Item 6. Exhibits and Reports on Form 8-K................................................................21
Signatures....................................................................................................22
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Attached are the following financial statements of Spieker Properties, Inc.
("the Company"):
(i) consolidated balance sheets as of June 30, 1996 and December 31, 1995,
(ii) consolidated statements of operations for the three and six month periods
ended June 30, 1996 and June 30, 1995,
(iii) consolidated statement of stockholders' equity for the six month period
ended June 30, 1996,
(iv) consolidated statements of cash flows for the six month periods ended
June 30, 1996 and June 30, 1995, and
(v) notes to consolidated financial statements.
The financial statements referred to above should be read in conjunction with
the Company's Annual Report on the Form 10-K/A for the year ended December 31,
1995.
3
<PAGE> 4
SPIEKER PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
(dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------------- ------------------
(unaudited)
<S> <C> <C>
INVESTMENTS IN REAL ESTATE
Properties:
Land, land improvements and leasehold interests $ 332,064 $ 303,157
Buildings and improvements 839,850 756,734
Construction in progress 55,826 38,980
----------- -----------
1,227,740 1,098,871
Less - Accumulated depreciation (129,807) (124,612)
----------- -----------
Net investments in properties 1,097,933 974,259
Investments in mortgages 14,334 -
----------- -----------
Net investments in real estate 1,112,267 974,259
CASH AND CASH EQUIVALENTS 11,940 7,573
ACCOUNTS RECEIVABLE 2,840 3,351
DEFERRED RENT RECEIVABLE 4,643 4,698
RECEIVABLE FROM RELATED PARTY 401 386
DEFERRED FINANCING AND LEASING COSTS, net of
accumulated amortization of $8,493 and $9,586 as of
June 30, 1996 and December 31, 1995, respectively 15,629 13,485
FURNITURE, FIXTURES AND EQUIPMENT, net 2,016 1,678
PREPAID EXPENSES AND OTHER ASSETS 4,593 6,067
----------- -----------
$ 1,154,329 $ 1,011,497
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
SPIEKER PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
(dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
-------------- -----------------
(unaudited)
<S> <C> <C>
DEBT
Unsecured notes $ 360,000 $ 260,000
Unsecured line of credit 86,150 117,700
Mortgage loans 40,284 112,702
----------- ------------
Total debt 486,434 490,402
----------- ------------
ASSESSMENT BONDS PAYABLE 12,355 12,140
ACCOUNTS PAYABLE 3,636 3,804
ACCRUED REAL ESTATE TAXES 759 506
ACCRUED INTEREST 4,588 2,510
UNEARNED RENTAL INCOME 3,673 6,972
DIVIDENDS AND DISTRIBUTIONS PAYABLE 21,156 15,588
OTHER ACCRUED EXPENSES AND LIABILITIES 12,580 12,202
----------- -----------
Total liabilities 545,181 544,124
----------- ------------
MINORITY INTERESTS 45,791 47,526
----------- -----------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Series A Preferred Stock: cumulative, convertible, $.0001 par value,
1,000,000 shares authorized, issued and outstanding, $25,000
liquidation preference 23,949 23,949
Series B Preferred Stock: cumulative, redeemable, $.0001 par value,
5,000,000 shares authorized, 4,250,000 issued and outstanding,
$106,250 liquidation preference 102,064 102,064
Common Stock: $.0001 par value, 660,500,000 shares authorized,
31,789,861 and 26,724,074 shares issued and outstanding as of
June 30, 1996 and December 31, 1995, respectively 3 3
Class B Common Stock: $.0001 par value, 2,000,000 shares authorized,
issued and outstanding - -
Class C Common Stock: $.0001 par value, 1,500,000 shares authorized,
1,176,470 issued and outstanding as of June 30, 1996 - -
Excess Stock: $.0001 par value per share, 330,000,000 shares authorized,
no shares issued or outstanding - -
Additional paid-in capital 437,999 303,320
Deferred compensation (658) (652)
Retained earnings (deficit) - (8,837)
----------- -----------
Total stockholders' equity 563,357 419,847
----------- -----------
$ 1,154,329 $ 1,011,497
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
SPIEKER PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(dollars in thousands, except per share amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30 June 30
------- -------
1996 1995 1996 1995
-------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE
Rental income $ 46,707 $ 37,230 $ 91,052 $ 71,903
Interest and other income 989 514 1,812 1,123
----------- ----------- ----------- -----------
47,696 37,744 92,864 73,026
----------- ----------- ----------- -----------
OPERATING EXPENSES
Rental expenses 7,537 5,883 14,774 11,381
Real estate taxes 3,858 2,845 7,304 5,690
Interest expense, including amortization of finance costs 7,845 12,052 16,682 25,021
Depreciation and amortization 8,801 7,904 17,339 15,283
General and administrative and other expenses 2,524 2,069 4,805 4,220
----------- ----------- ----------- -----------
30,565 30,753 60,904 61,595
----------- ----------- ----------- -----------
Income from operations before minority interests and
extraordinary items 17,131 6,991 31,960 11,431
----------- ----------- ----------- -----------
MINORITY INTERESTS' SHARE IN NET INCOME (2,208) (1,369) (4,269) (2,329)
----------- ----------- ----------- -----------
Net income before extraordinary items 14,923 5,622 27,691 9,102
EXTRAORDINARY ITEMS, net of minority interests of $25
for the six months ended June 30, 1996 - - 125 -
----------- ----------- ----------- -----------
Net income 14,923 5,622 27,816 9,102
----------- ----------- ----------- -----------
PREFERRED DIVIDENDS
Series A Preferred Stock (524) (512) (1,048) (1,024)
Series B Preferred Stock (2,510) - (5,020) -
----------- ----------- ----------- -----------
Net income available to Common Stockholders $ 11,889 $ 5,110 $ 21,748 $ 8,078
=========== =========== =========== ===========
INCOME PER SHARE OF COMMON STOCK
Income before extraordinary items $ .33 $ .20 $ .65 $ .34
Extraordinary items, net of minority interests - - - -
----------- ----------- ----------- -----------
Net income $ .33 $ .20 $ .65 $ .34
=========== =========== =========== ===========
DIVIDENDS AND DISTRIBUTIONS PER SHARE
Series A Preferred Stock $ .52 $ .51 $ 1.05 $ 1.02
=========== =========== =========== ===========
Series B Preferred Stock $ .59 $ - $ 1.18 $ -
=========== =========== =========== ===========
Common Stock, including Class B and Class C $ .43 $ .42 $ .91 $ .84
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
SPIEKER PROPERTIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1996
(dollars in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Series A Series B Common Class B Class C Common
Preferred Preferred Stock Common Common Stock Par
Stock Stock Shares Stock Shares Stock Shares Value
--------- --------- ------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 $ 23,949 $102,064 26,724,074 2,000,000 - $ 3
Common Stock Offering - - 5,022,500 - - -
Class C Common Stock Offering - - - - 1,176,470 -
Stock Options Exercised - - 19,750 - - -
Restricted Stock Grant - - 8,000 - - -
Non-cash Compensation Merit Fund - - - - - -
Conversion Of Operating Partnership - - 15,537 - - -
Interests
Amortization of Deferred Compensation - - - - - -
Dividends Declared - - - - - -
Net Income - - - - - -
-------- -------- ---------- ----------- -------- --------
BALANCE AT JUNE 30, 1996 $ 23,949 $102,064 31,789,861 2,000,000 1,176,470 $ 3
======== ======== ========== =========== ========= ========
</TABLE>
<TABLE>
<CAPTION>
Additional Retained
Paid-in Deferred Earnings
Capital Compensation (Deficit) Total
---------- ------------ --------- -----
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 $303,320 $ (652) $ (8,837) $419,847
Common Stock Offering 121,369 - - 121,369
Class C Common Stock Offering 29,963 - - 29,963
Stock Options Exercised 404 - - 404
Restricted Stock Grant 200 (200) - -
Non-cash Compensation Merit Fund 51 - - 51
Conversion Of Operating Partnership 386 - - 386
Interests
Amortization of Deferred Compensation - 194 - 194
Dividends Declared (17,694) - (18,979) (36,673)
Net Income - - 27,816 27,816
-------- -------- -------- --------
BALANCE AT JUNE 30, 1996 $437,999 $ (658) $ - $563,357
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
SPIEKER PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
----------------
June 30
-------
1996 1995
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 27,816 $ 9,102
Adjustments to reconcile net income to net cash provided by
operating activities-
Depreciation and amortization 17,339 15,283
Amortization of prepaid interest and deferred financing costs 729 4,974
Non-cash compensation 255 165
Minority share of net income 4,294 2,329
Extraordinary item (150) -
Decrease (increase) in deferred rent receivable 55 (263)
Decrease in accounts receivable 511 471
(Increase) decrease in receivables from related parties (15) 539
Decrease in prepaid expenses and other assets 636 1,382
Decrease in assessment bonds payable (385) (276)
(Decrease) increase in accounts payable (168) 558
Increase (decrease) in accrued real estate taxes 253 (65)
Increase (decrease) in accrued interest 2,078 (640)
Increase in other accrued expenses and liabilities 378 730
(Decrease) increase in unearned rental income (3,299) 250
Increase in payable to related party - (582)
-------------- -------------
Net cash provided by operating activities 50,327 33,957
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to properties (138,535) (88,825)
Additions to leasing costs (2,829) (1,726)
Additions to investment in mortgages (14,334) -
-------------- --------------
Net cash used for investing activities (155,698) (90,551)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 265,550 92,550
Payments on debt (269,368) (184,329)
Payment of financing fees (1,422) -
Payment of dividends/distributions (36,758) (22,644)
Proceeds from sale of Common Stock, net of issuance costs 121,369 117,158
Proceeds from sale of Class B Common Stock, net of issuance costs - 49,961
Proceeds from sale of Class C Common Stock, net of issuance costs 29,963 -
Proceeds from stock options exercised 404 477
-------------- --------------
Net cash provided by financing activities 109,738 53,173
-------------- --------------
Net increase in cash and cash equivalents 4,367 (3,421)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,573 9,663
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,940 $ 6,242
============== ==============
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest 15,399 19,891
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Debt assumed in relation to property acquisitions - 13,452
Increase to land and assessment bonds payable 600 -
Minority interest capital recorded in relation to property acquisitions - 10,617
Write-off of fully depreciated property 10,266 3,323
Write-off of fully amortized deferred financing and leasing costs 3,217 1,160
Conversion of operating partnership units to Common Stock with
resulting reduction in minority interest and increase in additional
paid-in-capital 386 343
Restricted Stock Grants 200 -
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE> 9
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except share data)
JUNE 30, 1996 AND 1995
1. ORGANIZATION AND BASIS OF PRESENTATION:
Spieker Properties, Inc.
Spieker Properties, Inc. (the "Company") was organized in the state of
Maryland on August 20, 1993, and commenced operations on November 19, 1993.
On November 18, 1993, the Company completed an initial public offering
("IPO") and issued 20,400,000 shares of Common Stock at $20.50 per share, or
$418,200. Net proceeds of $386,800 were used to purchase an approximate 77.6
percent general partnership interest in Spieker Properties L.P. (the
"Operating Partnership"). The Company and the Operating Partnership are
collectively referred to as the Company. The Company qualifies as a real
estate investment trust ("REIT") under the Internal Revenue Code of 1986
(the "Code"), as amended.
The Company is primarily engaged in the ownership, operation, management,
leasing, acquisition, expansion and development of industrial, suburban
office, and retail income-producing properties. As of June 30, 1996, the
Company owned (i) 100 percent of 126 properties, (ii) an effective 100
percent general partner interest in Spieker Washington Interest Partners
("SWIP"), a California general partnership, which owns 100 percent of 13
properties, (iii) a 90 percent interest in 1 property, (iv) a 92.5 percent
interest with SWIP in 1 property, and (v) 95 percent of the Series A
Preferred Stock of Spieker Northwest, Inc., which provides fee management
and other services for properties not owned by the Company. The Company's
141 stabilized properties, aggregating approximately 18.7 million leasable
square feet, are comprised of 77 industrial properties, 49 office
properties, and 15 retail properties. All of the properties are located in
California and the Pacific Northwest.
The Company owned approximately 84.9 percent of the Operating Partnership as
of June 30, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Consolidation
The Company's consolidated financial statements include the consolidated
financial position of the Operating Partnership and its subsidiaries as of
June 30, 1996 and December 31, 1995, its consolidated results of operations,
for the three and six months ended June 30, 1996 and 1995, and its
consolidated cash flows for the six months ended June 30, 1996 and 1995. The
Company's investment in Spieker Northwest, Inc. is accounted for under the
equity method. The carrying value of Spieker Northwest, Inc. of $53 at June
30, 1996 and December 31, 1995 is included in prepaid expenses and other
assets. All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.
Interim Financial Information
The Consolidated Financial Statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC") and,
in management's opinion, include all adjustments necessary for a fair
statement of results for such interim periods. Certain information and note
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to SEC rules or regulations; however, the Company
believes that the disclosures made are adequate to make the information
presented not misleading.
The interim results for the three and six months ended June 30, 1996 and
1995 are not necessarily indicative of results for the full year. It is
suggested that these financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K/A for the year ended December 31, 1995.
9
<PAGE> 10
Investments in Real Estate
Properties are recorded at cost and are depreciated using the straight-line
method over the estimated useful lives of the properties. The estimated
lives are as follows:
<TABLE>
<S> <C>
Land improvements and leasehold interests 18 to 40 years
Buildings and improvements 10 to 40 years
Tenant improvements Term of the related lease
</TABLE>
Investments in properties are stated at the lower of depreciated cost or
estimated fair value. Fair value for financial reporting purposes is
evaluated periodically by the Company on a property by property basis using
undiscounted cash flow. If a potential impairment is identified, it is
measured by the property's fair value based on either sales comparables or
the net cash expected to be generated by the property, less estimated
carrying costs (including interest) during the anticipated holding period,
plus the estimated cash proceeds from the ultimate disposition of the
property. To the extent that the carrying value exceeds the estimated fair
value, a provision for decrease in net realizable value is recorded.
Estimated fair value is not necessarily an indication of a property's
current value or the amount that will be realized upon the ultimate
disposition of the property. As of June 30, 1996, none of the carrying
values of the properties exceeded their estimated fair values. As of June
30, 1996, the properties are located primarily in California, Oregon and
Washington. As a result of this geographic concentration, the operations of
these properties could be adversely affected by a recession or general
economic downturn in the areas where these properties are located.
Project costs clearly associated with the development and construction of a
real estate project are capitalized as construction in progress. In
addition, interest and real estate taxes are capitalized during the period
in which activities necessary to get the property ready for its intended use
are in progress.
In January 1996, the Company acquired two mortgage loans for the initial
cost of $14,333. The mortgages are secured by real estate, have an aggregate
face value of $21,000, require monthly principal and interest payments of
$163, and mature in December 1999. The Company assesses possible impairment
of these loans on a quarterly basis by reviewing the fair value of the
underlying real estate. At June 30, 1996, the value of the underlying real
estate was in excess of the carrying value of the mortgage loans.
The land on which three of the Company's properties are located is owned by
Stanford University and is subject to ground leases. The ground leases
expire in 2039 or 2040, and unless the leases are extended, the use of the
land, together with all improvements, will revert back to Stanford
University. The former owners of the three properties prepaid the ground
leases through 2011, 2012 and 2017; thereafter, the Company will be
responsible for the ground lease payments, as defined under the terms of the
leases. These ground lease payments have been segregated from the total
purchase price of the properties, capitalized as leasehold interests in the
accompanying consolidated balance sheet, and are being amortized ratably
over the terms of the related original prepayment periods (18 to 24 years).
Cash and Cash Equivalents
Highly liquid investments with an original maturity of three months or less
when purchased are classified as cash equivalents.
Deferred Financing and Leasing Costs
Costs incurred in connection with financing or leasing are capitalized and
amortized on a straight-line basis over the term of the related loan or
lease for periods ranging from 2 to 25 years. Unamortized leasing costs are
charged to expense upon the early termination of the lease.
Fair Value of Financial Investments
Based on the borrowing rates currently available to the Company, the
carrying amount of debt approximates fair value. Cash and cash equivalents
consist of demand deposits, certificates of deposit and overnight repurchase
agreements, with financial institutions. The carrying amount of cash and
cash equivalents approximates fair value.
10
<PAGE> 11
Minority Interest
Minority interest in the Company represents (i) the individual Spieker
Partners' approximate 15.1 percent limited partnership interest in the
Operating Partnership, and (ii) a 10 percent interest in one property and a
7.5 percent interest in another property held by outside interests.
Revenues
All leases are classified as operating leases. Rental income is recognized
on the straight-line basis over the terms of the leases. Deferred rent
receivable represents the excess of rental revenue recognized on a
straight-line basis over cash received under the applicable lease
provisions.
Extraordinary Items
Extraordinary items for the six months ended June 30, 1996, represent a gain
on the early extinguishment of debt. See Note 10 - Extraordinary Item.
Net Income (Loss) Per Share of Common Stock
Per share amounts for the Company are computed using the weighted average
common shares outstanding (includes Class B Common Stock and Class C Common
Stock) during the period. The weighted average common shares outstanding for
the three and six months ended June 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Weighted Average
Common Shares Outstanding
-------------------------
<S> <C>
Three months ended:
June 30, 1996 35,668,801
June 30, 1995 25,361,929
Six months ended:
June 30, 1996 33,502,443
June 30, 1995 22,911,669
</TABLE>
Earnings used in the calculation are reduced by dividends owed to preferred
stockholders.
Reclassifications
Certain items in the 1995 financial statements have been reclassified to
conform to the 1996 presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. RELATED PARTY TRANSACTIONS
Receivable From Related Party
The receivable from related party at June 30, 1996 and December 31, 1995
represents management fees and reimbursements from Spieker Partners related
entities.
4. DEBT
Unsecured Notes
The Company has issued unsecured investment grade notes in four tranches
totaling $360,000 in principal with varying interest rates from 6.65% to
6.95% payable semi-annually. The notes are due on various dates from 2000 to
2004.
11
<PAGE> 12
Unsecured Line of Credit
The maximum amount available under the unsecured line of credit facility is
$150,000. The facility carries interest at LIBOR plus 1.5% and matures in
November 1997. The facility also includes a fee on average unused funds
which varies between 0.125% and 0.20% based on the average outstanding
balance. As of June 30, 1996 the amount drawn on the facility was $86,150.
Mortgage Loans
Mortgage loans of $40,284 as of June 30, 1996 are secured by a first or
second deed of trust on related properties. The mortgage loans carry
interest rates ranging from 7.5% to 13.75%, require monthly principal and
interest payments, and mature from 1996 to 2012.
5. DIVIDENDS AND DISTRIBUTIONS PAYABLE
The dividends and distributions payable at June 30, 1996 and December 31,
1995 represent amounts payable to stockholders of record and distributions
payable to minority interest holders as of the same dates. The stockholders
of record and minority interests holders as of June 30, 1996 and December
31, 1995 are as follows:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
Shares of:
<S> <C> <C>
Common Stock 31,789,861 26,724,074
Class B Common Stock 2,000,000 2,000,000
Class C Common Stock 1,176,470 -
Series A Preferred Stock 1,000,000 1,000,000
Series B Preferred Stock 4,250,000 4,250,000
Minority Interest Holders 6,549,819 6,565,356
</TABLE>
6. STOCKHOLDERS' EQUITY
Equity Offerings
On February 28, 1996, the Company concurrently sold 4,887,500 shares of
Common Stock, through an underwritten public offering, and directly placed
1,176,470 shares of Class C Common Stock and 135,000 shares of Common Stock
with a limited number of institutional investors at $25.50 per share. Net
proceeds of $151,332 were used primarily to repay floating rate debt.
In December 1995, the Company sold 4,250,000 shares of Series B Preferred
Stock at $25.00 per share and concurrently sold $260,000 of unsecured
investment grade rated notes through underwritten public offerings
(collectively referred to as the "December 1995 Offerings"). Net proceeds of
$360,242 were used to prepay cross- collateralized mortgage obligations
outstanding and certain fees to Prudential Insurance Company (the
"Prudential Debt").
On May 11, 1995, the Company sold 5,750,000 shares of Common Stock for
$19.75 per share through an underwritten public offering. Concurrently, the
Company sold 506,329 shares of Common Stock at $19.75 per share and
2,000,000 shares of Class B Common Stock at $25.00 per share to a limited
number of institutional investors (collectively referred to as the
"Concurrent Offerings"). Net proceeds from the underwritten public offering
and the Concurrent Offerings totaling $167,119 were used to repay
indebtedness incurred by the Company to fund acquisition and development
activities.
Preferred Stock
The 1,000,000 shares of Series A Cumulative, Convertible, Preferred Stock
ranks senior to the Company's Common Stock as to dividends and liquidation
rights. The shares are convertible into 1,219,512 shares of the Company's
Common Stock and have voting rights equal to 1,219,512 shares of Common
Stock. The dividend per share, calculated on the converted numbers of
shares, is equal to the Common Stock dividend, provided that the dividend
yield on the preferred stock may not be less than the initial dividend rate
thereof. With respect to the payment of dividends and amounts upon
liquidation, the Series A Preferred Stock ranks on parity with the Company's
Series B Preferred Stock and ranks senior to the Company's Common Stock,
Class B Common Stock and Class C Common Stock.
12
<PAGE> 13
The Series B Preferred Stock dividends are paid quarterly in arrears at
9.45% of the initial liquidation preference per annum. The Series B
Preferred Stock are redeemable on or after December 11, 2000 at the option
of the Company in whole or in part at a redemption price of $25.00 per
share, plus accrued and unpaid dividends. With respect to the payments of
dividends and amounts upon liquidation, the Series B Preferred Stock ranks
on parity with the Company's Series A Preferred Stock and ranks senior to
the Company's Common Stock, Class B Common Stock and Class C Common Stock.
Class B Common Stock
The Class B Common Stock ranks on parity with the Company's
Common Stock and Class C Common Stock with respect to dividends. In the
event of any liquidation of the Company, the holders of Class B Common
Stock rank on parity with Class C Common Stock and are entitled to receive
prior and in preference to holders of Common Stock, an amount per share of
Class B Common Stock equal to all declared but unpaid dividends for each
share of Class B Common Stock.
Class C Common Stock
The Class C Common Stock ranks on parity with the Company's Common Stock and
Class B Common Stock with respect to dividends. In the event of any
liquidation of the Company, the holders of Class C Common Stock rank on
parity with Class B Common Stock and are entitled to receive prior to and in
preference to the holders of Common Stock, an amount per share of Class C
Common Stock equal to all declared but unpaid dividends for each share of
Class C Common Stock.
Ownership Limitations
To maintain its qualification as a REIT, not more than 50 percent in value
of the outstanding shares of the Company may be owned, directly or
indirectly, by five or fewer individuals (defined to include certain
entities), applying certain constructive ownership rules. To help ensure
that the Company will not fail this test, the Company's Charter provides for
certain restrictions on the transfer of the Common Stock to prevent further
concentration of stock ownership. Moreover, to evidence compliance with
these requirements, the Company must maintain records that disclose the
actual ownership of its outstanding Common Stock and will demand written
statements each year from the record holders of designated percentages of
its Common Stock disclosing the actual owners of such Common Stock.
7. EMPLOYEE STOCK PLANS
Employee Stock Incentive Pool
At the time of the Company's initial public offering, the Senior Officers of
the Company reserved a portion of their limited partnership interests in the
Operating Partnership for awards and conversion into Common Stock to
existing employees at that time. The aggregate amount of interests reserved
for the Employee Stock Incentive Pool is equivalent to 69,990 shares of
Common Stock. The participants in the Pool were granted 25% of their
respective allocations on January 1, 1994, January 1, 1995 and January 1,
1996, resulting in a total of 75% of potential stock awards having been
granted. The remainder of the employees' allocations will be granted on
January 1, 1997, provided that the employee has not previously terminated
employment.
The initial deferred compensation of $1,320 pertaining to the 69,990 units
was recorded on the books of the Company, and is being amortized annually
based on the vesting period. The initial value was calculated by converting
the 69,990 partnership units into shares of Common Stock and multiplying by
the Company's Common Stock price on the date of the grant.
Non-cash compensation expense for the awards is measured by the number of
Operating Partnership units converted multiplied by the Company's Common
Stock price on the date of conversion.
For the six months ended June 30, 1996, non-cash compensation expense
arising from the conversion of 15,537 shares of common stock equivalents was
$194, and deferred compensation was $658.
13
<PAGE> 14
Stock Incentive Plan
The Company has adopted the Spieker Properties, Inc. 1993 Stock Incentive
Plan (the "Stock Incentive Plan") to provide incentives to attract and
retain officers and key employees. The Stock Incentive Plan provides for the
grants of options to purchase a specified number of shares of Common Stock.
Under the Stock Incentive Plan, the total number of shares initially
available for grant will be 2,000,000. As of June 30, 1996, options on
approximately 1,514,750 shares of Common Stock at an exercise price of
$20.50 per share, and 200,000 shares of Common Stock at an exercise price of
$25.00 per share have been granted under the Plan. To date, 53,250 shares
have been exercised and 779,188 shares are currently exercisable.
On May 22, 1996, the Stock Incentive Plan was amended. The number of shares
available for option grant has been increased to 9.9% of the number of
shares of Common Stock outstanding as of the last day of the immediately
preceding quarter, reduced by the number of shares of Common Stock reserved
for issuance under other stock compensation plans of the Company. No shares
have been granted or exercised under the amended plan as of June 30, 1996.
Directors' Stock Incentive Plan
On May 22, 1996, the Directors' Stock Incentive Plan was amended to increase
the number of shares of Common Stock subject to automatic annual option
grants to Independent Directors from 500 shares to 4,000 shares, to increase
the number of shares of Common Stock available for option grant from 30,000
to 150,000, and to provide that, in the event of a Change in Control,
outstanding options will become fully vested.
8. ACQUISITIONS
The Company acquired the following properties during the six month period
ended June 30, 1996:
<TABLE>
<CAPTION>
Total Rentable
Project Name Location Property Type (1) Square Feet Date Acquired Initial Cost
- ----------------------------------- ----------------- ------------------ --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Bayside Corporate Center Foster City, CA O 84,925 Jan '96 $ 10,000
Benicia Industrial Benicia, CA I 1,822,788 Jan '96 $ 41,100
Everett Industrial Everett, WA I 150,154 Mar '96 $ 7,400
Carmel Valley Centre I & II San Diego, CA O 106,921 Apr '96 $ 14,000
2290 North First Street San Jose, CA O 75,680 May '96 $ 6,000
Everett 526 Everett, WA I 97,523 May '96 $ 4,300
Port of Oakland Oakland, CA I 199,733 May '96 $ 6,800
Doolittle Drive San Leandro, CA I 113,196 May '96 $ 3,500
10700 Northup Building Bellevue, WA O 55,854 May '96 $ 4,600
Dove Street Newport Beach, CA O 78,052 June '96 $ 7,900
</TABLE>
(1) "O" indicates office property; "I" indicates industrial property.
Additionally, the Company acquired two mortgages secured by two office
properties in San Jose, California for the initial cost of $14,333.
9. DEVELOPMENTS
During the six month period ended June 30, 1996, the Company acquired four
parcels of land for development. The total initial cost of these four
parcels was $4,498.
10. EXTRAORDINARY ITEM
On February 14, 1996, the Company recognized an extraordinary gain on the
early extinguishment of certain debt. A secured mortgage with $7,455 in
remaining principal was retired at a discount for $7,305.
14
<PAGE> 15
11. SUBSEQUENT EVENTS
On July 19,1996, the Company sold $100,000 of unsecured investment grade
rated notes bearing interest at 8.00% and due July 19, 2005.
On July 22, 1996, the Company sold $50,000 of unsecured investment grade
rated notes bearing interest at 7.58% and due December 17, 2001.
Net proceeds from the sale of the aforementioned unsecured investment grade
rated notes of $149,150 were used principally to repay borrowings on the
unsecured line of credit and to fund the ongoing acquisition and development
of property.
The line of credit facility has been amended. Effective August 1, 1996 the
interest rate on the facility was reduced from LIBOR plus 1.50% to LIBOR
plus 1.25%.
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
Statements contained in this Item 2, "Management's Discussion and Analysis of
Financial Conditions and Results of Operations," and elsewhere in this Quarterly
Report on Form 10-Q which are not historical facts may be forward-looking
statements. Such statements are subject to certain risks and uncertainties which
could cause actual results to differ materially from those projected, including,
but not limited to, those risks and special considerations set forth in the
Company's other SEC filings. Readers are cautioned not to place undue reliance
on these forward-looking statements which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the result of any revisions
to these forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
RESULTS OF OPERATIONS
The following comparison is of the Company's consolidated operations for the
three and six month periods ended June 30, 1996 as compared to the Company's
consolidated operations for the three and six month periods ended June 30, 1995.
Rental revenues for the second quarter of 1996 increased by $9.5 million or
25.5% to $46.7 million, as compared with $37.2 million for the quarter ended
June 30, 1995. Of this increase, $3.7 million was generated by properties
acquired during 1995 (the "1995 Acquisitions"). During 1995, the Company spent
approximately $164.8 million to acquire properties totaling 2.3 million square
feet. $1.9 million was generated by developments begun during 1995 and completed
during 1996 (the "1995 Developments"). During the six months ended June 30,
1996, three properties representing a total investment of $42.3 million and
totaling 0.6 million square feet have been completed and added to the Company's
portfolio of stabilized properties and six other properties representing a total
cost of $32.4 million and totaling approximately 0.4 million square feet are
shell complete and partially occupied. $3.4 million of the increase in rental
revenue was generated by properties acquired during the six months ended June
30, 1996. During the first half of 1996, the Company has acquired properties
totaling 2.8 million square feet (the "1996 Acquisitions") at a total projected
cost, including certain repositioning costs, of $112.9 million. The remaining
$0.5 million of the increase in rental revenues is attributable to revenue
increases in the properties owned at January 1, 1995 (the "Core Portfolio"). The
revenue increase in the Core Portfolio is due to contractual rent increases and
increased rental rates realized on the renewal and re-leasing of second
generation space.
For the six month period ended June 30, 1996, rental revenues increased by $19.2
million or 26.7% to $91.1 million, as compared to $71.9 million for the
corresponding period ended June 30, 1995. The increase was attributable to
revenues in the amount of $10.0 million from the 1995 Acquisitions, $3.0 million
from the 1995 Developments, $4.5 million from the 1996 Acquisitions, and $1.7
million from the Core Portfolio.
As a result of the 1995 Acquisitions, 1996 Acquisitions, and 1995 Developments,
the Company's rentable square footage increased by 3.4 million square feet or
22.2% to 18.7 million square feet on June 30, 1996 from 15.3 million on June 30,
1995. At June 30, 1996 the portfolio of stabilized properties was 96.0% leased.
By property type, the office portfolio was 95.2% leased, the industrial
portfolio was 96.8% leased and the retail portfolio was 93.0% leased.
Interest and other income increased by $0.5 million and $0.7 million or 100.0%
and 63.6% for the three and six month periods ended June 30, 1996, respectively,
as compared with similar periods in 1995. The net increases in interest and
other income were primarily due to $0.5 million and $0.8 million in interest
income earned on investments in mortgages during the three and six month periods
ended June 30, 1996, respectively. The increase in interest and other income for
the six months ended June 30, 1996, was offset by a $0.1 million decrease in
management income. The decrease in management fee income is attributable to the
Company's acquisition of certain properties previously managed by the Company.
Rental expenses increased by $1.6 million or 27.1% for the three months ended
June 30, 1996, as compared with the same period in 1995. Real estate taxes
increased by $1.1 million or 39.3% for the three months ended June 30, 1996, as
compared with the same period in 1995. The overall increase in rental expenses
and real estate taxes (collectively referred to as "property operating
expenses") is primarily a result of the growth in the total square footage of
the Company's portfolio of properties. On a percentage basis, property operating
expenses were 24.4% and 23.4% of rental revenues for the quarters ended June 30,
1996 and June 30, 1995, respectively. The total increase in operating expenses
is due to a $1.5 million increase attributable to the 1995 Acquisitions, a $0.5
million increase attributable to the 1995 Developments, a $0.6 million increase
attributable to the 1996 Acquisitions, and a $0.1 million increase attributable
to the Core Portfolio.
16
<PAGE> 17
For the six month period ended June 30, 1996, rental expenses increased by $3.4
million or 29.8% to $14.8 million, as compared to $11.4 million for the
corresponding period ended June 30, 1995. Real estate taxes increased by $1.6
million or 28.1% to $7.3 million for the six month period ended June 30, 1996,
as compared to $5.7 million for the corresponding period ended June 30, 1995.
The total increase in property operating expenses is due to a $3.4 million
increase attributable to the 1995 Acquisitions, a $0.8 million increase
attributable to the 1995 Developments and a $0.8 million increase attributable
to the 1996 Acquisitions. On a percentage basis, property operating expenses
were 24.2% and 23.7% of rental revenues for the six months ended June 30, 1996
and 1995, respectively.
Interest expense decreased by $4.3 million or 35.5% to $7.8 million for the
three months ended June 30, 1996 from $12.1 million for the same period in 1995.
For the six month period ended June 30, 1996, interest expense decreased by $8.3
million or 33.2% to $16.7 million, from $25.0 million for the same period in
1995. The decrease in interest expense is due to both lower average total debt
outstanding for the six months ended June 30, 1996 as compared to the same
period in 1995 and to the elimination of the amortization of debt discount as a
result of the December 1995 refinancing of $347 million of secured mortgage debt
(the "Prudential Debt"). The Prudential Debt was prepaid with the net proceeds
from the concurrent underwritten public offering of $260.0 million of investment
grade rated unsecured notes and 4.25 million shares of Series B Preferred Stock.
The prepayment of the Prudential Debt resulted in the write-off of approximately
$28.1 million in debt discount which was previously being amortized over the
remaining term of the loans and recorded as interest expense.
Depreciation and amortization expenses increased by $0.9 million or 11.4% and
$2.0 million or 13.1% for the three and six month periods ended June 30, 1996,
respectively, as compared with the same periods in 1995 due to the 1995 and 1996
Acquisitions and Developments completed.
General and administrative expenses and other expenses increased by $0.4 and
$0.6 million for the three and six month periods ended June 30, 1996,
respectively, as compared with the same periods in 1995, primarily as a result
of the increased number of employees. On a percentage basis, general and
administrative expenses were 5.4% and 5.3% of rental revenues for the three and
six month periods ended June 30, 1996, respectively, as compared with 5.6% and
5.9% for the same periods in 1995.
Net income before minority interests increased by $10.1 million or 144.3% to
$17.1 million for the three month period ended June 30, 1996 from $7.0 million
for the same period in 1995. For the six month period ended June 30, 1996, net
income before minority interests increased by $20.6 million or 180.7% to $32.0
million over the same period in 1995. The increase in net income is principally
due (i) to income from the 1995 and 1996 Acquisitions, the 1995 Developments and
the increased property operating income (rental revenue less property operating
expenses) generated by the Core Portfolio as a result of contractual rent
increases and increased rental rates realized on the renewal and re-leasing of
second generation space and (ii) the decrease in interest expense.
LIQUIDITY AND CAPITAL RESOURCES
For the six month period ended June 30, 1996, cash provided by operating
activities increased by $16.3 million or 47.9% to $50.3 million, as compared to
$34.0 million for the same period in 1995. The increase is primarily due to the
increase in net income resulting from the 1995 and 1996 Acquisitions, 1995
Developments, increased property operating income generated by the Core
Portfolio and a decrease in interest expense. Cash used for investing activities
increased by $65.1 million or 71.9% to $155.7 million for the first six months
of 1996, as compared to $90.6 million for the same period in 1995. The increase
is attributable to the Company's ongoing acquisition and development of suburban
office, industrial and retail properties. Cash provided by financing activities
increased by $56.5 million or 106.2% to $109.7 million for the first six months
of 1996, as compared to $53.2 million for the same period in 1995. During the
first six months of 1996, cash provided by financing activities consisted,
primarily, of $151.3 million in net proceeds from the sale of Common Stock and
Class C Common Stock, and $98.9 million net proceeds from the issuance of
unsecured investment grade notes, which was offset by net payments of $31.5
million on the line of credit and payments of $72.4 million on mortgage loans.
Additionally, payments of distributions increased by $14.2 million to $36.8
million for the first six months of 1996, as compared with $22.6 million for the
same period in 1995. The increase is due to the greater number of shares
outstanding and a 2.4% increase in the distribution rate.
The principal sources of funding for acquisitions, development, expansion and
renovation of the properties are an unsecured line of credit, construction and
permanent secured debt financings, public and privately placed equity financing,
public unsecured debt financing, the issuance of partnership units in the
Operating Partnership, and cash flow provided by operations. The Company
believes that its liquidity and capital resources are adequate to continue to
meet liquidity requirements for the foreseeable future.
17
<PAGE> 18
At June 30, 1996, the Company had no material commitments for capital
expenditures related to the renewal or re-leasing of space. The Company believes
that the cash provided by operations and its line of credit provide sufficient
sources of liquidity to fund capital expenditure costs associated with the
renewal or re-leasing of space.
The Company has a $150.0 million unsecured line of credit facility (the
"Facility") with interest at London Interbank Offered Rates ("LIBOR") plus 1.5%.
The Facility matures in November 1997 and the Company has an option to extend
the Facility for one year upon payment of a fee equal to 0.12% of the total
Facility. The Facility also includes a fee on average unused funds, which varies
between 0.125% and 0.20% based on the average outstanding balance. At June 30,
1996, the Company had $86.2 million outstanding under the Facility. Effective
on August 1, 1996, the Facility was amended to reduce the interest rate to
LIBOR plus 1.25%.
In December 1995, the Company issued in a public offering $260.0 million of
unsecured investment grade rated notes (the "Unsecured Notes") and the Company
issued $106.3 million of Series B Preferred Stock (the offering of the Unsecured
Notes and the offering of the Series B Preferred Stock are collectively referred
to as the "December Offerings"). The Unsecured Notes were issued in three
tranches as follows: $100.0 million of 6.65% notes due December 15, 2000 priced
to yield 6.683%, $50.0 million of 6.80% notes due December 15, 2001 priced to
yield 6.823%, and $110.0 million of 6.95% notes due December 15, 2002 priced at
par. The Series B Preferred Stock was issued at $25.00 per share and a dividend
yield of 9.45%.
The proceeds from the December Offerings of $358.9 million were used to prepay a
cross-collateralized mortgage obligation outstanding to Prudential Insurance
Company. The amount paid to Prudential Insurance Company included the repayment
of principal, interest due through December 10, 1995, and a negotiated
prepayment penalty of $11.8 million. The prepayment resulted in the
unencumbrance of 55 of the Company's properties.
On January 19, 1996 the Company issued $100.0 million of investment grade rated
unsecured notes. The notes carry an interest rate of 6.90%, were priced to yield
6.97%, and mature on January 15, 2004. Net proceeds of $98.9 million were used
to repay borrowings on the unsecured line of credit. As a result of the December
1995 and January 1996 offerings of unsecured notes, as of June 30, 1996, the
Company had $360.0 million outstanding of investment grade rated unsecured notes
in four tranches that mature from 2000 to 2004.
In addition to the Unsecured Notes and the Facility, the Company has $40.3
million of secured indebtedness (the "Mortgages") at June 30, 1996. The
Mortgages have interest rates varying from 7.5% to 13.75% and maturity dates
from 1996 to 2012. The Mortgages are secured by a first or second deed of trust
on the related properties and generally require monthly principal and interest
payments. The Company also has $12.4 million of assessment bonds outstanding as
of June 30, 1996.
On February 28, 1996, the Company concurrently sold 4,887,500 shares of Common
Stock (including 637,500 shares sold pursuant to the underwriters' exercise of
their over-allotment option) through an underwritten public offering and
directly placed 1,176,470 shares of Class C Common Stock and 135,000 shares of
Common Stock with a limited number of institutional investors at $25.50 per
share. The net proceeds of $151.3 million were used primarily to repay floating
rate debt.
In January 1996, the Company filed a shelf registration statement (the "January
1996 Shelf Registration Statement") with the SEC to register 1,407,005 shares of
Common Stock issuable by the Company upon conversion of shares of Series A
Preferred Stock and upon conversion of partnership units in the Operating
Partnership by certain holders thereof. The January 1996 Shelf Registration
Statement was declared effective by the SEC on February 28, 1996. The Company
will receive no proceeds from the sale of Common Stock under the January 1996
Shelf Registration Statement.
In May 1996, the Company and the Operating Partnership filed a shelf
registration statement (the "May 1996 Shelf Registration Statement") with the
SEC which registered $250.0 million of equity securities of the Company and
$250.0 million of debt securities of the Operating Partnership. The May 1996
Shelf Registration Statement was declared effective by the SEC on June 20, 1996.
In June 1996, the Company commenced a $200.0 million medium-term note program.
In July 1996, the Company issued $100.0 million of 8.00% medium-term notes due
July 19, 2005 and $50.0 million of 7.58% medium-term notes due December 17, 2001
(the "July Notes"). The net proceeds of $149.2 million from the issuance of the
medium-term notes were used to repay borrowings on the line of credit and to
fund ongoing acquisition and development projects. As of July 31, 1996, $50.0
million of debt securities remained available for issuance under the medium-term
note program.
18
<PAGE> 19
After completion of the issuance of the July Notes, the Company has the capacity
pursuant to the October 1995 Shelf Registration Statement and the May 1996 Shelf
Registration Statement to issue up to approximately $392.0 million in equity
securities and the Operating Partnership has the capacity pursuant to the
October 1995 Shelf Registration Statement and the May 1996 Shelf Registration
Statement to issue up to $240.0 million in debt securities (including the $50.0
million of medium-term notes available under the medium-term note program).
In August 1996, the Company filed a shelf registration statement (the "August
Shelf Registration Statement") with the SEC to register 50,000 shares of Common
Stock issuable by the Company upon exchange of partnership units in the
Operating Partnership by certain holders thereof. The Company will receive no
proceeds from the sale of Common Stock under the August Shelf Registration
Statement.
FUNDS FROM OPERATIONS
The Company considers Funds from Operations to be a useful financial measure of
the operating performance of an equity REIT because, together with net income
and cash flows, Funds from Operations provides investors with an additional
basis to evaluate the ability of a REIT to incur and service debt and to fund
acquisitions, developments, and other capital expenditures. Funds from
Operations does not represent net income or cash flows from operations as
defined by generally accepted accounting principles ("GAAP") and Funds from
Operations should not be considered as an alternative to net income as an
indicator of the Company's operating performance or as an alternative to cash
flows as a measure of liquidity. Funds from Operations does not measure whether
cash flow is sufficient to fund all of the Company's cash needs including
principal amortization, capital improvements, and distributions to stockholders.
Funds from Operations does not represent cash flows from operating, investing,
or financing activities as defined by GAAP. Further, Funds from Operations as
disclosed by other REITs may not be comparable to the Company's calculation of
Funds from Operations, as described below.
Pursuant to the National Association of Real Estate Investment Trusts ("NAREIT")
revised definition of Funds from Operations, beginning with the quarter ended
March 31, 1996, the Company calculated Funds from Operations by adjusting net
income before minority interest, calculated in accordance with GAAP, for certain
non-cash items, principally the amortization and depreciation of real property
and for dividends on shares and other equity interests that are not convertible
into shares of Common Stock. The Company will not add back the depreciation of
corporate items, such as computers or furniture and fixtures, or the
amortization of deferred financing costs or debt discount. However, the Company
will include an adjustment for the straight-lining of rent under GAAP, as
management believes this presents a more meaningful picture of rental income
over the reporting period.
Funds from Operations per share is calculated based on weighted average shares
equivalents outstanding, assuming the conversion of all shares of Series A
Preferred Stock, Class B Common Stock, Class C Common Stock and all partnership
units in the Operating Partnership into shares of Common Stock. Assuming such
conversion, the average number of shares outstanding for the three and six
months ended June 30, 1996 are 43,438,132 and 41,271,774, respectively, and
33,085,328 and 30,387,786 for the same periods in 1995.
19
<PAGE> 20
STATEMENT OF FUNDS FROM OPERATIONS
(based on the new NAREIT definition)
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income before minority interest $ 17,131 $ 6,991 $ 31,960 $ 11,431
Add:
Depreciation and Amortization 8,723 7,855 17,197 15,194
Dividends on Series B Preferred Stock (2,510) -- (5,020) --
Other, net 120 65 236 140
Straight-lined rent 125 (78) 55 (263)
-------- -------- -------- --------
Funds from Operations $ 23,589 $ 14,833 $ 44,428 $ 26,502
======== ======== ======== ========
</TABLE>
Because of the impact of the December Offerings on the Company's balance sheet
and result of operations, the Company believes that an adjusted calculation of
1995 Funds from Operations, based on the new NAREIT definition and reflecting
the effect of the December Offerings and the conversion of the secured line of
credit into an unsecured facility, as if such transactions had occurred on
January 1, 1995, provides a helpful basis for analyzing the impact of the new
NAREIT definition. The table below sets forth the Company's calculation of Funds
from Operations for the three and six months ended June 30, 1995, based on the
new NAREIT definition and adjusted to reflect the December Offerings and the
conversion of the secured line of credit into an unsecured facility.
STATEMENT OF FUNDS FROM OPERATIONS
1995 New NAREIT Definition Adjusted
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1995 June 30, 1995
------------- -------------
<S> <C> <C>
Funds From Operations - New Definition $ 14,833 $ 26,502
Add:
Amortization of Discount and Deferred Financing Fees 2,455 4,974
-------- --------
Funds From Operations - Old Definition 17,288 31,476
Less:
Restructuring of Secured Debt (1) (958) (1,916)
Amortization of Discount and Deferred Financing Fees (2) (311) (686)
-------- --------
Funds From Operations - Pro Forma New Definition $ 16,019 $ 28,874
======== ========
</TABLE>
(1) Adjustment reflects interest cost of unsecured notes and dividend cost
of Series B Preferred Stock less previously recorded cash interest cost
on $347 million of prepaid debt.
(2) Adjustment reflects amortization of discount and deferred financing fees
added back in calculating FFO based on old NAREIT definition less
amortization on the $347 million of prepaid debt and the previous
secured line of credit and adding in amortization on the new unsecured
line of credit.
20
<PAGE> 21
PART II. OTHER INFORMATION
Item 2. Changes in Securities
None.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
The exhibits listed below are filed or incorporated by reference as
part of this quarterly report on Form 10-Q.
Exhibit Number Page Number
-------------- -----------
1.1 Distribution Agreement Relating to the Medium-Term
Note Program
3.1 Articles of Amendment of Spieker Properties, Inc.
(amending articles of incorporation)
(incorporated by reference to Exhibit 3.2 to
Spieker Properties, Inc.'s shelf registration
statement filed with the Securities and Exchange
Commission on August 2, 1996)
4.1 Fifth Supplemental Indenture relating to the Medium-
Term Note Program
4.2 * Amended and Restated Spieker Properties, Inc.
1993 Directors' Stock Option Plan
4.3 * Amended and Restated Spieker Properties, Inc.
1993 Stock Incentive Plan
10.1 Amendment No. 1 to the Credit Agreement among Spieker
Properties, L.P. as borrower, and Wells Fargo Bank, The First
National Bank of Boston, Seattle - First National Bank of
Boston, Seattle - First National Bank and Union Bank, as
lenders, dated as of July 24, 1996.
12.1 Statement of Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred Dividends
27.1 Article 5 Financial Data Schedule (EDGAR filing
only)
* Indicates management contract or compensatory plan or
arrangement
(B) Reports on Form 8-K
The Company filed a current report on Form 8-K dated June
18, 1996, containing combined statements of revenue and certain
expenses for the six acquired properties and two investments in
mortgages.
The Company filed a current report on Form 8-K dated July
15, 1996, containing combined statements of revenue and certain
expenses for the City Portfolio.
21
<PAGE> 22
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
Spieker Properties, Inc.
(Registrant)
Dated: August 14, 1996 /s/ Elke Strunka
--------------------- ------------------------------
Elke Strunka,
Vice President
Principal Accounting Officer
22
<PAGE> 1
SPIEKER PROPERTIES, L.P.
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
June 20, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
DEAN WITTER REYNOLDS INC.
Two World Trade Center
New York, New York 10048
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
J.P. MORGAN SECURITIES INC.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Spieker Properties, Inc., a Maryland corporation (the "Company"), and
Spieker Properties, L.P. (the "Operating Partnership"), jointly confirm their
respective agreements with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Dean Witter Reynolds Inc., Goldman, Sachs & Co. and J.P.
Morgan Securities Inc. (each, an "Agent", and collectively, the "Agents") with
respect to the issue and sale by the Operating Partnership of its Medium-Term
Notes Due Nine Months or More From Date of Issue (the "Notes"). The Notes are
to be issued pursuant to an Indenture, dated as of December 6, 1995, as
amended, supplemented or modified from time to time (the "Indenture"), among
the Operating Partnership, the Company and State Street Bank and Trust Company,
as trustee (the "Trustee"). As of the date hereof, the Operating Partnership
has authorized the issuance and sale of up to U.S. $200,000,000 aggregate
initial offering price of Notes to or through the Agents pursuant to the terms
of this Agreement. It is understood, however, that the Operating Partnership
may from time to time authorize the issuance of additional Notes and that such
additional Notes may be sold to or through the Agents pursuant to the terms of
this Agreement, all as though the issuance of such Notes were authorized as of
the date hereof.
This Agreement provides both for the sale of Notes by the Operating
Partnership to one or more Agents as principal for resale to investors and
other purchasers and for the sale of Notes by the Operating Partnership
directly to
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investors (as may from time to time be agreed to by the Operating Partnership
and the applicable Agent), in which case such Agent will act as an agent of the
Operating Partnership in soliciting purchases of the Notes.
The Company and the Operating Partnership have filed with the
Securities and Exchange Commission (the "SEC") registration statements on Form
S-3 (File Nos. 33-98372 and 333-04299) for the registration of debt and other
securities, including the Notes, under the Securities Act of 1933, as amended
(the "1933 Act"), and the offering thereof from time to time in accordance with
Rule 415 of the rules and regulations of the SEC under the 1933 Act (the "1933
Act Regulations"). Each of such registration statements, as amended (if
applicable), has been declared effective by the SEC and the Indenture has been
duly qualified under the Trust Indenture Act of 1939, as amended (the "1939
Act"). References herein to a "Registration Statement" and the "Registration
Statements" shall be deemed to refer to and include each such registration
statement, including the exhibits thereto, as amended at the date of this
Agreement and, if the Company or the Operating Partnership shall subsequently
file and the SEC shall declare effective any further registration statements
for the purpose of registering additional Notes (each, a "Subsequent
Registration Statement") and the Company and the Operating Partnership shall
have satisfied the conditions set forth in Section 5(e) hereof with respect
thereto, then references herein to a "Registration Statement" and the
"Registration Statements" shall also be deemed to refer to and include, from
and after the date on which the Company shall have satisfied such conditions,
each such Subsequent Registration Statement, including the exhibits thereto, as
amended (if applicable), in the form in which it is declared effective by the
SEC; provided, however, that, in the event that the Company or the Operating
Partnership shall have issued and sold all of the securities registered under
any Registration Statement, as amended if applicable, then, from and after the
date (the "Subject Date") on which the Company or the Operating Partnership
shall have issued and sold the last such securities, the terms "Registration
Statement" and "Registration Statements" shall be deemed not to include such
Registration Statements, except that, notwithstanding the foregoing (i) all
representations, warranties, covenants and agreements made by or on behalf of
the Company or the Operating Partnership in or pursuant to this Agreement with
respect to such Registration Statement through the Subject Date shall survive
and remain operative and in full force and effect and (ii) without limitation
to the provisions of clause (i) above, the terms "Registration Statement" and
"Registration Statements", as used in Sections 8 and 9 hereof, shall continue
to mean and include such Registration Statement. The prospectus and prospectus
supplement relating to the Notes in the form transmitted for filing with the
SEC pursuant to Rule 424(b) under the 1933 Act Regulations on June 20, 1996 are
herein called, together, the "Prospectus"; provided, however, that if in any
case any revised prospectus or prospectus supplement shall be provided by the
Company or the Operating Partnership to the Agents for use in connection with
the offering of the Notes, whether or not the same is required to be filed
pursuant to such Rule 424(b), the term "Prospectus" shall be deemed to refer to
and include such revised prospectus or prospectus supplement from and after the
time it is first provided to the Agents for such use. In that regard, the
Company and the Operating Partnership, jointly and severally, covenant and
agree that, in the event that any Subsequent Registration Statement shall be
declared effective by the SEC while any Notes remain unissued under one or more
prior Registration Statements, then the prospectus contained in such Subsequent
Registration Statement shall, pursuant to Rule 429 under the 1933 Act
Regulations (or any successor thereto), also relate to the unissued Notes
registered under such prior Registration Statements and the Company and the
Operating Partnership shall thenceforth use only such prospectus supplement
relating to the Notes in connection with the offering of the Notes, such that
there shall at all times be only one "Prospectus" for purposes of this
Agreement and the offering of the Notes made pursuant hereto. Any reference
herein to a Registration Statement or Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 which were filed under the 1933 Act or under the Securities
Exchange Act of 1934, as amended (the "1934 Act") on or before the date of this
Agreement (or, in the case of a Subsequent Registration Statement, on or before
the day it is declared effective by the SEC) or the date of such Prospectus, as
the case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to any Registration Statement or Prospectus shall be
deemed to refer to and include the filing of any document under the 1934 Act
after the date of this Agreement (or, in the case of any Subsequent
Registration Statement, after the date it is declared effective by the SEC) or
such Prospectus, as the case may be, deemed to be incorporated therein by
reference.
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1. Appointment as Agent.
(a) Appointment. Subject to the terms and conditions stated
herein and subject to the reservation by the Operating Partnership of the right
to sell Notes directly on its own behalf, the Company and the Operating
Partnership hereby jointly agree that Notes will be sold exclusively to or
through the Agents. The Company and the Operating Partnership further jointly
agree that neither of them will appoint any other agents to act on either of
their behalf, or to assist either of them, in the placement of the Notes.
(b) Sale of Notes. The Operating Partnership shall not sell or
approve the solicitation of purchases of Notes in excess of the amount which
shall be authorized by the Operating Partnership from time to time or in excess
of the aggregate initial offering price of Notes registered pursuant to the
Registration Statement. The Agents shall have no responsibility for
maintaining records with respect to the aggregate initial offering price of
Notes sold, or of otherwise monitoring the availability of Notes for sale,
under the Registration Statement.
(c) Purchases as Principal. The Agents shall not have any
obligation to purchase Notes from the Operating Partnership as principal, but
one or more Agents may agree from time to time to purchase Notes as principal
for resale to investors and other purchasers determined by such Agent or
Agents. Any such purchase of Notes by an Agent as principal shall be made in
accordance with Section 3(a) hereof.
(d) Solicitations as Agent. If agreed upon by an Agent and the
Operating Partnership, such Agent, acting solely as agent for the Operating
Partnership and not as principal, will solicit purchases of the Notes. Such
Agent will communicate to the Operating Partnership, orally, each offer to
purchase Notes solicited by it on an agency basis, other than those offers
rejected by such Agent. Such Agent shall have the right, in its discretion
reasonably exercised, to reject any proposed purchase of Notes, as a whole or
in part, and any such rejection shall not be deemed a breach of its agreement
contained herein. The Operating Partnership may accept or reject any proposed
purchase of Notes, in whole or in part. Such Agent shall make reasonable
efforts to assist the Operating Partnership in obtaining performance by each
purchaser whose offer to purchase Notes has been solicited by it and accepted
by the Operating Partnership. Such Agent shall not have any liability to the
Operating Partnership or to the Company in the event that any such purchase is
not consummated for any reason. If the Operating Partnership shall default on
its obligation to deliver Notes to a purchaser whose offer it has accepted, the
Operating Partnership and the Company, jointly and severally, shall (i) hold
such Agent harmless against any loss, claim or damage arising from or as a
result of such default by the Operating Partnership and (ii) pay to such Agent
any commission to which it would otherwise be entitled absent such default.
(e) Reliance. The Company, the Operating Partnership and the
Agents agree that any Notes purchased by one or more Agents as principal shall
be purchased, and any Notes the placement of which an Agent arranges as agent
shall be placed by such Agent, in reliance on the representations, warranties,
covenants and agreements of the Company and the Operating Partnership contained
herein and on the terms and conditions and in the manner provided herein.
2. Representations and Warranties.
(a) The Company and the Operating Partnership, jointly and
severally, represent and warrant to each Agent as of the date hereof, as of the
date of each acceptance by the Operating Partnership of an offer for the
purchase of Notes (whether to such Agent as principal or through such Agent as
agent), as of the date of each delivery of Notes (whether to such Agent as
principal or through such Agent as agent) (the date of each such delivery to
the Agent as principal or through such Agent as agent being hereafter referred
to as a "Settlement Date"), and as of any time that the Registration Statement
or the Prospectus shall be amended or supplemented or there is filed with the
SEC any
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document incorporated by reference into the Prospectus (each of the times
referenced above being referred to herein as a "Representation Date"), as
follows:
(i) Due Incorporation and Qualification. The
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland
with corporate power and authority to own its properties and conduct
its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction; and the Operating Partnership has been duly organized and
is validly existing as a limited partnership in good standing under the
laws of the State of California with power and authority to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign limited partnership for the
transaction of business under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction.
(ii) Capitalization; Operating Partnership. The
Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non assessable; the Company is the sole general partner of the
Operating Partnership; the partnership agreement of the Operating
Partnership has been duly authorized, executed and delivered by each
partner thereto and is valid, legally binding and enforceable in
accordance with its terms; and all of the partnership interests in the
Operating Partnership have been duly and validly authorized and issued
and (except as described in the Prospectus) are owned directly or
indirectly by the Company free and clear of all liens, encumbrances,
equities or claims.
(iii) Subsidiaries. Each subsidiary of the Company
or the Operating Partnership has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation with corporate power and authority to
own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction; and all of the capital
stock in each subsidiary of the Company or the Operating Partnership
has been duly and validly authorized and issued and (except as
described in the Prospectus) is owned directly or indirectly by the
Company or the Operating Partnership, as the case may be, free and
clear of all liens, encumbrances, equities or claims.
(iv) Registration Statement and Prospectus. At
the time the Registration Statement became effective, the Registration
Statement complied, and as of each Representation Date will comply, in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the 1939 Act and the rules and regulations of
the SEC promulgated thereunder; the Registration Statement, at the time
it became effective, did not, and at each time thereafter at which any
amendment to the Registration Statement becomes effective or any Annual
Report on Form 10-K is filed by the Company with the SEC and as of each
Representation Date, will not, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
the Prospectus, as of the date hereof does not, and as of each
Representation Date will not, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements or
omissions made in reliance upon and in
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conformity with information furnished in writing to the Company or the
Operating Partnership by any Agent expressly for use in the Prospectus
relating to the Notes or to that part of the Registration Statement
which shall constitute the Statement of Eligibility under the 1939 Act
(Form T-1) of the Trustee under the Indenture relating to the debt
securities of the Operating Partnership (the "Form T-1").
(v) Incorporated Documents. The documents
incorporated by reference in the Prospectus, at the time they were or
hereafter are filed with the SEC, complied or when so filed will
comply, as the case may be, in all material respects with the
requirements of the 1934 Act and the rules and regulations promulgated
thereunder (the "1934 Act Regulations"), and, when read together and
with the other information in the Prospectus, did not and will not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were or are made, not misleading; provided, however, that
the representations and warranties in this subsection shall not apply
to statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by any Agent expressly
for use in the Prospectus.
(vi) Accountants. The accountants who certified
the financial statements included or incorporated by reference in the
Prospectus are independent public accountants within the meaning of the
1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations.
(vii) Authorization and Validity of this Agreement,
the Indenture and the Notes. This Agreement has been duly authorized,
executed and delivered by each of the Company and the Operating
Partnership and, upon execution and delivery by the Agents, will be a
valid and legally binding agreement of each of the Company and the
Operating Partnership; the Indenture has been duly authorized, executed
and delivered by each of the Company and the Operating Partnership and
is a valid and legally binding agreement of each of the Company and the
Operating Partnership enforceable against each of them in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and by the effect of general principles of equity;
the Notes have been duly and validly authorized for issuance, offer and
sale pursuant to this Agreement and, when issued, authenticated and
delivered pursuant to the provisions of this Agreement and the
Indenture against payment of the consideration therefor, the Notes will
constitute valid and legally binding obligations of the Operating
Partnership enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and by
the effect of general principles of equity; the Notes and the Indenture
will be substantially in the form heretofore delivered to the Agents
and conform in all material respects to all statements relating thereto
contained in the Prospectus; and each holder of Notes will be entitled
to the benefits of the Indenture.
(viii) Material Changes or Material Transactions.
Neither the Company nor the Operating Partnership nor any of their
respective subsidiaries has sustained since the date of the latest
audited financial statements included or incorporated by reference in
the Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (1) there has
not been any change in the capital stock of the Company or long-term or
short-term debt of the Company or the capital of the Operating
Partnership or any of their respective subsidiaries or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or
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results of operations of the Company, the Operating Partnership or
their respective subsidiaries considered as one enterprise other than
as set forth or contemplated in the Prospectus.
(ix) No Defaults. Neither the Company nor any of
its subsidiaries is in violation of its charter or bylaws and the
Operating Partnership is not in violation of its partnership agreement;
neither the Company nor the Operating Partnership nor any of their
respective subsidiaries is in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan agreement,
note, lease or other agreement or instrument to which it is a party or
by which it or any of them or their properties may be bound; and the
execution and delivery of this Agreement and the Indenture and the
consummation of the transactions contemplated herein and therein will
not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company, the Operating Partnership
or any of their respective subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or the Operating Partnership is a party or by which
the Company, the Operating Partnership or any of their respective
subsidiaries is bound or to which any of the property or assets of the
Company, the Operating Partnership or any of their respective
subsidiaries is subject, nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or the
partnership agreement of the Operating Partnership or any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company, the Operating Partnership or
any of their respective subsidiaries or any of their properties.
(x) Regulatory Approvals. No consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale
of the Notes or the consummation by the Company, the Operating
Partnership or any of their respective subsidiaries of the transactions
contemplated by this Agreement, except such as have been obtained under
the 1933 Act, or will have been obtained prior to each delivery of
Notes, and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Notes by
the Agents.
(xi) Legal Proceedings. Other than as set forth
or incorporated by reference in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, the Operating
Partnership or any of their respective subsidiaries is a party or of
which any property of the Company, the Operating Partnership or any of
their respective subsidiaries is the subject, which, if determined
adversely to the Company, the Operating Partnership or any of their
respective subsidiaries, would individually or in the aggregate have a
material adverse effect on the consolidated financial position,
stockholders' equity or results of operations of the Company, the
Operating Partnership or their respective subsidiaries; and, to the
best knowledge of the Company and the Operating Partnership, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(xii) Title to Properties. The Company, the
Operating Partnership and their respective subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances, defects and other beneficial
interests except such as are described in the Prospectus or such as do
not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company, the Operating Partnership and their respective subsidiaries;
and any real property and buildings held under lease by the Company,
the Operating Partnership and their respective subsidiaries are held by
them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company,
the Operating Partnership and their respective subsidiaries.
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(xiii) Periodic Review of Costs of Environmental
Compliance. In the ordinary course of their business, the Company and
the Operating Partnership conduct periodic reviews of the effect of
federal, state, local and foreign laws and regulations relating to
pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum and petroleum
products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environment Concern (collectively, "Environmental Laws") on the
business, operations and properties of the Company, the Operating
Partnership and their respective subsidiaries, in the course of which
they identify and evaluate associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws
or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties).
On the basis of such reviews and the amounts of their established
reserves, the Company and the Operating Partnership have reasonably
concluded that such associated costs and liabilities would not,
individually or in the aggregate, have a material adverse effect on the
consolidated financial position, stockholder's equity or results of
operations of the Company and its subsidiaries considered as one
enterprise or the Operating Partnership and its subsidiaries considered
as one enterprise.
(xiv) Company Operates as a REIT. The Company has
at all times operated as a "real estate investment trust" ("REIT")
under the Internal Revenue Code of 1986, as amended (the "Code"), and
intends to continue to operate in such manner.
(xv) Investment Company Act. Neither the Company,
the Operating Partnership nor any of their respective subsidiaries is,
or, after giving effect to the issuance and sale of the Notes by the
Operating Partnership, will be an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act").
(xvi) New York Stock Exchange. The common stock,
par value $.0001 per share (the "Common Stock"), of the Company is
listed on the New York Stock Exchange.
(xvii) Doing Business with Cuba. Neither the
Company nor any of its affiliates does business with the government of
Cuba or with any person or affiliate located in Cuba within the meaning
of Section 517.075 of the Florida Statutes;
(xviii) Ratings. The Notes are rated at least "Baa3"
by Moody's Investors Service, Inc. and "BBB-" by Standard & Poor's
Ratings Group.
(b) Additional Certifications. Any certificate signed by any
director or officer of the Company or the Operating Partnership and delivered
to one or more Agents or to counsel for the Agents in connection with an
offering of Notes to one or more Agents as principal or through an Agent as
agent shall be deemed a representation and warranty by the Company or the
Operating Partnership, as the case may be, to such Agent or Agents as to the
matters covered thereby on the date of such certificate and at each
Representation Date subsequent thereto.
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3. Purchases as Principal; Solicitations as Agent.
(a) Purchases as Principal. Unless otherwise agreed by an Agent
and the Operating Partnership, Notes shall be purchased by one or more Agents
as principal in accordance with terms agreed upon by such Agent or Agents and
the Operating Partnership (which terms, unless otherwise agreed, shall, to the
extent applicable, include those terms specified in Exhibit A hereto and be
agreed upon orally, with written confirmation prepared by such Agent or Agents
and mailed to the Operating Partnership). An Agent's commitment to purchase
Notes as principal shall be deemed to have been made on the basis of the
representations and warranties of the Company and the Operating Partnership
herein contained and shall be subject to the terms and conditions herein set
forth. Unless the context otherwise requires, references herein to "this
Agreement" shall include the agreement of one or more Agents to purchase Notes
from the Operating Partnership as principal. Each purchase of Notes, unless
otherwise agreed, shall be at a discount from the principal amount of each such
Note equivalent to the applicable commission set forth in Schedule A hereto.
The Agents may engage the services of any other broker or dealer in connection
with the resale of the Notes purchased by them as principal and may allow all
or any portion of the discount received in connection with such purchases from
the Operating Partnership to such brokers and dealers. At the time of each
purchase of Notes by one or more Agents as principal, such Agent or Agents
shall specify the requirements for the stand-off agreement, officers'
certificate, opinions of counsel and comfort letter pursuant to Sections 4(k),
7(b), 7(c) and 7(d) hereof.
(b) Solicitations as Agent. On the basis of the representations
and warranties herein contained, but subject to the terms and conditions herein
set forth, when agreed by the Operating Partnership and an Agent, such Agent,
as an agent of the Operating Partnership, will use its reasonable efforts to
solicit offers to purchase the Notes upon the terms and conditions set forth in
the Prospectus. The Agents are not authorized to appoint sub-agents with
respect to Notes sold through them as agent. All Notes sold through an Agent
as agent will be sold at 100% of their principal amount unless otherwise agreed
to by the Operating Partnership and such Agent.
The Operating Partnership reserves the right, in its sole discretion,
to suspend solicitation of purchases of the Notes through an Agent, as agent,
commencing at any time for any period of time or permanently. As soon as
practicable after receipt of instructions from the Operating Partnership, such
Agent will suspend solicitation of purchases from the Operating Partnership
until such time as the Operating Partnership has advised such Agent that such
solicitation may be resumed.
The Operating Partnership agrees to pay each Agent a commission, in the
form of a discount, equal to the applicable percentage of the principal amount
of each Note sold by the Operating Partnership as a result of a solicitation
made by such Agent as set forth in Schedule A hereto.
(c) Administrative Procedures. The purchase price, interest rate
or formula, maturity date and other terms of the Notes (as applicable)
specified in Exhibit A hereto shall be agreed upon by the Operating Partnership
and the applicable Agent or Agents and specified in a pricing supplement to the
Prospectus (each, a "Pricing Supplement") to be prepared in connection with
each sale of Notes. Except as may be otherwise specified in the applicable
Pricing Supplement, the Notes will be issued in denominations of U.S. $1,000 or
any larger amount that is an integral multiple of U.S. $1,000. Administrative
procedures with respect to the sale of Notes shall be agreed upon from time to
time by the Operating Partnership, the Agents and the Trustee (the
"Procedures"). The Agents and the Operating Partnership agree to perform, and
the Operating Partnership agrees to cause the Trustee to agree to perform,
their respective duties and obligations specifically provided to be performed
by them in the Procedures.
4. Covenants of the Company and the Operating Partnership.
The Company and the Operating Partnership, jointly and severally,
covenant with the Agents as follows:
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(a) Notice of Certain Events. The Company and the Operating
Partnership will notify the Agents immediately, and confirm such notice in
writing, of (i) the effectiveness of any amendment to the Registration
Statement, (ii) the transmittal to the SEC for filing of any amendment or
supplement to the Prospectus or any document to be filed pursuant to the 1934
Act (other than any Annual Report on Form 10-K or Quarterly Report on Form 10-Q
or any amendment, supplement or document relating solely to securities other
than the Notes), (iii) the receipt of any comments from the SEC with respect to
the Registration Statement or the Prospectus, (iv) any request by the SEC for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, (v) the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose and (vi) any downgrading in
the rating accorded the Company's preferred stock or the Operating
Partnership's debt securities by any "nationally recognized statistical rating
organization", as that term is defined by the SEC for purposes of Rule
436(g)(2) under the 1933 Act Regulations or any public announcement by any such
organization that it has under surveillance or review, with possible negative
implications, its rating of the Company's preferred stock or the Operating
Partnership's debt securities. The Company and the Operating Partnership will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) Notice of Certain Proposed Filings. Each of the Company and
the Operating Partnership will give the Agents advance notice of its intention
to file or prepare any additional registration statement with respect to the
registration of additional Notes, any amendment to the Registration Statement
or any amendment or supplement to the Prospectus (other than any Annual Report
on Form 10-K or Quarterly Report on Form 10-Q or any amendment or supplement
providing solely for a change in the interest rate or formula applicable to the
Notes or relating solely to the issuance and/or offering of securities other
than the Notes), whether by the filing of documents pursuant to the 1934 Act or
the 1933 Act or otherwise, and will furnish to the Agents copies of any such
amendment or supplement or other documents proposed to be filed or used a
reasonable time in advance of such proposed filing or use, as the case may be,
and will not file any such amendment or supplement or other documents in a form
to which the Agents or counsel for the Agents shall reasonably object.
(c) Copies of the Registration Statement and the Prospectus. The
Company and the Operating Partnership will deliver to the Agents as many signed
and conformed copies of the Registration Statement (as originally filed) and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference in the Prospectus) as
the Agents reasonably request. The Company and the Operating Partnership will
furnish to the Agents as many copies of the Prospectus (as amended or
supplemented) as the Agents reasonably request so long as the Agents are
required to deliver a Prospectus in connection with sales or solicitations of
offers to purchase the Notes.
(d) Preparation of Pricing Supplements. The Company and the
Operating Partnership will prepare, with respect to any Notes to be sold to or
through one or more Agents pursuant to this Agreement, a Pricing Supplement
with respect to such Notes in a form previously approved by the Agents and will
file such Pricing Supplement pursuant to Rule 424(b)(3) under the 1933 Act not
later than the close of business of the SEC on the fifth business day after the
date on which such Pricing Supplement is first used.
(e) Revisions of Prospectus -- Material Changes. Except as
otherwise provided in subsection (l) of this Section, if at any time during the
term of this Agreement any event shall occur or condition exist as a result of
which it is necessary, in the opinion of counsel for the Agents or counsel for
the Company or the Operating Partnership, to amend or supplement the Prospectus
in order that the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time the Prospectus is delivered to a purchaser, or if it shall be
necessary, in the opinion of either such counsel, to amend or supplement the
Registration Statement or the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company and the
Operating Partnership shall give
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immediate notice, confirmed in writing, to the Agents to cease the solicitation
of offers to purchase the Notes in their capacity as agents and to cease sales
of any Notes they may then own as principal, and the Company and the Operating
Partnership will promptly amend the Registration Statement and the Prospectus,
whether by filing documents pursuant to the 1934 Act or the 1933 Act or
otherwise, as may be necessary to correct such untrue statement or omission or
to make the Registration Statement and Prospectus comply with such
requirements.
(f) Prospectus Revisions -- Periodic Financial Information.
Except as otherwise provided in subsection (l) of this Section, on or prior to
the date on which there shall be released to the general public interim
financial statement information related to the Company or the Operating
Partnership with respect to each of the first three quarters of any fiscal year
or preliminary financial statement information with respect to any fiscal year,
the Company or the Operating Partnership, as the case may be, shall furnish
such information to the Agents, confirmed in writing, and shall cause the
Prospectus to be amended or supplemented to include or incorporate by reference
financial information as shall be necessary for an understanding thereof or as
shall be required by the 1933 Act or the 1933 Act Regulations.
(g) Prospectus Revisions -- Audited Financial Information. Except
as otherwise provided in subsection (l) of this Section, on or prior to the
date on which there shall be released to the general public financial
information included in or derived from the audited financial statements of the
Company or the Operating Partnership for the preceding fiscal year, the Company
or the Operating Partnership, as the case may be, shall furnish such
information to the Agents, confirmed in writing, and shall cause the
Registration Statement and the Prospectus to be amended, whether by the filing
of documents pursuant to the 1934 Act or the 1933 Act or otherwise, to include
or incorporate by reference such audited financial statements and the report or
reports, and consent or consents to such inclusion or incorporation by
reference, of the independent accountants with respect thereto, as well as such
other information and explanations as shall be necessary for an understanding
of such financial statements or as shall be required by the 1933 Act or the
1933 Act Regulations.
(h) Earnings Statements. Each of the Company and the Operating
Partnership will make generally available to its security holders as soon as
practicable, but not later than 90 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 of the 1933 Act Regulations) covering each twelve month period beginning,
in each case, not later than the first day of the Company's or the Operating
Partnership's, as the case may be, fiscal quarter next following the "effective
date" (as defined in such Rule 158) of the Registration Statement with respect
to each sale of Notes.
(i) Blue Sky Qualifications. The Company and the Operating
Partnership will endeavor, in cooperation with the Agents, to qualify the Notes
for offering and sale under the applicable securities laws of such states and
other jurisdictions of the United States as the Agents may designate, and will
maintain such qualifications in effect for as long as may be required for the
distribution of the Notes; provided, however, that neither the Company nor the
Operating Partnership shall be obligated to file any general consent to service
of process or to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified. Each of the Company and the Operating Partnership will
file such statements and reports as may be required by the laws of each
jurisdiction in which the Notes have been qualified as above provided. Each of
the Company and the Operating Partnership will promptly advise the Agents of
the receipt by it of any notification with respect to the suspension of the
qualification of the Notes for sale in any such state or jurisdiction or the
initiating or threatening of any proceeding for such purpose.
(j) 1934 Act Filings. The Company and the Operating Partnership,
during the period when the Prospectus is required to be delivered under the
1933 Act or the 1934 Act in connection with sales of the Notes, will file all
documents required to be filed with the SEC pursuant to Sections 13, 14 or
15(d) of the 1934 Act within the time periods prescribed by the 1934 Act and
the 1934 Act Regulations.
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(k) Stand-Off Agreement. If specified by the applicable Agent or
Agents in connection with a purchase of Notes from the Operating Partnership as
principal, between the date of the agreement to purchase such Notes and the
Settlement Date with respect to such purchase, neither the Operating
Partnership nor the Company will, without the prior written consent of such
Agent or Agents, offer or sell, grant any option for the sale of, or enter into
any agreement to sell, any debt securities of the Company or the Operating
Partnership (other than the Notes that are to be sold pursuant to such
agreement or commercial paper in the ordinary course of business).
(l) Suspension of Certain Obligations. Neither the Company nor
the Operating Partnership shall be required to comply with the provisions of
subsections (e), (f) or (g) of this Section during any period from the time (i)
the Agents shall have suspended solicitation of purchases of the Notes in their
capacity as agents pursuant to a request from the Operating Partnership and
(ii) no Agent shall then hold any Notes purchased as principal pursuant hereto,
until the time the Operating Partnership shall determine that solicitation of
purchases of the Notes should be resumed or an Agent shall subsequently
purchase Notes from the Operating Partnership as principal.
5. Conditions of Obligations.
The obligations of the Agents to purchase Notes from the Operating
Partnership as principal and to solicit offers to purchase Notes as agent of
the Operating Partnership, and the obligations of any purchasers of Notes sold
through an Agent as agent, will be subject to the accuracy of the
representations and warranties on the part of the Company and the Operating
Partnership herein and to the accuracy of the statements of the directors or
officers of the Company or the Operating Partnership made in any certificate
furnished pursuant to the provisions hereof, to the performance and observance
by the Company and the Operating Partnership of all their covenants and
agreements herein contained and to the following additional conditions
precedent:
(a) Legal Opinions. On the date hereof, the Agents shall have
received the following legal opinions, dated as of the date hereof and in form
and substance satisfactory to the Agents:
(1) Opinion of Counsel to the Company and the Operating
Partnership. The favorable opinion of Morrison & Foerster, counsel to
the Company and the Operating Partnership, to the effect that:
(i) The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Maryland.
(ii) The Company has corporate power and
authority to own its properties and to conduct its business as
described in the Prospectus.
(iii) The Company has been duly qualified
as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction
in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject
to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction (such
counsel being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company,
provided that such counsel shall state that they believe that
both they and the Agents are justified in relying upon such
opinions and certificates).
(iv) The Company has an authorized
capitalization as set forth in the Prospectus, and all of the
issued shares of capital stock of the Company have been duly
and validly authorized and issued, and are fully paid and non
assessable.
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(v) The Operating Partnership has been
duly formed under the laws of the State of California, with a
stated term beyond the term of the documents being executed in
connection with the transactions contemplated hereby; the
partnership agreement of the Operating Partnership has been
duly authorized, executed and delivered by each partner
thereto and is valid, legally binding and enforceable in
accordance with its terms, except as enforcement thereof may
be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
by the effect of general principles of equity; and all of the
partnership interests in the Operating Partnership have been
duly and validly authorized and issued and (except as
described in the Prospectus) are owned directly or indirectly
by the Company free and clear of all liens, encumbrances,
equities or claims (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of
officers of the Operating Partnership provided that such
counsel shall state that they believe that both they and the
Agents are justified in relying upon such opinions and
certificates).
(vi) All of the capital stock in each
subsidiary of the Company or the Operating Partnership has
been duly and validly authorized and issued and (except as
described in the Prospectus) is owned directly or indirectly
by the Company or the Operating Partnership, as the case may
be, free and clear of all liens, encumbrances, equities or
claims (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of
the Company, the Operating Partnership, or the Significant
Subsidiaries provided that such counsel shall state that they
believe that both they and the Agents are justified in relying
upon such opinions and certificates).
(vii) The Operating Partnership has been
duly qualified as a foreign limited partnership for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any
such jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of
officers of the Operating Partnership, provided that such
counsel shall state that they believe that both they and the
Agents are justified in relying upon such opinions and
certificates).
(viii) This Agreement has been duly
authorized, executed and delivered by each of the Company and
the Operating Partnership.
(ix) The Indenture has been duly
authorized, executed and delivered by each of the Company and
the Operating Partnership and is a valid and legally binding
agreement of each of the Company and the Operating
Partnership, enforceable against each of them in accordance
with its terms, except as enforcement thereof may be limited
by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
by the effect of general principles of equity.
(x) The Notes, in the form(s) certified
by the Operating Partnership as of the date hereof, have been
duly authorized for issuance, offer and sale pursuant to this
Agreement and, when issued, authenticated and delivered
pursuant to the provisions of this Agreement and the Indenture
against payment of the consideration therefor, will constitute
valid and legally binding obligations of the Operating
Partnership, enforceable in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and
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similar laws of general applicability relating to or affecting
creditors' rights and by the effect of general principles of
equity; and each holder of Notes will be entitled to the
benefits of the Indenture.
(xi) (1) The Notes and the Indenture
conform in all material respects to the statements relating
thereto in the Prospectus; and (2) the statements in the
Prospectus under the captions "Description of Notes",
"Description of Debt Securities", "Description of Common
Stock" and "Certain Provisions of the Company's Charter and
Bylaws", insofar as such statements constitute a summary of
legal matters, documents or proceedings referred to therein,
are accurate summaries and fairly and correctly present the
information called for with respect to such legal matters,
documents or proceedings.
(xii) The Indenture has been duly
qualified under the 1939 Act.
(xiii) The Registration Statement has been
declared effective by the SEC under the 1933 Act and, to the
best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued
under the 1933 Act or proceedings therefor initiated or
threatened by the SEC.
(xiv) The Registration Statement and the
Prospectus, excluding the documents incorporated by reference
therein, as of their respective effective or issue dates,
comply as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and
the 1939 Act and the rules and regulations of the SEC
promulgated thereunder.
(xv) Each document filed pursuant to the
1934 Act and incorporated by reference in the Prospectus
complied when so filed as to form in all material respects
with the 1934 Act and the 1934 Act Regulations.
(xvi) Neither the Company, the Operating
Partnership nor any of their respective subsidiaries is, or,
after giving effect to the issuance and sale of the Notes by
the Operating Partnership, will be an "investment company" or
a company "controlled" by an "investment company" within the
meaning of the 1940 Act.
(xvii) No consent, approval, authorization,
order, registration or qualification of or with any court or
governmental agency or body is required for the issue and sale
of the Notes or the consummation by the Company, the Operating
Partnership or any of their respective subsidiaries of the
transactions contemplated by this Agreement, except such as
have been obtained under the 1933 Act and such consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Notes by
the Agents.
(xviii) The execution and delivery of this
Agreement and the Indenture and the consummation of the
transactions contemplated herein and therein have been duly
authorized by all necessary action of the Company and the
Operating Partnership and will not conflict with or constitute
a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company, the
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<PAGE> 14
Operating Partnership or any of their respective subsidiaries
pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument known to such
counsel to which the Company or the Operating Partnership or
any of their respective subsidiaries is a party or by which
the Company, the Operating Partnership or any of their
respective subsidiaries is bound or to which any of the
property or assets of the Company, the Operating Partnership
or any of their respective subsidiaries is subject, nor will
such action result in any violation of the provisions of the
charter or by-laws of the Company or the partnership agreement
of the Operating Partnership or any statute or any order, rule
or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the
Company the Operating Partnership or any of their properties.
(xix) To the best knowledge of such
counsel and other than as set forth or incorporated by
reference in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, the
Operating Partnership or any of their respective subsidiaries
is a party or of which any property of the Company, the
Operating Partnership or any of their respective subsidiaries
is the subject, which, if determined adversely to the Company,
the Operating Partnership or any of their respective
subsidiaries, would individually or in the aggregate have a
material adverse effect on the consolidated financial
position, stockholders' equity or results of operations of the
Company, the Operating Partnership or their respective
subsidiaries; and, to the best knowledge of such counsel, no
such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xx) The statements under the captions
"Federal Income Tax Considerations" and "United States
Taxation" in the Prospectus and Items 14 and 15 of Part II of
the Registration Statement, insofar as such statements
constitute a summary of legal matters, documents or
proceedings referred to therein, are accurate summaries and
fairly and correctly present the information called for with
respect to such legal matters, documents or proceedings.
(xxi) In the opinion of such counsel,
commencing with the Company's taxable year ending December 31,
1993, the Company is organized in conformity with the
requirements for qualification as a REIT and its method of
operation enables it to meet the requirements for
qualification and taxation as a REIT under the Code, and the
conversion rights of the limited partners of the Operating
Partnership will not cause the Company to fail to satisfy the
diversity test of Section 856(a)(6) of the Code.
(xxii) The Operating Partnership is
properly treated (1) as a partnership for federal income tax
purposes and (2) not as an association or publicly traded
partnership taxable as a corporation.
(2) Opinion of Counsel to the Agents. The favorable
opinion of Latham & Watkins, counsel to the Agents, (A) covering the
matters referred to in subsection (a)(1) under the subheadings (i),
(viii) to (xiv), inclusive, above (except, however, that with respect
to the matters referred to under the subheading (ix)(2), such opinion
shall cover only the statements in the Prospectus under the captions
"Description of Notes", "Description of Debt Securities", "Description
of Common Stock" and "Certain Provisions of the Company's Charter and
Bylaws") and (B) to the effect that the Operating Partnership has been
duly organized and is an existing limited partnership in good standing
under the laws of the State of California. In its written opinion,
Latham & Watkins is entitled to rely on the opinion of Morrison &
Foerster referred to above with respect to matters of Maryland law
pertaining to the foregoing clauses.
(3) Disclosure Documents. In giving their opinions
required by subsection (a)(1) and (a)(2), respectively, of this
Section 5, Morrison & Foerster and Latham & Watkins shall each
additionally state that nothing has come to their attention that would
lead them to believe that the Registration Statement (except for
financial statements and schedules and other financial and statistical
information included or incorporated by reference therein and except
for the Form T-1, as to which such counsel need make no statement, and
further
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<PAGE> 15
except, in the case of Latham & Watkins, for the statements made in
the Registration Statement under the captions "Description of Class B
Common Stock, Class C Common Stock, Series A Preferred Stock and
Series B Preferred Stock", "Description of Preferred Stock",
"Description of Depositary Shares" and "Description of Warrants", as
to which Latham & Watkins need make no statement), at the time it
became effective (or, if an amendment to the Registration Statement or
an Annual Report on Form 10-K has been filed by the Company with the
SEC subsequent to the effectiveness of the Registration Statement,
then at the time such amendment became effective or at the time of the
most recent such filing, as the case may be) or at the date hereof,
contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading or that the Prospectus (except for financial statements and
schedules and other financial and statistical information included or
incorporated by reference therein and except for the Form T-1, as to
which such counsel need make no statement, and further except, in the
case of Latham & Watkins, for the statements made in the Prospectus
under the captions "Description of Class B Common Stock, Class C
Common Stock, Series A Preferred Stock and Series B Preferred Stock",
"Description of Preferred Stock", "Description of Depositary Shares"
and "Description of Warrants", as to which Latham & Watkins need make
no statement), at the date hereof (or, if such opinion is being
delivered in connection with the purchase of Notes from the Operating
Partnership by one or more Agents as principal pursuant to Section
7(c) hereof, at the date of any agreement by such Agent or Agents to
purchase Notes as principal and at the Settlement Date with respect
thereto, as the case may be) (included or) includes an untrue
statement of a material fact or (omitted or) omits to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) Officers' Certificate. At the date hereof, the Agents shall
have received a certificate of the Chief Executive Officer, President or Vice
President and the principal financial officer or principal accounting officer
of the Company, dated as of the date hereof, to the effect that (i) since the
respective dates as of which information is given in the Prospectus or since
the date of any agreement by one or more Agents to purchase Notes from the
Operating Partnership as principal, (1) there has not been any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position, stockholders'
equity or results of operations of the Company, the Operating Partnership or
their respective subsidiaries considered as one enterprise and (2) there have
been no material transactions entered into by the Company, the Operating
Partnership or their respective subsidiaries other than those in the ordinary
course of business, (ii) the representations and warranties of the Company and
the Operating Partnership contained in Section 2 hereof are true and correct
with the same force and effect as though expressly made at and as of the date
of such certificate, (iii) each of the Company and the Operating Partnership
has performed or complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the date of such
certificate, (iv) no stop order suspending the effectiveness of the
Registration Statement under the 1933 Act has been issued and no proceeding for
that purpose have been initiated or threatened by the SEC and (v) since the
respective dates as of which information is given in the Prospectus or since
the date of any agreement by one or more Agents to purchase Notes from the
Operating Partnership as principal, there has not been any downgrading in the
rating accorded the Company's preferred stock or the Operating Partnership's
debt securities by any "nationally recognized statistical rating organization",
as that term is defined by the SEC for purposes of Rule 436(g)(2) under the
1933 Act Regulations or any public announcement by any such organization that
it has under surveillance or review, with possible negative implications, its
rating of the Company's preferred stock or the Operating Partnership's debt
securities. In addition, at the date hereof, the Agents shall have received a
certificate of the Operating Partnership, executed by the same such officers in
their capacity as officers of the general partner of the Operating Partnership
and dated as of the date hereof, to the effect of the matters set forth in
clauses (i) through (v) above, inclusive, with respect to the Operating
Partnership. As used in this Section 5(b), the term "Prospectus" means the
Prospectus in the form first provided to the applicable Agent or Agents for use
in confirming sales of the Notes.
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(c) Comfort Letter of Accountants. On the date hereof, the Agents
shall have received a letter from Arthur Andersen LLP, dated as of the date
hereof and in form and substance satisfactory to the Agents containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to financial statements and
certain financial information of each of the Company and the Operating
Partnership and their respective subsidiaries contained or incorporated by
reference in the Registration Statement and the Prospectus.
(d) Other Documents. On the date hereof and on each Settlement
Date, counsel to the Agents shall have been furnished with such documents and
opinions as such counsel may reasonably require for the purpose of enabling
such counsel to pass upon the issuance and sale of Notes as herein contemplated
and related proceedings, or in order to evidence the accuracy and completeness
of any of the representations and warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company and the
Operating Partnership in connection with the issuance and sale of Notes as
herein contemplated shall be satisfactory in form and substance to the Agents
and to counsel to the Agents.
(e) Subsequent Registration Statement. In the event that the
Operating Partnership shall have authorized the issuance of additional Notes to
be sold to or through the Agents pursuant to terms of this Agreement, and shall
have filed and the SEC have declared effective a Subsequent Registration
Statement with respect thereto as contemplated by and in accordance with the
provisions of this Agreement, then such Notes shall be eligible for sale under
this Agreement on such date as (i) the Agents shall have received legal
opinions to the effect specified in Sections 5(a)(1) and (2), an officers'
certificate to the effect specified in Section 5(b), and a comfort letter to
the effect specified in Section 5(c), all dated as of such date and otherwise
appropriately revised to refer to the Registration Statements and the
Prospectus, as amended or supplemented, and such additional Notes, and such
further information, certificates and documents as the Agents may reasonably
request, and (ii) the Company and the Operating Partnership shall have
transmitted the prospectus contained in the Subsequent Registration Statement,
together with a prospectus supplement relating to the Notes, for filing with
the SEC pursuant to Rule 424(b) under the 1933 Act Regulations, if required
under the 1933 Act Regulations, and shall have provided copies thereof to the
Agents in connection with the offering of the Notes.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the applicable Agent or Agents by notice to the Company and the
Operating Partnership at any time and any such termination shall be without
liability of any party to any other party, except that the covenant regarding
provision of an earnings statement set forth in Section 4(h) hereof, the
provisions concerning payment of expenses under Section 10 hereof, the
indemnity and contribution agreement set forth in Sections 8 and 9 hereof, the
provisions concerning the representations, warranties and agreements to survive
delivery of Section 11 hereof, the provisions relating to governing law and
forum set forth in Section 14 and the provisions relating to parties set forth
in Section 15 hereof shall remain in effect.
6. Delivery of and Payment for Notes Sold through an Agent.
Delivery of Notes sold through an Agent as agent shall be made by the
Operating Partnership to such Agent for the account of any purchaser only
against payment therefor in immediately available funds. In the event that a
purchaser shall fail either to accept delivery of or to make payment for a Note
on the date fixed for settlement, such Agent shall promptly notify the
Operating Partnership and deliver such Note to the Operating Partnership and,
if such Agent has theretofore paid the Operating Partnership for such Note, the
Operating Partnership will promptly return such funds to such Agent. If such
failure occurred for any reason other than default by such Agent in the
performance of its obligations hereunder, the Operating Partnership will
reimburse such Agent on an equitable basis for its loss of the use of the funds
for the period such funds were credited to the Operating Partnership's account.
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7. Additional Covenants of the Company and the Operating Partnership.
The Company and the Operating Partnership, jointly and severally,
covenant and agree with the Agents that:
(a) Reaffirmation of Representations and Warranties. Each
acceptance by the Operating Partnership of an offer for the purchase of Notes
(whether to one or more Agents as principal or through an Agent as agent), and
each delivery of Notes (whether to one or more Agents as principal or through
an Agent as agent), shall be deemed to be an affirmation that the
representations and warranties of the Company and the Operating Partnership
contained in this Agreement and in any certificate theretofore delivered to the
Agents pursuant hereto are true and correct at the time of such acceptance or
sale, as the case may be, and an undertaking that such representations and
warranties will be true and correct at the time of delivery to such Agent or
Agents or to the purchaser or its agent, as the case may be, of the Note or
Notes relating to such acceptance or sale, as the case may be, as though made
at and as of each such time (and it is understood that such representations and
warranties shall relate to the Registration Statement and Prospectus as amended
and supplemented to each such time).
(b) Subsequent Delivery of Certificates. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented
(other than by an amendment or supplement providing solely for a change in the
interest rate or formula applicable to the Notes or relating solely to the
issuance and/or offering of securities other than the Notes), (ii) there is
filed with the SEC any document incorporated by reference into the Prospectus
(other than any Current Report on Form 8-K relating solely to the issuance
and/or offering of securities other than the Notes, unless the Agents shall
otherwise specify), (iii) (if required in connection with the purchase of Notes
from the Operating Partnership by one or more Agents as principal) the
Operating Partnership sells Notes to such Agent or Agents as principal or (iv)
the Operating Partnership sells Notes in a form not previously certified to the
Agents by the Operating Partnership, each of the Company and the Operating
Partnership shall furnish or cause to be furnished to the Agent(s), forthwith a
certificate dated the date of filing with the SEC of such supplement or
document, the date of effectiveness of such amendment, or the date of such
sale, as the case may be, in form satisfactory to the Agent(s) to the effect
that the statements contained in the certificate referred to in Section 5(b)
hereof which were last furnished to the Agents are true and correct at the time
of such amendment, supplement, filing or sale, as the case may be, as though
made at and as of such time (except that such statements shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented to such time) or, in lieu of such certificate, a certificate of
the same tenor as the certificate referred to in Section 5(b) hereof, modified
as necessary to relate to the Registration Statement and the Prospectus as
amended and supplemented to the time of delivery of such certificate.
(c) Subsequent Delivery of Legal Opinions. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented
(other than by an amendment or supplement providing solely for a change in the
interest rate or formula applicable to the Notes, providing solely for the
inclusion of additional financial information, or, unless the Agents shall
otherwise specify, relating solely to the issuance and/or offering of
securities other than the Notes), (ii) there is filed with the SEC any document
incorporated by reference into the Prospectus (other than any Current Report on
Form 8-K relating solely to the issuance and/or offering of securities other
than the Notes, unless the Agents shall otherwise specify), (iii) (if required
in connection with the purchase of Notes from the Operating Partnership by one
or more Agents as principal) the Operating Partnership sells Notes to such
Agent or Agents as principal or (iv) the Operating Partnership sells Notes in a
form not previously certified to the Agents by the Operating Partnership, the
Company and the Operating Partnership shall furnish or cause to be furnished
forthwith to the Agent(s) and to counsel to the Agents the written opinion of
Morrison & Foerster, counsel to the Company and the Operating Partnership, or
other counsel satisfactory to the Agent(s), dated the date of filing with the
SEC of such supplement or document, the date of effectiveness of such
amendment, or the date of such sale, as the case may be, in form and substance
satisfactory to the Agent(s), of the same tenor as the opinion referred to in
Section 5(a)(1) hereof, but modified, as necessary, to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such opinion or, in lieu of such opinion, counsel last
furnishing such opinion to the Agents shall
17
<PAGE> 18
furnish the Agent(s) with a letter substantially to the effect that the
Agent(s) may rely on such last opinion to the same extent as though it was
dated the date of such letter authorizing reliance (except that statements in
such last opinion shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented to the time of delivery of such
letter authorizing reliance).
(d) Subsequent Delivery of Comfort Letters. Each time that (i)
the Registration Statement or the Prospectus shall be amended or supplemented
to include additional financial information (other than by an amendment or
supplement relating solely to the issuance and/or offering of securities other
than the Notes), (ii) there is filed with the SEC any document incorporated by
reference into the Prospectus which contains additional financial information,
or (iii) (if required in connection with the purchase of Notes from the
Operating Partnership by one or more Agents as principal) the Operating
Partnership sells Notes to such Agent or Agents as principal, the Company and
the Operating Partnership shall cause Arthur Andersen LLP forthwith to furnish
to the Agent(s) a letter, dated the date of effectiveness of such amendment,
supplement or document with the SEC, or the date of such sale, as the case may
be, in form satisfactory to the Agent(s), of the same tenor as the portions of
the letter referred to Section 5(c) hereof but modified to relate to the
Registration Statement and Prospectus as amended and supplemented to the date
of such letter, and with such changes as may be necessary to reflect changes in
the financial statements and other information derived from the accounting
records of the Company or the Operating Partnership.
8. Indemnification.
(a) Indemnification of the Agents. The Company and the Operating
Partnership, jointly and severally, agree to indemnify and hold harmless each
Agent and each person, if any, who controls such Agent within the meaning of
Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), or
the omission or alleged omission therefrom of a material fact
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
included in the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that neither the Company nor the Operating Partnership shall
be liable in any such case to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement (or any amendment thereto)
or the Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with information furnished in writing to the
Company by any Agent expressly for use in the Registration Statement
(or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto); provided further, that the Company shall not be
liable to any Agent under the indemnity agreement in this subsection
(a) with respect to any preliminary prospectus or any preliminary
prospectus supplement to the extent that any such loss, liability,
claim, damage or expense of such Agent results from the fact that such
Agent sold Notes to a person as to whom it shall be established that
there was not sent or given, at or prior to the written confirmation
of such sale, a copy of the Prospectus as then amended or supplemented
in any case where such delivery is required by the 1933 Act if the
Company has previously furnished copies thereof in sufficient quantity
to such Agent and the loss, liability, claim, damage or expense of
such Agent results from an untrue statement or omission of a material
fact contained in the preliminary prospectus or the preliminary
prospectus supplement which was corrected in the Prospectus or in the
Prospectus as then amended or supplemented;
(ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or
investigation or
18
<PAGE> 19
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense
whatsoever (including the fees and disbursements of counsel chosen by
such Agent), as incurred, reasonably incurred in investigating,
preparing or defending against any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above.
(b) Indemnification of the Company and the Operating Partnership.
Each Agent agrees to indemnify and hold harmless the Company, its directors,
each of its officers who signed the Registration Statement, the Operating
Partnership and each person, if any, who controls the Company or the Operating
Partnership within the meaning of Section 15 of the 1933 Act against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or alleged untrue statements or omissions or alleged
omissions made in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by any Agent
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto).
(c) General. Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action with
counsel chosen by it (who shall not, except with the consent of the indemnified
party, be counsel to such indemnified party). In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
9. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 8 hereof
is for any reason held to be unavailable to or insufficient to hold harmless
the indemnified parties although applicable in accordance with its terms, the
Company, the Operating Partnership and the Agents shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company, the Operating
Partnership and the Agents, as incurred, in such proportions that each Agent is
responsible for that portion represented by the percentage that the commission
or underwriting discount received by such Agent bears to the total sales price
from the sale of the Notes sold to or through such Agent that were the subject
of the claim for indemnification, and the Company and the Operating Partnership
are jointly and severally liable for the balance; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls an Agent within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as such
Agent, and each director of the Company, each officer of the Company who signed
the Registration Statement, and each person, if any, who controls the Company
or the Operating Partnership within the meaning of Section 15 of the 1933 Act
shall have the same rights to contribution as the Company or the Operating
Partnership, as the case may be.
19
<PAGE> 20
10. Payment of Expenses.
The Company and the Operating Partnership, jointly and severally,
agree to pay all expenses incident to the performance of their obligations
under this Agreement, including:
(a) The preparation and filing of all Registration Statements and
all amendments thereto and the Prospectus and any amendments or supplements
thereto;
(b) The preparation, filing and reproduction of this Agreement;
(c) The preparation, printing, issuance and delivery of the Notes,
including any fees and expenses relating to the eligibility and issuance of
Notes in book-entry form;
(d) The fees and disbursements of the Company's and the Operating
Partnership's accountants and counsel, of the Trustee and its counsel, and of
any calculation agent or exchange rate agent;
(e) The reasonable fees and disbursements of counsel to the Agents
incurred in connection with the establishment of the program relating to the
Notes and incurred from time to time in connection with the transactions
contemplated hereby;
(f) The qualification of the Notes under state securities laws in
accordance with the provisions of Section 4(i) hereof, including filing fees
and the reasonable fees and disbursements of counsel for Company, the Operating
Partnership or the Agents, as applicable, in connection therewith and in
connection with the preparation of any Blue Sky or Legal Investment Survey;
(g) The printing and delivery to the Agents in quantities as
hereinabove stated of copies of the Registration Statement and any amendments
thereto, and of the Prospectus and any amendments or supplements thereto, and
the delivery by the Agents of the Prospectus and any amendments or supplements
thereto in connection with solicitations or confirmations of sales of the
Notes;
(h) The preparation, reproducing and delivery to the Agents of
copies of the Indenture and all amendments, supplements and modifications
thereto;
(i) Any fees charged by nationally recognized statistical rating
organizations for the rating of the Notes;
(j) The fees and expenses incurred in connection with any listing
of Notes on a securities exchange;
(k) The fees and expenses incurred with respect to any filing with
the National Association of Securities Dealers, Inc.;
(l) Any advertising and other out-of-pocket expenses of the Agents
incurred with the approval of the Company or the Operating Partnership; and
(m) The cost of providing any CUSIP or other identification
numbers for the Notes.
20
<PAGE> 21
11. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or the Operating
Partnership submitted pursuant hereto or thereto shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the Agents or any controlling person of an Agent, or by or on behalf of the
Company or the Operating Partnership, and shall survive each delivery of and
payment for any of the Notes.
12. Termination.
(a) Termination of this Agreement. This Agreement (excluding any
agreement by one or more Agents to purchase Notes from the Operating
Partnership as principal) may be terminated for any reason, at any time by
either the Operating Partnership or an Agent, as to itself, upon the giving of
30 days' written notice of such termination to the other party hereto.
(b) Termination of Agreement to Purchase Notes as Principal. The
applicable Agent or Agents may terminate any agreement by such Agent or Agents
to purchase Notes from the Operating Partnership as principal, immediately upon
notice to the Operating Partnership, at any time prior to the Settlement Date
relating thereto, if (i) there has been, since the date of such agreement or
since the respective dates as of which information is given in the Prospectus,
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company, the Operating Partnership or their respective subsidiaries considered
as one enterprise, or (ii) there shall have occurred any material adverse
change in the financial markets in the United States or any outbreak or
escalation of hostilities or other national or international calamity or crisis
the effect of which is such as to make it, in the judgment of such Agent or
Agents, impracticable to market the Notes or enforce contracts for the sale of
the Notes, or (iii) trading in any securities of the Company or the Operating
Partnership has been suspended by the SEC or a national securities exchange, or
if trading generally on either the American Stock Exchange or the New York
Stock Exchange shall have been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by either of said exchanges or by order of the SEC or any other
governmental authority, or if a banking moratorium shall have been declared by
either Federal, New York or California authorities, or (iv) there has been any
downgrading in the rating accorded the Company's preferred stock or the
Operating Partnership's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the SEC for
purposes of Rule 436(g)(2) under the 1933 Act Regulations or any public
announcement by any such organization that it has under surveillance or review,
with possible negative implications, its rating of the Company's preferred
stock or the Operating Partnership's debt securities, or (v) there shall have
come to the attention of such Agent or Agents any facts that would cause them
to believe that the Prospectus, at the time it was required to be delivered to
a purchaser of Notes, included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time of such delivery,
not misleading. As used in this Section 12(b), the term "Prospectus" means the
Prospectus in the form first provided to the applicable Agent or Agents for use
in confirming sales of the related Notes.
(c) General. In the event of any such termination, neither party
will have any liability to the other party hereto, except that (i) the Agents
shall be entitled to any commission earned in accordance with the third
paragraph of Section 3(b) hereof, (ii) if at the time of termination (a) any
Agent shall own any Notes purchased by it as principal with the intention of
reselling them or (b) an offer to purchase any of the Notes has been accepted
by the Operating Partnership but the time of delivery to the purchaser or his
agent of the Note or Notes relating thereto has not occurred, the covenants set
forth in Sections 4 and 7 hereof shall remain in effect until such Notes are so
resold or delivered, as the case may be, and (iii) the covenant set forth in
Section 4(h) hereof, the provisions of Section 10 hereof, the
21
<PAGE> 22
indemnity and contribution agreements set forth in Sections 8 and 9 hereof, and
the provisions of Sections 11, 14 and 15 hereof shall remain in effect.
13. Notices.
Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company or the Operating Partnership:
Spieker Properties, Inc.
2180 Sand Hill Road
Menlo Park, CA 94025
Attention: General Counsel
Telecopy No.: (415) 854-6594
with a copy to:
Stephen J. Schrader, Esq.
Morrison & Foerster
755 Page Mill Road
Palo Alto, California 94394-1018
Telecopy No.: (415) 494-0792
If to the Agents:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower - 10th Floor
New York, New York 10281-1310
Attention: MTN Product Management
Telecopy No.: (212) 449-2234
Dean Witter Reynolds Inc.
Two World Trade Center
New York, New York 10048
Attention: Corporate Finance (Tom Grier)
Debt Syndicate (Ted Zeller)
Telecopy No.: (212) 392-1052/3973
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Registration Department
Telecopy No.: (212) 902-3000
22
<PAGE> 23
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attention: Medium Term Note Desk
Telecopy No.: (212) 648-5907
Telex: RCA 212-232-194
with a copy of any notice given to any Agent to:
Gregory K. Miller, Esq.
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Telecopy No.: (415) 395-8095
or at such other address as such party may designate from time to time by
notice duly given in accordance with the terms of this Section 13.
14. GOVERNING LAW; FORUM.
This Agreement and all the rights and obligations of the parties shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed in such State. Any
suit, action or proceeding brought by the Company or the Operating Partnership
against any Agent in connection with or arising under this Agreement shall be
brought solely in the state or federal court of appropriate jurisdiction
located in the Borough of Manhattan, The City of New York.
15. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents, the Company and the Operating Partnership and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 8 and 9 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision herein contained. This Agreement
and all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and respective successors and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Notes shall be deemed to be a successor by reason merely of
such purchase.
16. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts hereof shall
constitute a single instrument.
23
<PAGE> 24
If the foregoing is in accordance with the Agents' understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts will become a binding
agreement among the Agents, the Company and the Operating Partnership in
accordance with its terms.
Very truly yours,
SPIEKER PROPERTIES, INC.
By:
-------------------
Name:
Title:
SPIEKER PROPERTIES, L.P.
By Spieker Properties, Inc.,
General Partner
By:
-------------------
Name:
Title:
Confirmed and Accepted, as of the date
first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
--------------------------
DEAN WITTER REYNOLDS INC.
By:
--------------------------
Thomas Grier
- -----------------------------
(Goldman, Sachs & Co.)
J.P. MORGAN SECURITIES INC.
By:
--------------------------
<PAGE> 25
EXHIBIT A
The following terms, if applicable, shall be agreed to by one or more
Agents and the Company in connection with each sale of Notes:
Principal Amount: $_______
Interest Rate or Formula:
If Fixed Rate Note,
Interest Rate:
Default Rate:
Interest Payment Dates:
If Floating Rate Note,
Interest Rate Basis(es):
If LIBOR,
o LIBOR Reuters
o LIBOR Telerate
Index Currency:
If CMT Rate,
Designated CMT Telerate Page:
Designated CMT Maturity Index:
Index Maturity:
Spread and/or Spread Multiplier, if any:
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Reset Dates:
Interest Payment Dates:
Default Rate:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date, if any:
Fixed Interest Rate, if any:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
If Repayable:
Optional Repayment Date(s):
Original Issue Date:
Stated Maturity Date:
Specified Currency:
Exchange Rate Agent:
Authorized Denomination:
Purchase Price: ___%, plus accrued interest, if any, from ___________
Settlement Date and Time:
Additional/Other Terms:
Also, in connection with the purchase of Notes from the Company by one or more
Agents as principal, agreement as to whether the following will be required:
Officers' Certificate pursuant to Section 7(b) of the Distribution
Agreement.
Legal Opinions pursuant to Section 7(c) of the Distribution Agreement.
<PAGE> 26
Comfort Letter pursuant to Section 7(d) of the Distribution Agreement.
Applicability of Stand-off Agreement pursuant to Section 4(k) of the
Distribution Agreement.
<PAGE> 27
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Note equal to the principal amount of such Note multiplied by the
appropriate percentage set forth below:
<TABLE>
<CAPTION>
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
<S> <C>
From 9 months to less than 1 year . . . . . . . . . . . . . . . . . . . .125%
From 1 year to less than 18 months . . . . . . . . . . . . . . . . . . .150
From 18 months to less than 2 years . . . . . . . . . . . . . . . . . . .200
From 2 years to less than 3 years . . . . . . . . . . . . . . . . . . . .250
From 3 years to less than 4 years . . . . . . . . . . . . . . . . . . . .350
From 4 years to less than 5 years . . . . . . . . . . . . . . . . . . . .450
From 5 years to less than 6 years . . . . . . . . . . . . . . . . . . . .500
From 6 years to less than 7 years . . . . . . . . . . . . . . . . . . . .550
From 7 years to less than 10 years . . . . . . . . . . . . . . . . . . .600
From 10 years to less than 15 years . . . . . . . . . . . . . . . . . . .625
From 15 years to less than 20 years . . . . . . . . . . . . . . . . . . .700
From 20 years to 30 years . . . . . . . . . . . . . . . . . . . . . . . .750
Greater than 30 years. . . . . . . . . . . . . . . . . . . . . . . . . *
</TABLE>
__________________________________
* As agreed to by the Company and the applicable Agent at the time of
sale.
<PAGE> 28
{Face of Security}
Registered CUSIP No.: PRINCIPAL AMOUNT
No. - FXR-___________ ____________ $______________
If the registered owner of this Security (as indicated below) is The
Depository Trust Company (the "Depositary") or a nominee of the Depositary, this
Security is a global Security ("Global Security") and the following legend is
applicable:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER NAME, ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SPIEKER PROPERTIES, L.P.
Medium-Term Note
(Fixed Rate)
INTEREST PAYMENT DATE(S) ORIGINAL ISSUE DATE:
(If other than January 15 and July 15):
REGULAR RECORD DATE(S) STATED MATURITY:
(If other than December 31 and June 30):
INTEREST RATE: OPTIONAL REPAYMENT
DATE(S):
INITIAL REDEMPTION DATE:
INITIAL REDEMPTION PERCENTAGE:
ANNUAL REDEMPTION PERCENTAGE REDUCTION:
MAKE-WHOLE AMOUNT APPLICABLE: / / ORIGINAL ISSUE
/ / Yes DISCOUNT NOTE
/ / No Issue Price: %
OTHER/ADDITIONAL PROVISIONS:
1
EXHIBIT A
<PAGE> 29
If the registered owner of this Security is the Depositary or a nominee of
the Depositary, this Security is a Global Security and the following legends are
applicable except as specified on the reverse hereof:
THIS SECURITY IS A GLOBAL SECURITY, WITHOUT COUPONS, EXCHANGEABLE FOR ONE
OR MORE DEFINITIVE SECURITIES OF THIS SERIES, WITHOUT COUPONS, AT THE PRINCIPAL
OFFICE OR AGENCY OF THE REGISTRAR IN BOSTON, MASSACHUSETTS OR THE CITY OF NEW
YORK ONLY UNDER THE CIRCUMSTANCES DESCRIBED HEREIN. THE RIGHTS ATTACHING TO THIS
GLOBAL SECURITY AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
DEFINITIVE SECURITIES OF THIS SERIES ARE AS SPECIFIED HEREIN AND IN THE
INDENTURE. THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. IN ADDITION, THE DEPOSITARY
MAY NOT SELL, ASSIGN, TRANSFER OR OTHERWISE CONVEY ANY BENEFICIAL INTEREST IN
THIS GLOBAL SECURITY UNLESS SUCH BENEFICIAL INTEREST IS IN AN AMOUNT EQUAL TO AN
AUTHORIZED DENOMINATION FOR SECURITIES OF THIS SERIES, AND THE DEPOSITARY, BY
ACCEPTING THIS GLOBAL SECURITY, AGREES TO BE BOUND BY THE PROVISIONS HEREOF.
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS GLOBAL SECURITY SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST OR PRINCIPAL HEREON EXCEPT PURSUANT
TO THE PROVISIONS HEREOF.
This Security is one of a duly authorized issue of securities (herein
called the "Securities") of Spieker Properties, L.P., a California limited
partnership (hereinafter called the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to), limited to an
aggregate principal amount not to exceed $200,000,000 (or if the Securities of
this series are to be Original Issue Discount Securities, such principal amount
as shall result in an aggregate initial offering price of Securities equivalent
to not more than $200,000,000), issued and to be issued under an Indenture,
dated as of December 6, 1995 between the Company, Spieker Properties, Inc., the
general partner of the Company (the "General Partner"), and State Street Bank
and Trust Company, as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture (as hereinafter defined)) pursuant to
a Fifth Supplemental Indenture thereto, to which Indenture and all applicable
indentures supplemental thereto (the Indenture as supplemented being herein
called the "Indenture") reference is hereby made for a statement of the
respective rights thereunder of the Company, the General Partner, the Trustee
and the holders of the Securities and of the terms upon which the Securities
are, and are to be, authenticated and delivered. This Security has been issued
in the Principal Amount specified on the face hereof, with the Interest Payment
Dates(s), Original Issue Date, and Stated Maturity specified on the face
2
EXHIBIT A
<PAGE> 30
hereof and bearing interest on said Principal Amount at the Initial Interest
Rate specified on the face hereof. The Securities of this series may be issued
from time to time with varying maturities, interest rates and other terms.
Reference herein to "this Security," "hereof," "herein" and comparable terms
shall include an addendum hereto if Other/Additional Provisions are specified on
the face hereof.
Any provision contained herein with respect to the calculation of the rate
of interest applicable to this Security, its payment dates or any other matter
relating hereto may be modified as specified in an addendum relating hereto if
Other/Additional Provisions are specified on the face hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.
The Company, for value received, hereby promises to pay to
, or registered assigns (the "Holder"), the Principal Amount hereof on the
Stated Maturity specified on the face hereof (except to the extent redeemed or
repaid prior to Stated Maturity), and to pay interest thereon, from the Original
Issue Date specified on the face hereof or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, or, if the date of
this Security is an Interest Payment Date to which interest has been paid or
duly provided for, then from the date hereof, semi-annually in arrears on each
Interest Payment Date commencing on the first such Interest Payment Date next
succeeding the Original Issue Date of this Security and at Stated Maturity (or
on any prior date on which the principal or an installment of principal of this
Security becomes due and payable, whether by the declaration of acceleration,
call for redemption at the option of the Company, repayment at the option of the
Holder or otherwise, each such date, a "Maturity"), commencing with the first
Interest Payment Date after the Original Issue Date of this Security, unless the
Original Issue Date of this Security is between a Regular Record Date and an
Interest Payment Date, in which case the first payment of interest hereon shall
be made on the second Interest Payment Date following such Regular Record Date,
at the Interest Rate per annum specified on the face hereof, until the principal
hereof is paid or duly made available for payment. Unless otherwise specified on
the face hereof, the Interest Payment Dates with respect to this Security will
be January 15 and July 15 of each year. Interest on this Security shall be
computed on the basis of a 360-day year of twelve 30-day months. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid to the Person in whose name this
Security (or one or more predecessor Securities) is registered at the close of
business on the Regular Record Date next preceding each Interest Payment Date;
provided, however, that interest payable at Maturity will be payable to the
person to whom principal shall be payable. Unless otherwise specified on the
face hereof, the "Regular Record Date" will be the date 15 calendar days
(whether or not a Business Day) immediately preceding the related Interest
Payment Date. If any Interest Payment Date or Maturity with respect to this
Security falls on a day that is not a Business Day, the related payment of
principal, premium, if any, and/or interest will be made on the next succeeding
Business Day as if it were made on the date such payment was due and no interest
shall accrue on the amount so payable
3
EXHIBIT A
<PAGE> 31
from and after such Interest Payment Date or Maturity, as the case may be. Any
such interest not so punctually paid or duly provided for shall forthwith cease
to be payable to the Holder on such Regular Record Date and may be paid to the
Person in whose name this Security (or one or more predecessor Securities) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest (a "Special Record Date"),
notice whereof shall be given to the Holder of this Security not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange,
all as more fully provided in the Indenture. As used herein, "Business Day"
means any day, other than Saturday or Sunday, that is neither a legal holiday
nor a day on which banking institutions are authorized or required by law,
regulation or executive order to close in the City of New York or the City of
Boston, Massachusetts.
If this Security is a Global Security (as specified on the face hereof),
this Security is exchangeable in whole for definitive Securities of this series
of like tenor and of an equal aggregate principal amount in accordance with the
Indenture. Any definitive Securities of this series issued in exchange for this
Global Security shall be registered in the name or names of such Person or
Persons as the Holder hereof shall instruct the Registrar. Except as provided
above, owners of beneficial interests in this Global Security will not be
entitled to receive physical delivery of Securities in definitive form and will
not be considered the holders thereof for any purpose under the Indenture.
Any exchange of a Global Security for one or more definitive Securities of
this series will be made at the office or agency of the Registrar in Boston,
Massachusetts or New York, New York.
If this Security is a Book-Entry Security, it may be transferred or
exchanged only through a participating member of the Depository Trust Company.
Registration of transfer of definitive Notes will be made at the Corporate Trust
Office of the Trustee, Two International Place, Boston, Massachusetts or the
Trustee's New York City office, 61 Broadway, New York, New York 10006. No
service charge will be made by the Company, the Trustee or the Security
Registrar for any such registration of transfer or exchange of Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith (other than exchanges
pursuant to the Indenture, not involving any transfer).
If this Security is a Global Security, except as provided in the next
paragraph, no beneficial owner of any portion of this Global Security shall be
entitled to receive payment of accrued interest hereon until this Global
Security has been exchanged for one or more definitive Securities of this
series, as provided herein and in the Indenture.
If this Security is a Global Security representing Book-Entry Securities,
payments of principal of, and premium and interest, if any, on this Security
will be made by the Company through the Trustee to the Depositary. If this
Security is a definitive Security, payment of principal or premium, if any, at
the Maturity of each definitive Security will
4
EXHIBIT A
<PAGE> 32
be made in immediately available funds upon presentation and surrender of the
definitive Security at the Corporate Trust Office of the Trustee, Two
International Place, Boston, Massachusetts or the Trustee's New York City
office, 61 Broadway, New York, New York 10006 or at such other place as the
Company may designate. Payment of interest due at Maturity will be made to the
person to whom payment of the principal of the definitive Security shall be
made. Payment of the interest due on definitive Securities other than at
Maturity will be made at the office or agency referred to above maintained by
the Company for such purpose or, at the option of the Company, may be made by
check mailed to the address of the holder entitled thereto as such address shall
appear in the Security Register. Notwithstanding the foregoing, a holder of
$10,000,000 or more in aggregate principal amount of Securities (whether having
identical or different terms and provisions) will be entitled to receive
interest payments, if any, on any Interest Payment Date other than at Maturity
by wire transfer of immediately available funds if appropriate wire transfer
instructions have been received in writing by the Trustee not less than 15 days
prior to such Interest Payment Date. Any such wire transfer instructions
received by the Trustee shall remain in effect until revoked by such holder.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee under the Indenture or its successors thereunder, by the
manual signature of one of its authorized officers, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
5
EXHIBIT A
<PAGE> 33
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:_________________________ SPIEKER PROPERTIES, L.P.
By: Spieker Properties, Inc., as
General Partner
--------------------------------------
Name:
Title:
{Seal}
Attest:
By:______________________
Name:
Title:
6
EXHIBIT A
<PAGE> 34
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated "Medium-Term Notes"
referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: ______________________
Authorized Officer
7
EXHIBIT A
<PAGE> 35
{FORM OF REVERSE}
ADDITIONAL PROVISIONS
1. REGISTRAR AND AGENTS. Initially, State Street Bank and Trust Company
will act as Registrar, Paying Agent, and agent for service of notices and
demands. The Company may change any Registrar, co-registrar, Paying Agent, and
agent for service of notices and demands without notice. The Company or any of
its Subsidiaries may act as Paying Agent. The address of State Street Bank and
Trust Company is Two International Place, Boston, Massachusetts or 61 Broadway,
New York, New York 10006.
2. INDENTURE, LIMITATIONS. The Company issued the Securities as a series
of its securities under an Indenture dated as of December 6, 1995 as
supplemented by the First, Second and Third Supplemental Indentures, each dated
December 11, 1995, the Fourth Supplemental Indenture dated January 24, 1996 and
the Fifth Supplemental Indenture dated June 20, 1996 (the "Indenture") between
the Company, the General Partner and State Street Bank and Trust Company, as
trustee (the "Trustee"). Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in
effect on the date of the Indenture. The Securities are subject to all such
terms, and the holders of the Securities are referred to the Indenture and said
Act for a statement of such terms.
The Securities are general unsecured obligations of the Company
limited to $200,000,000 principal amount (or if the Securities of this series
are to be Original Issue Discount Securities, such principal amount as shall
result in an aggregate initial offering price of Securities equivalent to not
more than $200,000,000). The Indenture imposes certain limitations on the
ability of the Company to, among other things, incur certain liens and certain
additional indebtedness and sell, lease, transfer or dispose of its properties
or assets.
3. OPTIONAL REDEMPTION. The Securities will be subject to redemption at
the option of the Company on any date on or after the applicable Initial
Redemption Date in whole or from time to time in part in increments of $1,000 or
such other minimum denomination specified on the face hereof (provided that any
remaining principal amount thereof shall be at least $1,000 or such minimum
denomination), at the applicable Redemption Price (as hereinafter defined),
together with unpaid interest accrued to the date of redemption. "Redemption
Price," with respect to any Security, means an amount equal to the Initial
Redemption Percentage specified on the face hereof (as adjusted by the Annual
Redemption Percentage Reduction, if applicable) multiplied by the unpaid
principal amount to be redeemed; and, if so specified on the face hereof, the
Make-Whole Amount (as hereinafter defined). The Company shall be responsible for
calculation of the Redemption Price and the components thereof. The Initial
Redemption
8
EXHIBIT A
<PAGE> 36
Percentage, if any, applicable to a Security shall decline at each anniversary
of the Initial Redemption Date by an amount equal to the applicable Annual
Redemption Percentage Reduction, if any, until the Redemption Price is equal to
100% of the unpaid principal amount to be redeemed.
From and after notice has been given as provided in the Indenture,
if funds for the redemption of any Securities called for redemption shall have
been made available on such redemption date, such 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 Securities will be to receive payment of the
Redemption Price.
Notice of any optional redemption of any Securities will be given
to holders at their addresses, as shown in the Security Register, not more than
60 nor less than 30 calendar 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 Securities held by such holder to be redeemed.
The Company will notify the Trustee at least 45 days prior to
giving notice of redemption to the holders (or such shorter period as
satisfactory to the Trustee) of the aggregate principal amount of Securities to
be redeemed and the redemption date. If less than all of the Securities of any
series are to be redeemed at the option of the Company, the Trustee shall
select, in such manner as it shall deem fair and appropriate, the Securities of
such series to be redeemed in whole or in part. Securities may be redeemed in
part in the minimum authorized denomination for Securities or in any integral
multiple thereof.
"Make-Whole Amount" means, in connection with any optional
redemption or accelerated payment of any Security, the excess, if any, of (i)
the aggregate present value as of the date of such redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount of
interest (exclusive of any interest accrued to the date of redemption or
accelerated payment) that would have been payable in respect of such dollar if
such redemption or accelerated payment had not been made, determined by
discounting, on a semiannual basis, such principal and interest at the
Reinvestment Rate (determined on the third Business Day preceding the date such
notice of redemption is given or declaration of acceleration is made) from the
respective dates on which such principal and interest would have been payable if
such redemption or accelerated payment had not been made, over (ii) the
aggregate principal amount of the Securities being redeemed or paid.
"Reinvestment Rate" means 0.25% (one-fourth of one percent) plus
the arithmetic mean of the yields under the respective headings "This Week" and
"Last Week" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published
9
EXHIBIT A
<PAGE> 37
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For the purposes
of calculating the Reinvestment Rate, the most recent Statistical Release
published prior to the date of determination of the Make-Whole Amount shall be
used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination under the
Indenture, then such other reasonably comparable index which shall be designated
by the Company.
4. OPTIONAL REPAYMENT. If provided on the face hereof, this Security will
be subject to repayment, in whole or in part on a given day or days, prior to
the Stated Maturity at the option of the Holder hereof on the optional repayment
dates, if any, specified on the face hereof (each an "Optional Repayment Date").
If no Optional Repayment Date is specified on the face hereof, this Security
will not be repayable at the option of the Holder hereof prior to its Stated
Maturity. If this Security is subject to repayment at the option of the Holder
hereof, on the Optional Repayment Date, if any, specified on the face hereof,
this Security will be repayable in whole or from time to time in part in
increments of $1,000, at a repayment price equal to 100% of the unpaid principal
amount to be repaid, together with unpaid interest accrued to the date of
repayment. For this Security to be repaid, such Security must be received,
together with the form hereon entitled "Option to Elect Repayment" duly
completed, by the Trustee at its Corporate Trust Office or its New York City
office, 61 Broadway, New York, New York 10006, not more than 60 nor less than 30
calendar days prior to the date of repayment. Exercise of such repayment option
by the Holder will be irrevocable.
Only DTC may exercise the repayment option in respect of Global
Securities representing Book-Entry Securities. Accordingly, Beneficial Owners
(as defined below) of Global Securities that desire to have all or any portion
of the Book-Entry Securities represented by such Global Securities repaid must
instruct the Participant (as hereinafter defined) through which they own their
interest to direct DTC to exercise the repayment option on their behalf by
delivering the related Global Security and duly completed election form to the
Trustee as aforesaid. In order to ensure that such Global Security and election
form are received by the Trustee on a particular day, the applicable Beneficial
Owner must so instruct the Participant through which it owns its interest before
such Participant's deadline for accepting instructions for that day. All
instructions given to Participants from Beneficial Owners of Global Securities
relating to the option to elect repayment shall be irrevocable. In addition, at
the time such instructions are given, each such Beneficial Owner shall cause the
Participant through which it owns its interest to transfer such Beneficial
Owner's interest in the Global Security or Global Securities
10
EXHIBIT A
<PAGE> 38
representing the related Book-Entry Securities, on DTC's records, to the Trustee
or its nominee.
As used herein, "Beneficial Owner" means the ownership interest of
each actual purchaser of each Security. As used herein, "Participant" means the
entity which deposits Securities with DTC for which DTC holds such Securities.
5. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered
form without coupons in denominations of $1,000 principal amount and integral
multiples thereof. A holder may register the transfer of or exchange Securities
in accordance with the Indenture. The Registrar may require a holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar is not required (i) to issue, register the transfer of or exchange any
Security if such security may be among those selected for redemption during a
period beginning at the opening of business 15 days before selection of the
Securities to be redeemed under Section 1103 of the Indenture and ending at the
close of business, if such Securities are issuable only as Registered
Securities, the day of the mailing of the relevant notice of redemption, or (ii)
to register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except, in the case of a Registered Security to
be redeemed in part, the portion thereof not selected for redemption may be
exchanged for a Registered Security of that series and of like tenor, provided
that such Registered Security shall be simultaneously surrendered for
redemption, or (iii) to issue, register the transfer of or exchange any Security
which has been surrendered for repayment at the option of the holder, except
that portion, if any, of such Security which is not to be so repaid.
6. PERSONS DEEMED OWNERS. The registered holder of a Security may be
treated as the owner of it for all purposes.
7. UNCLAIMED MONEY. If money for the payment of principal or interest on
any Securities remains unclaimed for two years, the Trustee and the Paying Agent
will pay the money back to the Company at its request, unless otherwise required
by law. Thereafter, holders may look only to the Company for payment.
8. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. The Indenture will be
discharged and canceled with respect to the Securities except for certain
sections thereof upon payment of all the Securities, or upon the irrevocable
deposit with the Trustee of funds, sufficient to pay principal, premium, if any,
and interest on such payment date or Redemption Date.
9. SUPPLEMENTAL INDENTURE. Subject to certain exceptions, the Indenture
may be amended or supplemented with respect to the Securities with the consent
of the holders of at least a majority in principal amount of the Securities then
outstanding and any existing default or compliance with any provision may be
waived with the consent of the holders of the majority in principal amount of
the Securities then outstanding. Without the consent of or notice to any holder,
the Company may
11
EXHIBIT A
<PAGE> 39
supplement the Indenture, to, among other things, cure any ambiguity, defect or
inconsistency, or make any other change that does not adversely affect the
interest rights of any holder.
10. SUCCESSORS. Upon satisfaction of the conditions provided in the
Indenture, if a successor to the Company assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
11. DEFAULTS AND REMEDIES. If an Event of Default with respect to the
Securities, as defined in the Indenture, occurs and is continuing, the Trustee
or the holders of a majority in principal amount of Securities may declare all
the Securities to be due and payable immediately in the manner and with the
effect provided in the Indenture. Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it, subject to the provisions of the TIA,
before it enforces the Indenture or the Securities. Subject to certain
limitations, holders of a majority in principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power with
respect to the Securities. The Trustee may withhold from holders of Securities
notice of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interests. The
Company is required to file periodic reports with the Trustee as to the absence
of any Default or Event of Default.
12. TRUSTEE DEALINGS WITH THE COMPANY. State Street Bank and Trust
Company, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not Trustee.
13. AUTHENTICATION. This Security shall not be valid until the Trustee
signs the certificate of authentication on the reverse side of this Security.
14. ABBREVIATIONS. Customary abbreviations may be used in the name of a
holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants
by the entirety), JT TEN (joint tenants with rights of survivorship and not as
tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors
Act).
The Company will furnish to any holder upon written request and
without charge a copy of the Indenture and any supplemental indentures thereto.
It also will furnish the text of this Security in larger type. Requests may be
made to: Spieker Properties, Inc., 2180 Sand Hill Road, Menlo Park, California
94025, Attention: Investor Relations Coordinator.
12
EXHIBIT A
<PAGE> 40
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers to
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNS
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Typewrite Name and Address Including Zip Code of Assignee)
________________________________________________________________________________
the within Security of Spieker Properties, L.P. and_____________________________
hereby does irrevocably constitute and appoint
________________________________________________________________________________
Attorney to transfer said Security on the books of the within-named Trust with
full power of substitution in the premises.
Dated:____________ ___________________________________________
___________________________________________
Signature(s) must be guaranteed by an eligible General Partner Institution
(banks, stock brokers, savings and loan associations and credit unions) with
membership in an approved signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad 15.
NOTICE: The signature to this assignment must correspond with the name as it
appears on the first page of the within Security in every particular, without
alteration or enlargement or any change whatever.
13
EXHIBIT A
<PAGE> 41
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Company
to repay this Security (or portion hereof specified below) pursuant to its terms
at a price equal to 100% of the principal amount to be repaid, together with
unpaid interest accrued hereon to the Optional Repayment Date, to the
undersigned, at_________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Security to be repaid, the Trustee must receive at the Corporate
Trust Office, currently located at Two International Place, Boston,
Massachusetts or its New York City office at 61 Broadway, New York, New York
10006, not more than 60 nor less than 30 calendar days prior to the Repayment
Date, this Security with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Security is to be repaid,
specify the portion hereof (which shall be increments of $1,000), which the
holder elects to have repaid and specify the denomination or denominations of
the Securities to be issued to the holder for the portion of this Security not
being repaid (in the absence of any such specification, one such Security will
be issued for the portion not being repaid).
Principal Amount
to be Repaid: $____________ ____________________________________________
Notice: The signature(s) on this
Date:_______________ Option to Elect Repayment must
correspond with the name(s) as
written on the face of the Security
in every particular, without alteration
or enlargement or any change whatsoever.
14
EXHIBIT A
<PAGE> 42
{Face of Security}
Registered CUSIP No.: PRINCIPAL AMOUNT
No. - FLR-___________ ____________ $______________
If the registered owner of this Security (as indicated below) is The
Depository Trust Company (the "Depositary") or a nominee of the Depositary, this
Security is a global Security ("Global Security") and the following legend is
applicable:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER NAME, ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SPIEKER PROPERTIES, L.P.
Medium-Term Note
(Floating Rate)
ORIGINAL ISSUE DATE: STATED MATURITY:
INITIAL INTEREST RATE: SPREAD (plus or minus):
INDEX MATURITY: SPREAD MULTIPLIER:
BASE RATE:
/ / Commercial Paper Rate
/ / LIBOR
/ / LIBOR Reuters
/ / LIBOR Telerate
/ / Treasury Rate
/ / CD Rate
/ / CMT Rate
EXHIBIT B
<PAGE> 43
Designated CMT
Telerate Page
/ / 7055
Other:
/ / Federal Funds Rate
/ / Prime Rate
/ / Other:
MAXIMUM INTEREST RATE: INTEREST RESET PERIOD:
MINIMUM INTEREST RATE: INTEREST DETERMINATION DATE:
INTEREST RESET DATE(S): INTEREST CALCULATION DATES:
INTEREST PAYMENT DATE(S): OPTIONAL REPAYMENT DATE:
REGULAR RECORD DATE(S): INITIAL REDEMPTION
PERCENTAGE:
INITIAL REDEMPTION DATE: CALCULATION AGENT (if other
than State Street Bank and
Trust Company):
ANNUAL REDEMPTION PERCENTAGE / / ORIGINAL ISSUE DISCOUNT
REDUCTION: NOTE:
Issue Price: %
OTHER/ADDITIONAL
PROVISIONS:
If the registered owner of this Security is the Depositary or a nominee of
the Depositary, this Security is a Global Security and the following legends are
applicable except as specified on the reverse hereof:
THIS SECURITY IS A GLOBAL SECURITY, WITHOUT COUPONS, EXCHANGEABLE FOR ONE
OR MORE DEFINITIVE SECURITIES OF THIS SERIES, WITHOUT COUPONS, AT THE PRINCIPAL
OFFICE OR AGENCY OF THE REGISTRAR IN BOSTON, MASSACHUSETTS OR THE CITY OF NEW
YORK ONLY UNDER THE CIRCUMSTANCES DESCRIBED HEREIN. THE RIGHTS ATTACHING TO THIS
GLOBAL SECURITY AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
DEFINITIVE SECURITIES OF
EXHIBIT B
<PAGE> 44
THIS SERIES ARE AS SPECIFIED HEREIN AND IN THE INDENTURE. THIS GLOBAL SECURITY
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY. IN ADDITION, THE DEPOSITARY MAY NOT SELL, ASSIGN,
TRANSFER OR OTHERWISE CONVEY ANY BENEFICIAL INTEREST IN THIS GLOBAL SECURITY
UNLESS SUCH BENEFICIAL INTEREST IS IN AN AMOUNT EQUAL TO AN AUTHORIZED
DENOMINATION FOR SECURITIES OF SUCH SERIES, AND THE DEPOSITARY, BY ACCEPTING
THIS GLOBAL SECURITY, AGREES TO BE BOUND BY THE PROVISIONS HEREOF.
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS GLOBAL SECURITY SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON EXCEPT PURSUANT TO THE
PROVISIONS HEREOF.
This Security is one of a duly authorized issue of securities (herein
called the "Securities") of Spieker Properties, L.P., a California limited
partnership (hereinafter called the "Company," which term includes any successor
corporation under the Indenture hereinafter referred to), limited to an
aggregate principal amount not to exceed $200,000,000 (or if the Securities of
this series are to be Original Issue Discount Securities, such principal amount
as shall result in an aggregate initial offering price of Securities equivalent
to not more than $200,000,000), issued and to be issued under an Indenture,
dated as of December 6, 1995 between the Company, Spieker Properties, Inc., the
general partner of the Company (the "General Partner"), and State Street Bank
and Trust Company, as Trustee (herein called the "Trustee," which term includes
any successor trustee under the Indenture (as hereinafter defined)), and
pursuant to the terms of a Fifth Supplemental Indenture thereto, to which
Indenture and all applicable indentures supplemental thereto (the Indenture as
supplemented being herein called the "Indenture") reference is hereby made for a
statement of the respective rights thereunder of the Company, the General
Partner, the Trustee and the holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security has been issued in the Principal Amount specified on the face hereof,
with the Interest Payment Date(s), Original Issue Date, and Stated Maturity
specified on the face hereof and bearing interest on said Principal Amount at
the Initial Interest Rate specified on the face hereof. The Securities of this
series may be issued from time to time with varying maturities, interest rates
and other terms. Reference herein to "this Security," "hereof," "herein" and
comparable terms shall include an addendum hereto if Other/Additional Provisions
are specified on the face hereof.
Any provision contained herein with respect to the calculation of the rate
of interest applicable to this Security, its payment dates or any other matter
relating hereto may be modified as specified in an addendum relating hereto if
Other/Additional Provisions are specified on the face hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.
The Company, for value received, hereby promises to pay to
EXHIBIT B
<PAGE> 45
, or registered assigns (the "Holder"), the Principal Amount hereof on the
Stated Maturity specified on the face hereof (except to the extent redeemed or
repaid prior to the Stated Maturity); and to pay interest thereon, from the
Original Issue Date specified on the face hereof or from and including the most
recent Interest Payment Date to which interest has been paid or duly provided
for, or, if the date of this Security is an Interest Payment Date to which
interest has been paid or duly provided for, then from the date hereof,
provided, however, that interest on a Security with daily or weekly Interest
Reset Dates shall be paid from the day following the most recent Regular Record
Date, at a rate per annum equal to the Initial Interest Rate specified on the
face hereof, if any, until the first Interest Reset Date specified on the face
hereof following the Original Issue Date specified on the face hereof and
thereafter in accordance with the provisions below, until the principal hereof
is paid or duly made available for payment. Interest will be payable on each
Interest Payment Date, as specified on the face hereof, and at Stated Maturity
(or on any prior date on which the principal or an installment of principal of
this Security becomes due and payable, whether by the declaration of
acceleration, call for redemption at the option of the Company, repayment at the
option of the Holder or otherwise, each such date, a "Maturity"), commencing
with the first Interest Payment Date after the Original Issue Date of this
Security, unless the Original Issue Date of this Security is between a Regular
Record Date and an Interest Payment Date, in which case, the first payment of
interest hereon shall be made on the second Interest Payment Date following such
Regular Record Date. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be payable to the Person in whose name this Security (or one or more predecessor
Securities) is registered at the close of business on the Regular Record Date
next preceding each Interest Payment Date; provided, however, that interest
payable at Maturity will be payable to the person to whom principal shall be
payable. Unless otherwise specified on the face hereof, the "Regular Record
Date" will be the date 15 calendar days (whether or not a Business Day (as
defined below)) immediately preceding the related Interest Payment Date. If any
Interest Payment Date or Maturity with respect to this Security falls on a day
that is not a Business Day, the related payment of principal, premium, if any,
and/or interest will be made on the next succeeding Business Day as if it were
made on the date such payment was due and no interest shall accrue on the amount
so payable from and after such Interest Payment Date or Maturity, as the case
may be. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
be paid to the Person in whose name this Security (or one or more predecessor
Securities) is registered at the close of business on a special record date to
be fixed by the Trustee for the payment of such defaulted interest (a "Special
Record Date") (notice whereof to be given to the Holder of this Security not
less than 10 days prior to such Special Record Date), or may be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture. As used herein, "Business Day" means any day, other than
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law, regulation or executive order to
close in the City of New York or the City of Boston, Massachusetts.
EXHIBIT B
<PAGE> 46
Interest on this Security will be determined by reference to the "Base
Rate" set forth on the face hereof, which may be one or more of (a) the CD Rate,
in which case this Security will be a "CD Rate Note;" (b) the Commercial Paper
Rate, in which case this Security will be a "Commercial Paper Rate Note;"(c) the
CMT Rate, in which case this Security will be a "CMT Rate Note;" (d) the Federal
Funds Rate, in which case this Security will be a "Federal Funds Rate Note;" (e)
LIBOR, in which case this Security will be a "LIBOR Note;" (f) the Prime Rate,
in which case this Security will be a "Prime Rate Note;" (g) the Treasury Rate,
in which case such Security will be a "Treasury Rate Note;" or (h) such other
Base Rate or interest rate formula as may be set forth on the face hereof.
The rate of interest on this Security will be reset daily, weekly,
monthly, quarterly, semi-annually, annually or such other period (each, an
"Interest Reset Date"), as specified on the face hereof. Unless otherwise
specified on the face hereof, the Interest Reset Date will be, if this Security
resets (a) daily, each Business Day; (b) weekly, the Wednesday of each week
(with the exception of weekly reset Treasury Rate Notes which will reset the
Tuesday of each week, except as specified below); (c) monthly, the third
Wednesday of each month; (d) quarterly, the third Wednesday of March, June,
September and December of each year; (e) semiannually, the third Wednesday of
each of the two months specified on the face hereof; and (f) annually, the third
Wednesday of the month specified on the face hereof; provided, however, that (a)
the interest rate in effect from the Original Issue Date of this Security (or
any predecessor Security) to the first Interest Reset Date will be the Initial
Interest Rate, if any, specified on the face hereof, and (b) the interest rate
in effect for the ten days immediately prior to Maturity of any installment of
principal will be the interest rate in effect on the tenth day preceding such
Maturity. If any Interest Reset Date for this Security would otherwise be a day
that is not a Business Day, such Interest Reset Date will be postponed to the
next succeeding Business Day, except that if this Security is a LIBOR Note (or a
Security for which the interest rate is determined with reference to LIBOR), if
such Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Business Day. "Initial Interest Rate"
means the rate at which this Security will bear interest from its Original Issue
Date to the first Interest Reset Date, as specified on the face hereof.
The interest rate applicable to each Interest Accrual Period (defined
below) commencing on the Interest Reset Date applicable to such Interest Accrual
Period will be the rate determined on the applicable "Interest Determination
Date" (defined below). The Interest Determination Date with respect to the CD
Rate, Commercial Paper Rate, CMT Rate, Federal Funds Rate, and the Prime Rate
will be the second Business Day preceding each Interest Reset Date for this
Security; and the Interest Determination Date with respect to LIBOR will be the
second London Business Day (defined below) preceding each Interest Reset Date.
With respect to the Treasury Rate, the Interest Determination Date will be the
day of the week in which the Interest Reset Date falls on which Treasury Bills
normally would be auctioned; provided, however, that if as a result of a legal
holiday an auction is held on the Friday of the week preceding the related
Interest Reset Date, the related Interest Determination Date shall be such
preceding Friday; and provided, further, that if an auction shall fall on or
after any Interest Reset Date, then the
EXHIBIT B
<PAGE> 47
related Interest Reset Date shall instead be the first Business Day following
such auction. The Interest Determination Date pertaining to a Floating Rate
Note, the interest rate of which is determined with reference to two or more
Base Rates, will be the latest Business Day which is at least two Business Days
prior to the Interest Reset Date for such Note on which each Base Rate is
determinable. Each Base Rate shall be determined and compared on such date, and
the applicable interest rate shall take effect on the related Interest Reset
Date. As used herein, "Interest Accrual Period" with respect to each Interest
Payment Date or Maturity means the period from and including the next preceding
Interest Payment Date in respect of which interest has been paid (or from and
including the date of issue if no interest has been paid with respect to such
Security), to but excluding the Interest Payment Date or Maturity, as the case
may be.
Interest will be payable, in the case of Securities which reset (a) daily,
weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified on
the face hereof; (b) quarterly, on the third Wednesday of March, June, September
and December of each year; (c) semiannually, on the third Wednesday of each of
the two months of each year specified on the face hereof; and (d) annually, on
the third Wednesday of the month specified on the face hereof and, in each case,
at Maturity.
If any Interest Payment Date (other than at Maturity) with respect to this
Security falls on a day that is not a Business Day, such Interest Payment Date
will be postponed to the following Business Day, except that, if this Security
is a LIBOR Note (or if the interest rate of this Security is determined with
reference to LIBOR), if such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding Business
Day. If the Maturity of this Security falls on a day that is not a Business Day,
the payment of principal, premium, if any, and interest will be made on the next
succeeding Business Day, and no interest on such payment shall accrue for the
period from and after the date of such Maturity.
The interest rate in effect with respect to this Security on each day that
is not an Interest Reset Date will be the interest rate determined as of the
Interest Determination Date pertaining to the immediately preceding Interest
Reset Date and the interest rate in effect on any day that is an Interest Reset
Date will be the interest rate determined as of the Interest Determination Date
pertaining to such Interest Reset Date, subject in either case to any maximum or
minimum interest rate limitation specified on the face hereof; provided,
however, that the interest rate in effect with respect to this Security for the
period from the date of issue to the first Interest Reset Date (as defined
herein) will be the Initial Interest Rate specified on the face hereof.
Accrued interest is calculated by multiplying the principal amount of this
Security by an accrued interest factor. Such accrued interest factor is computed
by adding the interest factor calculated for each day from the Original Issue
Date, or from the last date to which interest has been paid, to the date for
which accrued interest is being calculated. Unless otherwise specified on the
face hereof, the interest factor for each such day is computed by dividing the
interest rate applicable to such date by 360, in the case of CD
EXHIBIT B
<PAGE> 48
Rate Notes, Commercial Paper Rate Notes, LIBOR Notes and Prime Rate Notes, or by
the actual number of days in the year, in the case of Treasury Rate Notes and
CMT Rate Notes. Unless otherwise specified on the face hereof, the interest
factor for Securities for which the interest rate is calculated with reference
to the lowest of two or more Base Rates will be calculated in each period in the
same manner as if only the lowest of the applicable Base Rates appears.
All percentages resulting from any calculation on Securities will be
rounded to the nearest one hundred-thousandth of a percentage point with five
one-millionths of a percentage point rounded upwards (e.g., 7.654325% (or
.07654325) would be rounded to 7.65433% (or .0765433)), and all dollar amounts
used in or resulting from such calculation on the Securities will be rounded to
the nearest cent (with one-half cent being rounded upward).
Upon the request of the Holder of any Security, the Calculation Agent will
provide the interest rate in effect and, if determined, the interest rate that
will become effective as a result of a determination made for the next
succeeding Interest Reset Date with respect to such Security. Unless otherwise
specified on the face hereof, the "Calculation Date," if applicable, pertaining
to any Interest Determination Date will be the earlier of (a) the tenth calendar
day after such Interest Determination Date, or if such date is not a Business
Day, the next succeeding Business Day or (b) the Business Day immediately
preceding the applicable Interest Payment Date or the Maturity, as the case may
be.
The interest rate in effect with respect to a Security from the date of
issue to the first Interest Reset Date (the "Initial Interest Rate") is as
specified on the face hereof. The interest rate for each subsequent Interest
Reset Date will be determined by the Calculation Agent as follows:
Determination of Commercial Paper Rate
If the Base Rate specified on the face hereof is the Commercial Paper
Rate, the interest rate with respect to this Security for any Interest Reset
Date shall be the Commercial Paper Rate plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, as specified on the face hereof, as
determined on the applicable Interest Determination Date.
"Commercial Paper Rate" means, with respect to any Interest Determination
Date relating to a Commercial Paper Rate Note or any Interest Determination Date
for a Security for which the interest rate is determined with reference to the
Commercial Paper Rate (a "Commercial Paper Rate Interest Determination Date"),
the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified on the face hereof as
published in H.15(519) under the heading "Commercial Paper." In the event that
such rate is not published by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such Commercial Paper Rate Interest Determination Date, then
the Commercial Paper Rate will be the Money Market Yield on
EXHIBIT B
<PAGE> 49
such Commercial Paper Rate Interest Determination Date of the rate for
commercial paper of the Index Maturity specified on the face hereof as published
in Composite Quotations under the heading "Commercial Paper" (with an Index
Maturity of one month or three months being deemed to be equivalent to an Index
Maturity of 30 days or 90 days, respectively). If such rate is not published in
either H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on
such Calculation Date, then the Commercial Paper Rate will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 A.M., New York City time, on such Commercial
Paper Rate Interest Determination Date, of three leading dealers of commercial
paper in New York, New York (which may include one or more of the Agents)
selected by the Calculation Agent for commercial paper of the specified Index
Maturity placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized statistical rating agency; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the Commercial Paper Rate in effect
for the applicable period will be the Commercial Paper Rate in effect on such
Commercial Paper Rate Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point)
calculated in accordance with the following formula:
D x 360
Money Market Yield = --------------- x 100
360 - (D x M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal and "M" refers to the actual number of
days in the interest period for which interest is being calculated.
Determination of LIBOR
If the Base Rate specified on the face hereof is LIBOR, the interest rate
with respect to this Security for any Interest Reset Date shall be LIBOR plus or
minus the Spread, if any, or multiplied by the Spread Multiplier, if any, as
specified on the face hereof, as determined on the applicable Interest
Determination Date.
LIBOR will be determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a
LIBOR Note or any Interest Determination Date for a Security for which the
interest rate is determined with reference to LIBOR (a "LIBOR Interest
Determination Date"), LIBOR will be either: (a) if "LIBOR Reuters" is
specified on the face hereof, the arithmetic mean of the offered rates for
deposits in U.S. dollars having the Index Maturity specified on the face
hereof, commencing on the second London Business Day immediately following
that LIBOR Interest Determination Date,
EXHIBIT B
<PAGE> 50
that appear on the Reuters Screen LIBO Page as of 11:00 a.m., London time,
on that LIBOR Interest Determination Date, if at least two such offered
rates appear on the Reuters Screen LIBO Page, or (b) if "LIBOR Telerate"
is specified on the face hereof or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified on the face hereof as the method for calculating
LIBOR, the rate for deposits in U.S. dollars having the Index Maturity
specified on the face hereof commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date, that appears
on the Telerate Page 3750 as of 11:00 a.m., London time, on that LIBOR
Interest Determination Date ("LIBOR Telerate"). "Reuters Screen LIBO Page"
means the display designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace the LIBOR page on that
service for the purpose of displacing London interbank offered rates of
major banks). "Telerate Page 3750" means the display designated as page
"3750" on the Telerate Service (or such other page as may replace the 3750
page on that service or such other service or services as may be nominated
by the British Bankers' Association for the purpose of displaying London
interbank offered rates for U.S. dollar deposits). If neither LIBOR
Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR will be
determined as if LIBOR Telerate has been specified. If fewer than two
offered rates appear on the Reuters Screen LIBO Page, or if no rate
appears on the Telerate Page 3750, as applicable, LIBOR in respect of that
LIBOR Interest Determination Date will be determined as if the parties had
specified the rate described in (ii) below. "London Business Day" means
any day on which dealing in deposits in U.S. dollars are transacted in the
London interbank market.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Reuters Screen LIBO Page, as
specified in (i) (a) above, or on which no rate appears on Telerate Page
3750, as specified in (i) (b) above, as applicable, LIBOR will be
determined on the basis of the rates at which deposits in U.S. dollars
having the Index Maturity specified on the face hereof are offered at
approximately 11:00 a.m., London time, on that LIBOR Interest
Determination Date by four major banks in the London interbank market
selected by the Calculation Agent ("Reference Banks") to prime banks in
the London interbank market commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than $1,000,000 that is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If
fewer than two quotations are provided, LIBOR in respect of that LIBOR
Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 a.m., New York City time, on that LIBOR
Interest Determination Date by three major banks in the City of New York
selected by the Calculation Agent for loans in U.S. dollars to leading
European banks having the
EXHIBIT B
<PAGE> 51
Index Maturity specified on the face hereof commencing on the second
London Business Day immediately following that LIBOR Interest
Determination Date and in a principal amount equal to an amount of not
less than $1,000,000 that is representative for a single transaction in
such market at such time; provided, however, that if the banks selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR in effect for the applicable period will be LIBOR in
effect on such LIBOR Interest Determination Date.
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury Rate, the
interest rate with respect to this Security for any Interest Reset Date shall be
the Treasury Rate plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any, as specified on the face hereof, as determined on the
applicable Interest Determination Date.
"Treasury Rate" means, with respect to any Interest Determination Date
relating to a Treasury Rate Note or any Interest Determination Date for a
Security for which the interest rate is determined with reference to the
Treasury Rate (a "Treasury Rate Interest Determination Date"), the rate
applicable to the most recent auction of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified on the face hereof, as
such rate is published in H.15(519) under the heading "Treasury Bills-auction
average (investment)" or, if not published by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Treasury Rate Interest Determination
Date, the auction average rate (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury Bills having the specified
Index Maturity are not reported as provided by 3:00 P.M., New York City time, on
such Calculation Date, or if no such auction is held in a particular week, then
the Treasury Rate shall be calculated by the Calculation Agent and shall be a
yield to maturity (expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers (which may include one or
more of the Agents) selected by the Calculation Agent, for the issue of Treasury
Bills with a remaining maturity closest to the specified Index Maturity;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate in effect
for the applicable period will be the Treasury Rate in effect on such Treasury
Rate Interest Determination Date.
"Index Maturity" means, with respect to this Security, the period to
maturity of the instrument or obligation on which the interest rate index is
based, as specified on the face hereof. "H.15(519)" means the weekly statistical
release entitled "Statistical Release H.15(519), Selected Interest Rates," or
any successor publication, published by the Board of Governors of the Federal
Reserve System.
EXHIBIT B
<PAGE> 52
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, the interest
rate with respect to this Security shall be the CD Rate plus or minus the
Spread, if any, or multiplied-by the Spread Multiplier, if any, as specified on
the face hereof, as determined on the applicable Interest Determination Date.
"CD Rate" means, with respect to any Interest Determination Date relating
to a CD Rate Note or any Interest Determination Date for a Security for which
the interest rate is determined with reference to the CD Rate (a "CD Rate
Interest Determination Date"), the rate on such date for negotiable certificates
of deposit having the Index Maturity specified on the face hereof as published
by the Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)")
under the heading "CDs (Secondary Market)." In the event such rate is not
published by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such CD Rate Interest Determination Date, then the CD Rate will be the rate
on such CD Rate Interest Determination Date for negotiable certificates of
deposit of the Index Maturity specified on the face hereof as published by the
Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities" or any successor
publication ("Composite Quotations") under the heading "Certificates of
Deposit." If such rate is not published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on such Calculation Date, then the
CD Rate on such CD Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such CD Rate Interest
Determination Date, of three leading nonbank dealers in negotiable United States
dollar certificates of deposit in New York, New York (which may include one or
more of the Agents or their affiliates) selected by the Calculation Agent for
negotiable certificates of deposit of major United States money center banks in
the market for negotiable certificates of deposit with a remaining maturity
closest to the Index Maturity specified on the face hereof in an amount that is
representative for a single transaction in that market at that time; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate in effect for the
applicable period will be the CD Rate in effect on such CD Rate Interest
Determination Date.
Determination of CMT Rate
If the Base Rate specified on the face hereof is the CMT Rate, the
interest rate with respect to this Security shall be the CMT Rate plus or minus
the Spread, if any, or multiplied by the Spread Multiplier, if any, as specified
on the face hereof, as determined on the applicable Interest Determination Date.
"CMT Rate" means, with respect to any Interest Determination Date relating
to a Security for which the interest rate is determined with reference to the
CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed on the
Designated CMT
EXHIBIT B
<PAGE> 53
Telerate Page under the caption "...Treasury Constant Maturities...Federal
Reserve Board Release H.15...Mondays Approximately 3:45 P.M.," under the column
for the Designated CMT Maturity Index for (i) if the Designated CMT Telerate
Page is 7055, the rate on such CMT Rate Interest Determination Date and (ii) if
the Designated CMT Telerate Page is 7052, the week, or the month, as applicable,
ended immediately preceding the week in which the related CMT Rate Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
pages or is not displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published in the relevant H.15(519). If such rate is no longer
published or is not published by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate on such CMT Rate Interest Determination Date
will be such treasury constant maturity rate for the Designated CMT Maturity
Index (or other United States Treasury rate for the Designated CMT Maturity
Index) for the CMT Rate Interest Determination Date with respect to such
Interest Reset Date as may then be published by either the Board of Governors of
the Federal Reserve System or the United States Department of the Treasury that
the Calculation Agent determines to be comparable to the rate formerly displayed
on the Designated CMT Telerate Page and published in the relevant H.15(519). If
such information is not provided by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate on the CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 P.M., New York City time, on such CMT
Rate Interest Determination Date reported, according to their written records,
by three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York (which may include the Agent or its
affiliates) selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent is unable to obtain three such Treasury
Note quotations, the CMT Rate on such CMT Rate Interest Determination Date will
be calculated by the Calculation Agent and will be a yield to maturity based on
the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date of three Reference Dealers in The City of New York (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the next
highest to the Designated CMT Maturity Index and a remaining term to maturity
closest to the Designated CMT Maturity Index and in an amount of at least $100
million. If three or four (and not five) of such Reference Dealers are quoting
as described above, then the CMT Rate will be based on the arithmetic mean of
the offer prices obtained and
EXHIBIT B
<PAGE> 54
neither the highest nor the lowest of such quotes will be eliminated; provided
however, that if fewer than three Reference Dealers so selected by the
Calculation Agent are quoting as mentioned herein, the CMT Rate determined as of
such CMT Rate Interest Determination Date will be the CMT Rate in effect on such
CMT Rate Interest Determination Date. If two Treasury Notes with an original
maturity as described in the second preceding sentence have remaining terms to
maturity equally close to the Designated CMT Maturity Index, the quotes for the
Treasury Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified on the face hereof (or any other page as may
replace such page on that service for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519)) for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519). If no such page is
specified on the face hereof, the Designated CMT Telerate Page shall be 7052,
for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the Designated
CMT Maturity Index shall be 2 years.
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds Rate,
the interest rate with respect to this Security for any Interest Reset Date
shall be the Federal Funds Rate plus or minus the Spread, if any, or multiplied
by the Spread Multiplier, if any, as specified on the face hereof, as determined
on the applicable Interest Determination Date.
"Federal Funds Rate" means, with respect to any Interest Determination
Date relating to a Federal Funds Rate Note or any Interest Determination Date
for a Security for which the interest rate is determined with reference to the
Federal Funds Rate (a "Federal Funds Rate Interest Determination Date"), the
rate of interest on that day for Federal Funds as published in H.15(519) under
the heading "Federal Funds (Effective)." In the event such rate is not published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Federal Funds Rate Interest Determination Date, then the Federal Funds Rate will
be the rate on such Federal Funds Rate Interest Determination Date as published
in Composite Quotations under the heading "Federal Funds/Effective Rate." If
such rate is not published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on such Calculation Date, the Federal Funds Rate on
such Federal Funds Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight Federal Funds arranged by three leading dealers of
Federal Funds transactions in New York, New York (which may include one or more
of the Agents or their affiliates) selected by the Calculation Agent as of 9:00
A.M., New York City time, on such Federal Funds Rate Interest Determination
Date; provided, however, that if the dealers so selected as aforesaid by the
Calculation Agent are not quoting as mentioned in
EXHIBIT B
<PAGE> 55
this sentence, the Federal Funds Rate in effect for the applicable period will
be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
Determination of Prime Rate
If the Base Rate specified on the face hereof is the Prime Rate, the
interest rate with respect to this Security for any Interest Reset Date shall be
the Prime Rate plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any, as specified on the face hereof, as determined on the
applicable Interest Determination Date.
"Prime Rate" means, with respect to any Interest Determination Date
relating to a Prime Rate Note or any Security for which the interest rate is
determined with reference to the Prime Rate (a "Prime Rate Interest
Determination Date"), the rate on such date as such rate is published in
H.15(519) under the heading "Bank Prime Loan." If such rate is not published
prior to 3:00 P.M., New York City time, on the related Calculation Date, then
the Prime Rate shall be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen USPRIME1 (as
hereinafter defined) as such bank's prime rate or base lending rate as in effect
for such Prime Rate Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen USPRIME1 for such Prime Rate Interest Determination
Date, the Prime Rate shall be the arithmetic mean of the prime rates quoted on
the basis of the actual number of days in the year divided by a 360-day year as
of the close of business on such Prime Rate Interest Determination Date by four
major money center banks in The City of New York selected by the Calculation
Agent. If fewer than four such quotations are so provided, then the Prime Rate
shall be the arithmetic mean of four prime rates quoted on the basis of the
actual number of days in the year divided by 360-day year as of the close of
business on such Price Rate Interest Determination Date as furnished in the City
of New York by the major money center banks, if any, that have provided such
quotations, and by as many substitute banks or trust companies as necessary in
order to obtain four such prime rate quotations, provided substitute banks or
trust companies are organized and doing business under the laws of the United
States, or any State thereof, having total equity capital of at least $500
million and being subject to supervision or examination by Federal or State
authority, selected by the Calculation Agent to provide such rate or rates;
provided, however, that if the banks or trust companies selected as aforesaid
are not quoting as mentioned in this sentence, the Prime Rate determined as of
such Prime Rate Interest Determination Date will be the Prime Rate in effect on
such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1" means the display designated as page "USPRIME1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME1 page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. In addition, the interest
rate hereon shall in no event be
EXHIBIT B
<PAGE> 56
higher than the maximum rate permitted by New York, as the same may be modified
by United States law of general application.
Upon the request of the Holder hereof, the Calculation Agent will provide
the interest rate then in effect, and, if different, the interest rate which
will become effective as a result of a determination made on the most recent
Interest Determination Date with respect to this Security.
Interest payments hereon shall be the amount of interest accrued to, but
excluding, the Interest Payment Date; provided, however, that if the Interest
Reset Dates with respect to any Security are daily or weekly, interest payable
on any Interest Payment Date, other than interest payable (with respect to such
principal) on any date on which principal of any such Security is payable, will
include interest accrued to and including the next preceding Regular Record
Date.
If this Security is a Global Security (as specified on the face hereof),
this Security is exchangeable in whole for definitive Securities of this series
of like tenor and of an equal aggregate principal amount in accordance with the
Indenture. Any definitive Securities of this series issued in exchange for this
Global Security shall be registered in the name or names of such Person or
Persons as the Holder hereof shall instruct the Registrar. Except as provided
above, owners of beneficial interests in this Global Security will not be
entitled to receive physical delivery of Securities in definitive form and will
not be considered the Holders thereof for any purpose under the Indenture.
Any exchange of a Global Security for one or more definitive Securities of
this series will be made at the office or agency of the Registrar in Boston,
Massachusetts or New York, New York.
If this Security is a Book-Entry Security, it may be transferred or
exchanged only through a participating member of the Depository Trust Company.
Registration of transfer of definitive Notes will be made at the Corporate Trust
Office of the Trustee, Two International Place, Boston, Massachusetts or the
Trustee's New York City office, 61 Broadway, New York, New York 10006. No
service charge will be made by the Company, the Trustee or the Security
Registrar for any such registration of transfer or exchange of Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith (other than exchanges
pursuant to the Indenture, not involving any transfer).
If this Security is a Global Security, except as provided in the next
paragraph, no beneficial owner of any portion of this Global Security shall be
entitled to receive payment of accrued interest hereon until this Global
Security has been exchanged for one or more definitive Securities of this
series, as provided herein and in the Indenture.
If this Security is a Global Security, if a definitive Security or
Securities of this series are issued in exchange for this Global Security in
accordance with the provisions of the Indenture after the close of business at
the office or agency where such exchange
EXHIBIT B
<PAGE> 57
occurs on (i) any Regular Record Date and before the opening of business at such
office or agency on the related Interest Payment Date, or (ii) any Special
Record Date and before the opening of business at such office or agency on the
related proposed date for payment of defaulted interest, interest or defaulted
interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of such Security,
but will be payable on such Interest Payment Date or proposed date for payment,
as the case may be, only to the Holder hereof, and the Holder hereof will
undertake in such circumstances to credit such interest to the account or
accounts of the Persons who were the beneficial owners of any portion of this
Global Security on such Regular Record Date or Special Record Date, as the case
may be.
If this Security is a Global Security representing Book-Entry Securities,
payments of principal of, and premium and interest, if any, on this Security
will be made by the Company through the Trustee to the Depositary. If this
Security is a definitive Security, payment of principal or premium, if any, at
the Maturity of each definitive Security will be made in immediately available
funds upon presentation and surrender of the definitive Security at the
Corporate Trust Office of the Trustee, Two International Place, Boston,
Massachusetts or the Trustee's New York City office, 61 Broadway, New York, New
York 10006 or at such other place as the Company may designate. Payment of
interest due at Maturity will be made to the person to whom payment of the
principal of the definitive Security shall be made. Payment of the interest due
on definitive Securities other than at Maturity will be made at the office or
agency referred to above maintained by the Company for such purpose or, at the
option of the Company, may be made by check mailed to the address of the holder
entitled thereto as such address shall appear in the Security Register.
Notwithstanding the foregoing, a holder of $10,000,000 or more in aggregate
principal amount of Securities (whether having identical or different terms and
provisions) will be entitled to receive interest payments, if any, on any
Interest Payment Date other than at Maturity by wire transfer of immediately
available funds if appropriate wire transfer instructions have been received in
writing by the Trustee not less than 15 days prior to such Interest Payment
Date. Any such wire transfer instructions received by the Trustee shall remain
in effect until revoked by such holder.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee under the Indenture or its successors thereunder, by the
manual signature of one of its authorized officers, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
EXHIBIT B
<PAGE> 58
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:_________________________ SPIEKER PROPERTIES, L.P.
By: Spieker Properties, Inc., as
General Partner
------------------------------
Name:
Title:
{Seal}
Attest:
By:______________________
Name:
Title:
EXHIBIT B
<PAGE> 59
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated "Medium-Term Notes"
referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: ______________________
Authorized Officer
EXHIBIT B
<PAGE> 60
FORM OF REVERSE
ADDITIONAL PROVISIONS
1. REGISTRAR AND AGENTS. Initially, State Street Bank and Trust Company
will act as Registrar, Paying Agent, Calculation Agent and agent for service of
notices and demands. The Company may change any Registrar, co-registrar, Paying
Agent, Calculation Agent and agent for service of notices and demands without
notice. The Company or any of its Subsidiaries may act as Paying Agent. The
address of State Street Bank and Trust Company is Two International Place,
Boston, Massachusetts or 61 Broadway, New York, New York 10006.
2. INDENTURE, LIMITATIONS. The Company issued the Securities as a series
of its securities under an Indenture dated as of December 6, 1995 as
supplemented by the Fifth Supplemental Indenture dated June 20, 1996 (the
"Indenture") between the Company, the General Partner and State Street Bank and
Trust Company, as trustee (the "Trustee"). Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Section
77aaa-77bbbb) as in effect on the date of the Indenture. The Securities are
subject to all such terms, and the holders of the Securities are referred to the
Indenture and said Act for a statement of such terms.
The Securities are general unsecured obligations of the Company
limited to $200,000,000 principal amount (or if the Securities of this series
are to be Original Issue Discount Securities, such principal amount as shall
result in an aggregate initial offering price of Securities equivalent to not
more than $200,000,000). The Indenture imposes certain limitations on the
ability of the Company to, among other things, incur certain liens and certain
additional indebtedness and sell, lease, transfer or dispose of its properties
or assets.
3. OPTIONAL REDEMPTION. The Securities will be subject to redemption at
the option of the Company on any date on or after the applicable Initial
Redemption Date in whole or from time to time in part in increments of $1,000 or
such other minimum denomination specified on the face hereof (provided that any
remaining principal amount thereof shall be at least $1,000 or such minimum
denomination), at the applicable Redemption Price (as hereinafter defined),
together with unpaid interest accrued to the date of redemption. "Redemption
Price," with respect to any Security, means an amount equal to the Initial
Redemption Percentage specified on the face hereof (as adjusted by the Annual
Redemption Percentage Reduction, if applicable) multiplied by the unpaid
principal amount to be redeemed. The Company shall be responsible for
calculating the Redemption Price and the components thereof. The Initial
Redemption Percentage, if any, applicable to a Security shall decline at each
anniversary of the Initial Redemption Date by an amount equal to the applicable
Annual Redemption Percentage Reduction, if any, until the Redemption Price is
equal to 100% of the unpaid principal amount to be redeemed.
EXHIBIT B
<PAGE> 61
From and after notice has been given as provided in the Indenture, if
funds for the redemption of any Securities called for redemption shall have been
made available on such redemption date, such 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 Securities will be to receive payment of the
Redemption Price.
Notice of any optional redemption of any Securities will be given to
holders at their addresses, as shown in the Security Register, not more than 60
nor less than 30 calendar 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 Securities held by such holder to be redeemed.
The Company will notify the Trustee at least 45 days prior to giving
notice of redemption to the holders (or such shorter period as satisfactory to
the Trustee) of the aggregate principal amount of Securities to be redeemed and
the redemption date. If less than all of the Securities of any series are to be
redeemed at the option of the Company, the Trustee shall select, in such manner
as it shall deem fair and appropriate, the Securities of such series to be
redeemed in whole or in part. Securities may be redeemed in part in the minimum
authorized denomination for Securities or in any integral multiple thereof.
4. OPTIONAL REPAYMENT. If provided on the face hereof, this Security will
be subject to repayment, in whole or in part on a given day or days, prior to
the Stated Maturity at the option of the Holder hereof on the optional repayment
dates, if any, specified on the face hereof (each an "Optional Repayment Date").
If no Optional Repayment Date is specified on the face hereof, this Security
will not be repayable at the option of the Holder hereof prior to its Stated
Maturity. If this Security is subject to repayment at the option of the Holder
hereof, on the Optional Repayment Date, if any, specified on the face hereof,
this Security will be repayable in whole or from time to time in part in
increments of $1,000, at a repayment price equal to 100% of the unpaid principal
amount to be repaid, together with unpaid interest accrued to the date of
repayment. For this Security to be repaid, such Security must be received,
together with the form hereon entitled "Option to Elect Repayment" duly
completed, by the Trustee at its Corporate Trust Office or at its New York City
office, 61 Broadway, New York, New York 10006, not more than 60 nor less than 30
calendar days prior to the date of repayment. Exercise of such repayment option
by the Holder will be irrevocable.
Only DTC may exercise the repayment option in respect of Global
Securities representing Book-Entry Securities. Accordingly, Beneficial Owners
(as defined below) of Global Securities that desire to have all or any portion
of the Book-Entry Securities represented by such Global Securities repaid must
instruct the Participant (as hereinafter defined) through which they own their
interest to direct DTC to exercise the repayment option on their behalf by
delivering the related Global Security and duly completed election form to the
Trustee as aforesaid. In order to ensure that such Global Security and election
form are received by the Trustee on a particular day, the applicable Beneficial
Owner must so instruct the Participant through which it owns its interest before
such
EXHIBIT B
<PAGE> 62
Participant's deadline for accepting instructions for that day. All instructions
given to Participants from Beneficial Owners of Global Securities relating to
the option to elect repayment shall be irrevocable. In addition, at the time
such instructions are given, each such Beneficial Owner shall cause the
Participant through which it owns its interest to transfer such Beneficial
Owner's interest in the Global Security or Global Securities representing the
related Book-Entry Securities, on DTC's records, to the Trustee.
As used herein, "Beneficial Owner" means the ownership interest of each
actual purchaser of each Security. As used herein, "Participant" means the
entity which deposits securities with DTC for which DTC holds such securities.
5. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered
form without coupons in denominations of $1,000 principal amount and integral
multiples thereof. A holder may register the transfer of or exchange Securities
in accordance with the Indenture. The Registrar may require a holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar is not required (i) to issue, register the transfer of or exchange any
Security if such security may be among those selected for redemption during a
period beginning at the opening of business 15 days before selection of the
Securities to be redeemed under Section 1103 of the Indenture and ending at the
close of business on, if such Securities are issuable only as Registered
Securities, the day of the mailing of the relevant notice of redemption, or to
register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except, in the case of a Registered Security to
be redeemed in part, the portion thereof not selected for redemption may be
exchanged for a Registered Security of that series and of like tenor, provided
that such Registered Security shall be simultaneously surrendered for
redemption, or (iii) to issue, register the transfer of or exchange any Security
which has been surrendered for repayment at the option of the holder, except
that portion, if any, of such Security which is not to be so repaid.
6. PERSONS DEEMED OWNERS. The registered holder of a Security may be
treated as the owner of it for all purposes.
7. UNCLAIMED MONEY. If money for the payment of principal or interest on
any Securities remains unclaimed for two years, the Trustee and the Paying Agent
will pay the money back to the Company at its request, unless otherwise required
by law. Thereafter, holders may look only to the Company for payment.
8. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. The Indenture will be
discharged and canceled with respect to the Securities except for certain
sections thereof upon payment of all the Securities, or upon the irrevocable
deposit with the Trustee of funds, sufficient to pay principal, premium, if any,
and interest on such payment date or Redemption Date.
9. SUPPLEMENTAL INDENTURE. Subject to certain exceptions, the Indenture
may be amended or supplemented with respect to the Securities with the
EXHIBIT B
<PAGE> 63
consent of the holders of at least a majority in principal amount of the
Securities then outstanding and any existing default or compliance with any
provision may be waived with the consent of the holders of the majority in
principal amount of the Securities then outstanding. Without the consent of or
notice to any holder, the Company may supplement the Indenture, to, among other
things, cure any ambiguity, defect or inconsistency, or make any other change
that does not adversely affect the interest rights of any holder.
10. SUCCESSORS. Upon satisfaction of the conditions provided in the
Indenture, if a successor to the Company assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
11. DEFAULTS AND REMEDIES. If an Event of Default with respect to the
Securities, as defined in the Indenture, occurs and is continuing, the Trustee
or the holders of a majority in principal amount of Securities may declare all
the Securities to be due and payable immediately in the manner and with the
effect provided in the Indenture. Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it, subject to the provisions of the TIA,
before it enforces the Indenture or the Securities. Subject to certain
limitations, holders of a majority in principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power with
respect to the Securities. The Trustee may withhold from holders of Securities
notice of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interests. The
Company is required to file periodic reports with the Trustee as to the absence
of any Default or Event of Default.
12. TRUSTEE DEALINGS WITH THE COMPANY. State Street Bank and Trust
Company, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not Trustee.
13. AUTHENTICATION. This Security shall not be valid until the Trustee
signs the certificate of authentication on the reverse side of this Security.
14. ABBREVIATIONS. Customary abbreviations may be used in the name of a
holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants
by the entirety), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors
Act).
The Company will furnish to any holder upon written request and without
charge a copy of the Indenture and any supplemental indentures thereto. It also
will furnish the text of this Security in larger type. Requests may be made to:
Spieker Properties, Inc., 2180 Sand Hill Road, Menlo Park, California 94025,
Attention: Investor Relations Coordinator.
EXHIBIT B
<PAGE> 64
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers to
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNS
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Typewrite Name and Address Including Zip Code of Assignee)
________________________________________________________________________________
the within Security of Spieker Properties, L.P. and_____________________________
hereby does irrevocably constitute and appoint
________________________________________________________________________________
Attorney to transfer said Security on the books of the within-named Trust with
full power of substitution in the premises.
Dated:____________ ___________________________________________
___________________________________________
Signature(s) must be guaranteed by an eligible General Partner Institution
(banks, stock brokers, savings and loan associations and credit unions) with
membership in an approved signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad 15.
NOTICE: The signature to this assignment must correspond with the name as it
appears on the first page of the within Security in every particular, without
alteration or enlargement or any change whatever.
EXHIBIT B
<PAGE> 65
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Company
to repay this Security (or portion hereof specified below) pursuant to its terms
at a price equal to 100% of the principal amount to be repaid, together with
unpaid interest accrued hereon to the Optional Repayment Date, to the
undersigned, at_________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Security to be repaid, the Trustee must receive at the Corporate
Trust Office, currently located at Two International Place, Boston,
Massachusetts or its New York City office at 61 Broadway, New York, New York,
not more than 60 nor less than 30 calendar days prior to the Repayment Date,
this Security with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of $1,000), which the
holder elects to have repaid and specify the denomination or denominations of
the Securities to be issued to the holder for the portion of this Security not
being repaid (in the absence of any such specification, one such Note will be
issued for the portion not being repaid).
Principal Amount
to be Repaid: $____________ ____________________________________________
Notice: The signature(s) on this
Date:_______________ Option to Elect Repayment must
correspond with the name(s) as
written on the face hereof in every
particular, without alteration or
enlargement or any change whatsoever.
EXHIBIT B
<PAGE> 1
FIFTH SUPPLEMENTAL INDENTURE
FIFTH SUPPLEMENTAL INDENTURE, dated as of June 20, 1996 (the "Fifth
Supplemental Indenture"), among Spieker Properties, L.P., a limited partnership
organized under the laws of California (the "Issuer"), Spieker Properties, Inc.,
a Maryland corporation, (the "General Partner"), and State Street Bank and Trust
Company, as Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Issuer, the General Partner and the Trustee executed and
delivered an Indenture, dated as of December 6, 1995, and the first supplemental
indenture, second supplemental indenture and third supplemental indenture, each
dated December 11, 1995, and the fourth supplemental indenture dated January 24,
1996 (collectively, and as supplemented hereby, the "Indenture"), to provide for
the issuance by the Issuer from time to time of debt securities evidencing its
unsecured indebtedness;
WHEREAS, pursuant to Board Resolution, the Issuer has authorized the
issuance of up to $200,000,000 of its medium term notes (the "Medium Term
Notes");
WHEREAS, the Issuer and the General Partner have entered into a
distribution agreement (the "Distribution Agreement") with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Dean Witter Reynolds Inc.,
Goldman, Sachs & Co. and J.P. Morgan Securities Inc. (each an "Agent" and,
together with any other agents that the Issuer may elect to add pursuant to the
terms of the Distribution Agreement, the "Agents") pursuant to which the Medium
Term Notes will be offered to the public from time to time by the Issuer through
the Agents, each of which, if agreed to by the Issuer and the applicable Agent,
has agreed to purchase the Medium Term Notes as principal for resale or to use
its reasonable efforts to solicit offers to purchase Medium Term Notes which
offers may be accepted by the Issuer from time to time. The Issuer also may sell
Medium Term Notes directly to Investors on its own behalf in those jurisdictions
where it is authorized to do so.
WHEREAS, the Issuer desires to establish the terms of the Medium Term
Notes in accordance with Sections 301 and 303 of the Indenture and to establish
the form of Medium Term Notes in accordance with Section 201 of the Indenture.
ARTICLE 1
TERMS
SECTION 101. TERMS OF MEDIUM TERM NOTES. The following terms relating to
the Medium Term Notes are hereby established:
(1) The Medium Term Notes shall constitute a series of Securities
having the title "Medium Term Notes."
<PAGE> 2
(2) The aggregate principal amount of the Medium Term Notes that may
be authenticated and delivered under the Indenture (except for Medium Term
Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Medium Term Notes pursuant to Sections
304, 305, 306, 906, 1107 or 1305 of the Indenture) shall be up to
$200,000,000. The date of issuance, interest rate, date from which
interest shall accrue, issue price, maturity, redemption provisions, if
any, and any other terms of any Medium Term Notes may be established from
time to time by any officer of the General Partner and shall be set forth
in an Issuer Order delivered to the Trustee and the pricing supplement
applicable to such Medium Term Notes (the "Pricing Supplement") which
supplements the Prospectus Supplement, dated June 20, 1996, to the
Prospectus dated June 20, 1996, included in the Registration Statement on
Form S-3 (No. 333-04299). The Issuer shall use its reasonable best efforts
to send to the Trustee a copy of the Pricing Supplement by telecopy or
overnight express mail, in each case, for delivery by the close of
business on the applicable trade date (but in no event later than 11:00
a.m. New York City time on the Business Day following the applicable trade
date.)
(3) The date or dates, or the method by which such date or dates are
determined on which the outstanding principal of the Medium Term Notes
become payable may be established from time to time by an Officer of the
General Partner and shall be set forth in the applicable Pricing
Supplement.
(4) Unless stated to the contrary on the face of any Medium Term
Note and in the applicable Issuer Order and Pricing Supplement, the Medium
Term Notes will bear interest at a fixed rate or at floating rates. Such
fixed rate or floating rates or the method by which such fixed rate or
floating rates shall be determined, the date or dates from which such
interest shall accrue, or the method by which such date or dates is
determined, the Interest Payment Dates on which such interest will be
payable and the Regular Record Date, if any, for the interest payable on
the Medium Term Notes on any Interest Payment Date, or the method by which
such date is determined, and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30-day months,
may be established from time to time by an officer of the General Partner
and shall be set forth in the related Issuer Order and applicable Pricing
Supplement. If so specified on the face of any Medium Term Note and the
related Issuer Order and applicable Pricing Supplement, such Medium Term
Note may be issued at a price less than its stated redemption price at
maturity and may pay no interest or interest at a rate that is below
market at the time of issuance.
(5) Unless stated to the contrary on the face of any Medium Term
Note and in the related Issuer Order applicable Pricing Supplement, the
Medium Term Notes and issued from time to time shall be in Book-Entry
Form, and payment of principal of, and premium and interest, if any, on
such Medium Term Notes will be made by the Issuer through the Trustee to
the DTC. If the Medium Term
<PAGE> 3
Notes are registered in Definitive Form, the place where the principal of
or premium, if any, at the Maturity of each such Medium Term Note shall be
payable, and Medium Term Notes may be surrendered for the registration of
transfer or exchange and the place where notices or demands to or upon the
Issuer in respect of the Medium Term Notes and the Indenture may be served
shall be, the Corporate Trust Office of the Trustee, and with respect to
the surrender of such Notes, the Trustee's New York City office, 61
Broadway, New York, New York 10006 (each such office a "Place of
Payment"), or at such other place as the Issuer shall designate. Payment
of interest due on Definitive Notes on any Interest Payment Date other
than the Stated Maturity will be made at the applicable Place of Payment
or, at the option of the Issuer, may be made by check mailed to the
address of the person entitled thereto as such address shall appear on the
Security Register maintained at the Corporate Trust Office.; provided,
however, a Holder of $10 million or more in aggregate principal amount of
Notes (whether having identical or different terms and provisions) will be
entitled to receive interest payments, if any, on any Interest Payment
Date, other than at Maturity by wire transfer of immediately available
funds if appropriate wire transfer instructions have been received in
writing by the Trustee not less than 15 days prior to such Interest
Payment Date. Any such wire transfer instructions received by the Trustee
shall remain in effect until revoked by such Holder.
(6) Unless stated to the contrary on the face of any Medium Term
Note and in the applicable Pricing Supplement, such Medium Term Note is
not subject to redemption. If stated on the face of any Medium Term Note
and in the applicable Issuer Order and Pricing Supplement that such Medium
Term Note is subject to redemption, the Medium Term Note may be redeemed
at any time after the initial redemption date specified on the face of the
Medium Term Note and in the applicable Pricing Supplement, at the option
of the Issuer, in whole or from time to time in part, at the Redemption
Price (as defined in the Medium Term Notes) and in accordance with the
provisions set forth in the Medium Term Note and the Indenture.
In the event of redemption of the Medium Term Notes in part only, a
new Medium Term Note for the amount of the unredeemed portion thereof
shall be issued in the name of the Holder thereto, upon cancellation
thereof.
(7) If provided on the face of any Medium Term Note and in the
applicable Issuer Order and Pricing Supplement, the Medium Term Notes will
be subject to repayment, in whole or in part, on a given day or days prior
to their Maturity at the option of the Holders thereof in accordance with
the terms of such Medium Term Notes on their respective optional repayment
dates, if any, as agreed upon by the Issuer and the purchasers thereof at
the time of such sale. Unless stated to the contrary on the face of any
Medium Term Note and in the applicable Issuer Order and Pricing
Supplement, the Medium Term Notes will not have the benefit of any sinking
fund.
<PAGE> 4
(8) The Medium Term Notes shall be issuable in denominations of
$1,000 and any integral multiple thereof, or in the authorized amount
specified on the face of the Medium Term Note and in the applicable
Pricing Supplement.
(9) The Trustee shall be the Security Registrar, Paying Agent and
Calculation Agent for the Notes in accordance with the terms of a certain
Interest Calculation Agency Agreement dated as of June 20, 1996.
(10) The entire issued and outstanding principal amount of the
Medium Term Notes shall be payable upon declaration of acceleration of the
maturity thereof pursuant to Section 502 of the Indenture.
(11) Payments of the principal of and interest on the Medium Term
Notes shall be made in U.S. Dollars, and the Medium Term Notes shall be
denominated in U.S. Dollars.
(12) The Medium Term Notes will be payable on the Stated Maturity
Date in an amount equal to the principal amount thereof plus any unpaid
interest accrued to the Stated Maturity Date.
(13) Unless stated to the contrary on the face of any Medium Term
Note or in the applicable Issuer Order and Pricing Supplement, the Holders
of the Medium Term Notes shall have no special rights in addition to those
provided in the Indenture upon the occurrence of any particular events.
(14) (A) There shall be no deletions from, modifications of or
additions to the Events of Default with respect to the Medium Term Notes
set forth in the Indenture.
(B) There shall be the following additions to the covenants set
forth in the Indenture with respect to the Medium Term Notes, which shall
be effective only for so long as any of the Medium Term Notes are
Outstanding:
Limitations On Incurrence of Debt. The Issuer will not,
and will not permit any Subsidiary to, incur any Debt (as defined
below), other than inter-company debt representing Debt to which the
only parties are the General Partner, the Issuer and any of their
Subsidiaries (but only so long as such Debt is held solely by any of
the General Partner, the Issuer and any Subsidiary) that is
subordinate in right of payment to the Medium Term Notes if,
immediately after giving effect to the incurrence of such additional
Debt, the aggregate principal amount of all outstanding Debt of the
Issuer and its Subsidiaries on a consolidated basis is greater than
60% of the sum of (i) Total Assets (as defined below) as of the end
of the calendar quarter covered in the Issuer's Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most
recently filed with the Trustee (or such reports of the General
Partner if filed by the
<PAGE> 5
Issuer with the Trustee in lieu of filing its own reports) prior to
the incurrence of such additional Debt and (ii) the increase in
Total Assets from the end of such quarter including, without
limitation, any increase in Total Assets resulting from the
incurrence of such additional Debt (such increase, together with the
Total Assets, is referred to as "Adjusted Total Assets").
In addition to the foregoing limitation on the
incurrence of Debt, the Issuer will not, and will not permit any
Subsidiary to, incur any Debt if the ratio of Consolidated Income
Available for Debt Service to the Annual Service Charge (in each
case as defined below) for the four consecutive fiscal quarters most
recently ended prior to the date on which such additional Debt is to
be incurred shall have been less than 1.5 to 1, on a pro forma basis
after giving effect to the incurrence of such Debt and to the
application of the proceeds therefrom, and calculated on the
assumption that (i) such Debt and any other Debt incurred by the
Issuer or its Subsidiaries since the first day of such four-quarter
period and the application of the proceeds therefrom, including to
refinance other Debt, had occurred at the beginning of such period,
(ii) the repayment or retirement of any other Debt by the Issuer or
its Subsidiaries since the first day of such four-quarter period had
been incurred, repaid or retired at the beginning of such period
(except that, in making such computation, the amount of Debt under
any revolving credit facility shall be computed based upon the
average daily balance of such Debt during such period), (iii) the
income earned on any increase in Adjusted Total Assets since the end
of such four-quarter period had been earned, on an annualized basis,
during such period, and (iv) in the case of any acquisition or
disposition by the Issuer or any Subsidiary of any asset or group of
assets since the first day of such four-quarter period, including,
without limitation, by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any related
repayment of Debt had occurred as of the first day of such period
with the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation.
In addition to the foregoing limitations on the
incurrence of Debt, the Issuer will not, and will not permit any
Subsidiary to, incur any Debt secured by any mortgage, lien, charge,
pledge, encumbrance or security interest of any kind upon any of the
property of the Issuer or any Subsidiary ("Secured Debt"), whether
owned at the date of the Indenture or thereafter acquired, if,
immediately after giving effect to the incurrence of such additional
Secured Debt, the aggregate principal amount of all outstanding
Secured Debt is greater than 40% of Adjusted Total Assets.
For purposes of the foregoing provisions regarding the
limitation on the incurrence of Debt, Debt shall be deemed to be
<PAGE> 6
"incurred" by the Issuer or a Subsidiary whenever the Issuer and its
Subsidiary shall create, assume, guarantee or otherwise become
liable in respect thereof.
Maintenance of Total Unencumbered Assets. The Issuer is
required to maintain Total Unencumbered Assets of not less than 165%
of the aggregate outstanding principal amount of all outstanding
Unsecured Debt.
As used herein:
"Annual Service Charge" as of any date means the amount
which is expensed in any 12-month period for interest on Debt of the
Issuer and its Subsidiaries.
"Consolidated Income Available For Debt Service" for any
period means Consolidated Net Income plus amounts which have been
deducted for (a) interest on Debt of the Issuer and its
Subsidiaries, (b) provision for taxes of the Issuer and its
Subsidiaries based on income, (c) amortization of Debt discount, (d)
provisions for gains and losses on properties, (e) depreciation and
amortization, (f) the effect of any noncash charge resulting from a
change in accounting principles in determining Consolidated Net
Income for such period and (g) amortization of deferred charges.
"Consolidated Net Income" for any period means the
amount of consolidated net income (or loss) of the Issuer and its
Subsidiaries for such period determined on a consolidated basis in
accordance with generally accepted accounting principles.
"Debt" of the Issuer or any Subsidiary means any
indebtedness of the Issuer or such Subsidiary, as applicable,
whether or not contingent, in respect of (i) borrowed money
evidenced by bonds, notes, debentures or similar instruments, (ii)
indebtedness secured by a mortgage, pledge, lien, charge,
encumbrance of any security interest existing on property owned by
the Issuer or such Subsidiary, (iii) the reimbursement obligations,
contingent or otherwise, in connection with any letters of credit
actually issued or amounts representing the balance that constitutes
an accrued expense or trade payable or (iv) any lease of property by
the Issuer or such Subsidiary as lessee which is reflected in the
Issuer's consolidated balance sheet as a capitalized lease in
accordance with generally accepted accounting principles, and in the
case of items of indebtedness under (i) through (iii) above to the
extent that any such items (other than letters of credit) would
appear as a liability on the Issuer's consolidated balance sheet in
accordance with generally accepted accounting principles, and also
includes, to the extent not otherwise
<PAGE> 7
included, any obligation by the Issuer or such Subsidiary to be
liable for, or to pay, as obligor, General Partner or otherwise
(other than for purposes of collection in the ordinary course of
business), indebtedness of another person (other than the Issuer or
any Subsidiary).
"Subsidiary" means a corporation, partnership or limited
liability company, a majority of the outstanding voting stock,
partnership interests or membership interests, as the case may be,
of which is owned or controlled, directly or indirectly, by the
Issuer or by one or more other Subsidiaries of the Issuer. For the
purposes of this definition, "voting stock" means stock having the
voting power for the election of directors, general partners,
managers 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.
"Total Assets" as of any date means the sum of (i)
Undepreciated Real Estate Assets and (ii) all other assets of the
Issuer and its Subsidiaries on a consolidated basis determined in
accordance with generally accepted accounting principles (but
excluding intangibles and accounts receivable).
"Total Unencumbered Assets" means the sum of (i) those
Undepreciated Real Estate Assets which have not been pledged,
mortgaged or otherwise encumbered by the owner thereof to secure
Debt, excluding infrastructure assessment bonds, and (ii) all other
assets of the Issuer and its Subsidiaries determined in accordance
with generally accepted accounting principles (but excluding
intangibles and accounts receivable) which have not been pledged,
mortgaged or otherwise encumbered by the owner thereof to secure
Debt.
"Undepreciated Real Estate Assets" as of any date means
the cost (original cost plus capital improvements) of real estate
assets of the Issuer and its Subsidiaries on such date, before
depreciation and amortization, determined on a consolidated basis in
accordance with generally accepted accounting principles.
"Unsecured Debt" means Debt which is not secured by any
mortgage, lien, charge, pledge, encumbrance or security interest of
any kind upon any of the properties of the Issuer or any Subsidiary.
(C) The Trustee shall not be obligated to monitor or
confirm, on a continuing basis or otherwise, the Issuer's compliance with
the covenants contained in this subsection or with respect to reports or
other documents filed under the Indenture; provided, however, that nothing
herein shall relieve the Trustee of any obligations to monitor the
Issuer's timely delivery of all reports
<PAGE> 8
and certificates required under Sections 703 and 1005 of the Indenture and
to fulfill its obligations under Article Six of the Indenture.
(15) Unless stated to the contrary on the face of any Medium Term
Note and in the applicable Issuer Order and Pricing Supplement, the Medium
Term Notes shall be issuable as Registered Securities in permanent global
form (without coupons). Beneficial owners of interests in the permanent
global Medium Term Notes may not exchange such interests for Medium Term
Notes of like tenor or any authorized form and denomination except as
otherwise provided in Section 305 of the Indenture. DTC shall be the
depository with respect to the permanent global Medium Term Notes and such
Notes shall be registered in the name of Cede & Co.
(16) The Medium Term Notes shall not be issuable as Bearer
Securities.
(17) Interest on any Medium Term Note shall be payable only to the
Person in whose name that Medium Term Note (or one or more predecessor
Medium Term Notes thereof) is registered at the close of business on the
Regular Record Date for such interest.
(18) Unless stated to the contrary on the face of any Medium Term
Note and in the applicable Issuer Order and Pricing Supplement, sections
1402 and 1403 of the Indenture shall be applicable to the Medium Term
Notes.
(19) Unless stated to the contrary on the face of any Medium Term
Note and in the applicable Pricing Supplement, the Medium Term Notes shall
not be issuable in definitive form except under the circumstances
described in Section 305 of the Indenture.
(20) Articles Sixteen and Seventeen of the Indenture shall not be
applicable to the Medium Term Notes.
(21) Unless stated to the contrary on the face of any Medium Term
Note and in the applicable Pricing Supplement, the Issuer shall not pay
Additional Amounts with respect to the Medium Term Notes as contemplated
by Section 1009 of the Indenture.
(22) The Medium Term Notes shall not be subordinated to any other
debt of the Issuer, and shall constitute senior unsecured obligations of
the Issuer.
SECTION 102. FORMS OF MEDIUM TERM NOTE. The forms of the Medium Term Note
are attached hereto as Exhibit A (fixed rate note) and Exhibit B (floating rate
note).
<PAGE> 9
SECTION 103. AUTHENTICATION AND DELIVERY. Notwithstanding the provisions
of Section 303 of the Indenture, the Trustee shall authenticate and deliver from
time to time Medium Term Notes in such authorized amounts and on such terms as
are set forth in the related Issuer Order and Pricing Supplement and consistent
herewith and, in authenticating such Medium Term Notes, shall be entitled to
receive and shall be fully protected in relying upon an Officers' Certificate
(which need not be accompanied by an Opinion of Counsel).
ARTICLE II
MISCELLANEOUS
SECTION 201. DEFINITIONS. Capitalized terms used but not defined in this
Fifth Supplemental Indenture shall have the meanings ascribed thereto in the
Indenture.
SECTION 202. CONFIRMATION OF INDENTURE. The Indenture, as heretofore
supplemented and amended and as supplemented and amended by this Fifth
Supplemental Indenture, is in all respects ratified and confirmed, and the
Indenture, this Fifth Supplemental Indenture and all indentures supplemental
thereto shall be read, taken and construed as one and the same instrument.
SECTION 203. CONCERNING THE TRUSTEE. The Trustee assumes no duties,
responsibilities or liabilities by reason of this Fifth Supplemental Indenture
other than as set forth in the Indenture prior to being supplemented hereby.
SECTION 204. GOVERNING LAW. This Fifth Supplemental Indenture, the
Indenture and the Medium Term Notes shall be governed by and construed in
accordance with the law of the State of New York.
SECTION 205. SEPARABILITY. In case any provision in this Fifth
Supplemental Indenture shall for any reason be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 206. COUNTERPARTS. This Fifth Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental
Indenture to be duly executed, and the corporate seal of the General Partner to
be hereunto affixed and attested, as of the day and year first above written.
SPIEKER PROPERTIES, L.P.
By: Spieker Properties, Inc.
as General Partner
By:_____________________________
Name:
Title:
(seal)
Attest:
By:____________________________
Name:
Title:
SPIEKER PROPERTIES, INC.
By:_____________________________
Name:
Title:
(seal)
Attest:
By:____________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:_____________________________
Name:
Title:
Attest:
By:____________________________
Name:
Title:
<PAGE> 11
STATE OF )
COUNTY OF ) ss.:
On the ______ day of ________________, 1995, before me personally came
_________________ to me known, who, being by me duly sworn, did depose and say
that he is the ____________________ of Spieker Properties, Inc., one of the
entities described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to the said instrument
is such corporation seal; that it was so affixed by authority of the
corporation, and that he signed his name thereto by like authority.
-------------------------------
<PAGE> 1
SPIEKER PROPERTIES, INC.
AMENDED AND RESTATED 1993 DIRECTORS' STOCK OPTION PLAN
(as of March 20, 1996)
Establishment and Purpose.
There is hereby adopted the 1993 Directors' Stock Option Plan (the
"Plan") of Spieker Properties, Inc. (the "Company"). The Plan is intended to
provide a means whereby eligible members of the Board of Directors of the
Company (the "Board") may be given an opportunity to purchase shares of common
stock of the Company ("Stock") pursuant to options which are not intended to
qualify as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
The purpose of the Plan is to enable the Company to attract and
retain the best available individuals for service as members of the Board, to
provide additional incentive to such individuals while serving as directors, and
to encourage their continued service on the Board.
Definitions.
As used herein, the following definitions shall apply:
"Continuous Status as a Director" shall mean the absence of any
interruption or termination of service as a Director.
"Director" shall mean a member of the Board.
"Employee" shall mean any person, including officers and
Directors, who is an employee of the Company, or any Subsidiary of the Company,
for purposes of tax withholding under the Code. The payment of a director's fee
by the Company shall not be sufficient in and of itself to constitute
"employment" by the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Fair Market Value" shall mean, as of any date, the last reported
sale price of the Stock of the Company on the New York Stock Exchange or, if no
such reported sale takes place on any such day, the average of the closing bid
and asked prices. If the foregoing is not applicable, then the Fair Market Value
of a share of Stock shall be determined in good faith by the Board in its
discretion.
"Option" shall mean an option to purchase shares of Stock granted
pursuant to the Plan.
"Optionee" shall mean an Outside Director who receives an
Option.
"Outside Director" shall mean a Director who is not an
Employee.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
Stock Subject to the Plan.
An aggregate of not more than 150,000 shares shall be available for
the grant of stock options under the Plan. If an Option expires or becomes
unexercisable for any reason and has not been exercised in full, the Stock
subject to such Options shall become available for future grant under the Plan.
If Stock which was acquired upon exercise of an Option is subsequently
<PAGE> 2
repurchased by the Company, such Stock shall not become available for future
grant under the Plan.
Administration of the Plan.
The Plan is intended to be self-executing pursuant to the terms
hereof. However, any questions concerning interpretation or execution of the
Plan or grants hereunder shall be determined by the Board.
Subject to the provisions and restrictions of the Plan, the Board
shall have the authority, in its discretion, to: (i) interpret the Plan; (ii)
authorize any person to execute on behalf of the Company any agreements or other
documents in connection with the grant of an Option under the Plan consistent
with the terms of the Plan; (iii) approve forms of agreement for use under the
Plan consistent with the terms of the Plan; and (iv) make all other
determinations deemed necessary or advisable for the administration of the Plan.
Subject to the foregoing all decisions, determinations and
interpretations of the Board shall be final and binding on all holders of any
Options granted under the Plan.
Option Grants.
All grants of Options hereunder shall be automatic and
nondiscretionary and shall be made strictly in accordance with the provisions of
this Section 5. No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of shares of Stock
to be covered by Options granted to Outside Directors, the timing of such Option
grants or the exercise price thereof.
Each individual who becomes an Outside Director, as of the date on
which such person becomes an Outside Director, shall be granted automatically an
Option to purchase 2,500 shares of Stock.
On December 31, 1994 and December 31, 1995, each Outside Director
shall be granted automatically an Option to purchase 500 shares of Stock,
provided that on such date the Outside Director has served on the Board for more
than one year. Thereafter, on December 31 of each year, commencing on December
31, 1996, each Outside Director who has served on the Board for more than one
year as of such date shall be granted automatically an Option to purchase 4,000
shares of Stock.
Limitations.
Notwithstanding the provisions of Sections 5(b) and 5(c)
hereof, in the event that a sufficient number of shares of Stock is not
available under the Plan, the remaining shares shall be prorated based
upon the number of shares each Director was entitled to receive under this
Plan. Any further grants shall then be deferred until such time, if any,
as additional shares become available for grant under the Plan. Subject to
the terms of Section 13 hereof, the Board shall have the authority at any
time to make additional shares available for grant under the Plan, subject
to obtaining stockholder approval of such increase to the extent required
under Section 13(a) hereof.
Notwithstanding the provisions of Sections 5(b) and (c)
hereof, any grant of an Option made before the Company has obtained
stockholder approval of the Plan and any grant of an Option made after
amendment of the Plan where such amendment of the Plan requires
stockholder approval under Section 13(a) hereof shall be conditioned upon
obtaining such stockholder approval.
Terms and Conditions of Options.
Each Option granted pursuant to this Plan shall be evidenced by a
written stock option agreement ("Directors' Stock Option Agreement") executed by
the Company and the Outside Director containing such terms and conditions that
are consistent with this Plan and as otherwise determined by the Board.
<PAGE> 3
Subject to adjustment to the extent provided in Section 12 hereof,
the exercise price per share shall be 100% of the Fair Market Value per share on
the date of grant of the Option.
The Option shall vest and become exercisable at the rate of
twenty-five percent (25%) of the total number of shares of Stock covered by the
Option on each anniversary of the date of grant, beginning on the first
anniversary of the date of grant.
The term of each Option shall be ten (10) years from the date of
grant, unless a shorter period is required to comply with any applicable law, in
which case such shorter period will apply.
Eligibility.
Options may be granted only to Outside Directors. The Plan shall not
confer upon any Outside Director any right with respect to continuation of
service as a Director or nomination to serve as a Director, nor shall it
interfere in any way with any rights which the Director or the Company may have
to terminate his or her directorship at any time.
Term of Plan; Effective Date.
The Plan shall become effective upon adoption by the Board of the
Company. Options may be granted under this Plan at any time on or before October
11, 2003.
Payment Upon Exercise.
Payment of the exercise price upon exercise of any Option may be
made (i) in cash; (ii) by delivery on a form prescribed by the Board of an
irrevocable direction to a securities broker approved by the Board to sell
shares and deliver all or a portion of the proceeds to the Company in payment
for the Stock; (iii) by delivery of the Optionee's promissory note with such
recourse, interest, security and redemption provisions as the Board in its
discretion determines appropriate; or (iv) any combination of the foregoing.
Exercise of Option.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option agreement by the person entitled to exercise the Option and full payment
for the Stock has been received by the Company in accordance with Section 9
hereof. An Option may not be exercised for a fraction of a share.
Notwithstanding the exercise of the Option, until the issuance (as
evidenced by the appropriate entry on the books of a duly authorized transfer
agent of the Company) of the certificate evidencing such Stock, no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Stock. A stock certificate for the number of shares so acquired
shall be issued to the Optionee as soon as practicable after exercise of the
Option. No adjustment will be made for a dividend or other right if the record
date is prior to the date the stock certificate is issued.
If an Outside Director ceases to serve as a Director, he or she may,
but only within three (3) months after the date he or she ceases to be a
Director of the Company, exercise his or her Option to the extent that he or she
was entitled to exercise it at the date of such termination. Notwithstanding the
foregoing, in no event may the Option be exercised after its term set forth in
Section 6 has expired. To the extent that such Outside Director was not entitled
to exercise an Option at the date of such termination, or does not exercise such
Option (which he or she was entitled to exercise) within the time specified
herein, the Option shall terminate.
<PAGE> 4
Notwithstanding the provisions of Section 10(c) above, in the event
an Outside Director is unable to continue his service as a Director with the
Company as a result of his total and permanent disability (as defined in
Section 22(e)(3) of the Code), he may, within six months from the date of such
termination, exercise his Option to the extent he was entitled to exercise it at
the date of such termination. Notwithstanding the foregoing, in no event may the
Option be exercised after the expiration of the term set forth in Section 6. To
the extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option (which he was entitled
to exercise) within the time specified herein, the Option shall terminate.
In the event of the death of an Outside Director:
If the Outside Director dies during the term of the Option, is
a Director at the time of his death and has been in Continuous Status as a
Director since the date of grant of the Option, the Option may be
exercised at any time within six (6) months following the date of death by
the Outside Director's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Outside Director was entitled to exercise the Option at the time of death.
Notwithstanding the foregoing, in no event may the Option be exercised
after the expiration of the term set forth in Section 6.
If the Outside Director dies within three (3) months after the
termination of Continuous Status as a Director, the Option may be
exercised at any time within six (6) months following the date of death by
the Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent the Outside
Director was entitled to exercise the Option at the date of termination.
Notwithstanding the foregoing, in no event may the Option be exercised
more than ten (10) years after its date of grant.
Nontransferability of Options.
No Option may be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or
distribution. The designation of a beneficiary by an Optionee does not
constitute a transfer. An Option may be exercised during the lifetime of an
Optionee only by the Optionee.
Adjustment Upon Changes in Capitalization.
In the event that the number of outstanding shares of Stock of the Company
is changed by a stock dividend, stock split, reverse stock split, combination,
reclassification or similar change in the capital structure of the Company
without consideration, the number of shares of Stock available under this Plan,
the number of shares of Stock deliverable in connection with any Option and the
exercise price per share of such Options shall be proportionately adjusted,
subject to any required action by the Board or stockholders of the Company and
compliance with applicable securities laws; provided however, that no
certificate or scrip representing fractional shares shall be issued and any
resulting fractions of a share shall be ignored.
Amendment and Termination of the Plan.
The Board may amend the Plan from time to time in such respects as
the Board may deem advisable; provided that, to the extent necessary to comply
with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain approval of the Company's stockholders to
amend the Plan to the extent and in the manner required by such law or
regulation. Notwithstanding the foregoing, the provisions set forth in Sections
5 and 6 of this Plan (and any other Sections of this Plan that affect the
formula award terms required to be specified in this Plan by Rule 16b-3) shall
not be amended more than once every six months, other
<PAGE> 5
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
The Board, without further approval of the stockholders, may at any
time terminate or suspend the Plan. Except as otherwise provided herein, any
such termination or suspension of the Plan shall not affect Options already
granted hereunder and such Options shall remain in full force and effect as if
the Plan had not been terminated or suspended.
Except as otherwise provided herein, rights and obligations under
any outstanding Option shall not be altered or impaired by amendment, suspension
or termination of the Plan, except with the consent of the person to whom the
Option was granted.
Conditions Upon Issuance of Stock.
Stock shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such Stock
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act, the rules and
regulations promulgated thereunder, state securities laws, and the requirements
of any stock exchange upon which the Stock may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Stock is being purchased only for investment and without
any present intention to sell or distribute such Stock, if, in the opinion of
counsel for the Company, such a representation is required by any of the
relevant provisions of law.
Inability of the Company to obtain authority from any regulatory
body having jurisdictional authority deemed by the Company's counsel to be
necessary for the lawful issuance and sale of any Stock hereunder shall relieve
the Company of any liability for failure to issue or sell such Stock.
Reservation of Stock.
The Company, during the term of this Plan, will at all times reserve
and keep available such number of shares of Stock as shall be sufficient to
satisfy the requirements of the Plan.
Change in Control.
For purposes of this Section 15, a "Change in Control" shall be
deemed to occur if:
any acquisition by shareholders acting as a group (other than
an acquisition from the Company or by the Company, the management of the
Company or a Company-sponsored employee benefit plan) of 20% or more of
the outstanding Stock;
a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members
cease, by reason of one or more contested elections for Board membership
or by one or more actions by written consent of shareholders, to be
comprised of individuals who either (a) have been Board members
continuously since the beginning of such period or (b) have
<PAGE> 6
been elected or nominated for election as Board members during such
period by at least a majority of the Board members described in clause
(a) who were still in office at the time such election or nomination was
approved by the Board;
approval by the Company's shareholders of a merger or
consolidation in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the state
in which the Company is incorporated;
approval by the Company's shareholders of (x) the sale,
transfer or other disposition of all or substantially all of the assets
of the Company (including the capital stock of the Company's subsidiary
corporations) or (y) the complete liquidation or dissolution of the
Company; or
approval by the Company's shareholders of any reverse merger
in which the Company survives as an entity but in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities are transferred to a person
or persons different from those who held such securities immediately
prior to such merger.
<PAGE> 7
In the event of a Change in Control, any Option shall be fully
vested, nonforfeitable and become exercisable immediately prior to the specified
effective date of the Change in Control.
Stockholder Approval.
This Plan became effective when adopted by the Board on December
15, 1993 and was approved by the stockholders of the Company on May 25, 1994. On
March 20, 1996, the Board adopted and approved an amendment to the Plan to
provide for accelerated vesting of Options in the event of a Change in Control
and an increase in the number of shares of Stock subject to annual Option grants
received by eligible Outside Directors on each December 31 by 3,500 shares to
4,000 shares commencing on December 31, 1996, subject to stockholder approval
within twelve (12) months of the date of approval by the Board. Such Options may
be granted prior to approval by the stockholders of the Company, but no part of
the automatic annual Option grant in excess of the Option to purchase 500 shares
of stock shall become exercisable unless and until stockholder approval shall
have been obtained. If such stockholder approval is not obtained within twelve
(12) months after the date of the Board's adoption of the Plan amendment, then
the 3,500-share portion of the automatic annual Option grant shall terminate,
the accelerated Change in Control vesting provision shall be null and void, and
the automatic annual Option grants shall thereafter be an Option to purchase 500
shares of Stock as provided prior to the Plan amendment adopted and approved by
the Board on March 20, 1996.
Additional Restrictions of Rule 16b-3.
The terms and conditions of options granted hereunder to persons
subject to Section 16 of the Exchange Act shall comply with the applicable
provisions of Rule 16b-3. This Plan and the options granted hereunder shall be
deemed to contain such additional conditions and restrictions as may be required
for this Plan to qualify as a "formula plan" under Rule 16b-3, as then
applicable to the Company, and to qualify for the maximum exemptions from
Section 16 of the Exchange Act with respect to Plan transactions.
<PAGE> 1
SPIEKER PROPERTIES, INC.
AMENDED AND RESTATED 1993 STOCK INCENTIVE PLAN
(as of March 20, 1996)
Establishment, Purpose and Definitions.
There is hereby adopted by Spieker Properties, Inc. (the
"Company"), Spieker Northwest, Inc., and Spieker Properties, L.P. of which
the Company is the General Partner the Spieker Properties, Inc. 1993 Stock
Incentive Plan (the "Plan").
The purpose of the Plan is to provide a means whereby eligible
individuals (as defined in Section 4, below) can acquire Common Stock of the
Company ("Stock"). The Plan provides employees (including officers and directors
who are employees) of the Company and of its Affiliates an opportunity to
purchase shares of Stock pursuant to options which may qualify as incentive
stock options (referred to as "incentive stock options") under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and employees,
officers, directors, independent contractors, and consultants of the Company,
its Affiliates, Spieker Properties, L.P. and Spieker Northwest, Inc. an
opportunity to purchase shares of Stock pursuant to options which are not
described in Sections 422 or 423 of the Code (referred to as "nonqualified stock
options"). The Plan also provides for the sale or bonus of Stock and the grant
of performance stock units to eligible individuals in connection with the
performance of services for the Company, its Affiliates, Spieker Properties,
L.P. or Spieker Northwest, Inc. Finally, the Plan authorizes the grant of
dividend equivalent rights ("DERs") in tandem with options and performance stock
units, entitling holders to compensation measured by the dividends paid by the
Company with respect to all or a portion of the number of shares of Stock
subject to an option or a performance stock unit.
The term "Affiliates" as used in the Plan means parent or subsidiary
corporations of the Company, as defined in Sections 424(e) and (f) of the Code
(but substituting "the Company" for "employer corporation"), including parents
or subsidiaries of the Company which become such after adoption of the Plan.
Administration of the Plan.
The Plan shall be administered by the Board of Directors of the
Company (the "Board"). The Board may delegate the responsibility for
administering the Plan to a committee, under such terms and conditions as the
Board shall determine (the "Committee"). The Committee shall consist of two or
more members of the Board or such lesser number of members of the Board as
permitted by Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended ("Rule 16b-3"). None of the members of the Committee shall receive,
while serving on the Committee, or during the one-year period preceding
appointment to the Committee, a grant or award of equity securities under (i)
the Plan or (ii) any other plan of the Company, its Affiliates, Spieker
Properties, L.P. or Spieker Northwest, Inc. under which the participants are
entitled to acquire Stock (including restricted stock), stock options, stock
bonuses, performance stock units, DERs, or related rights of the Company, its
Affiliates or Spieker Northwest, Inc., other than pursuant to transactions in
any such other plan which do not disqualify a director from being a
disinterested person under Rule 16b-3. The limitations set forth in this
Section 2(a) shall automatically incorporate any additional requirements that
may in the future be necessary for the Plan to comply with Rule 16b-3. Members
of the Committee shall serve at the pleasure of the Board. The Committee shall
select one of its members as chair of the Committee, and shall hold meetings at
such times and places as it may determine. A majority of the Committee shall
constitute a quorum and acts of the Committee at which a quorum is present, or
acts reduced to or approved in writing by all the members of the Committee,
shall be the valid acts of the Committee. The Board may delegate the
responsibility for administering the Plan with respect to individuals not
subject to Section 16 of the Securities Exchange Act of 1934 to another
committee (the "Non-Executive Stock Incentive Plan Committee"), under such terms
and conditions and with such members as the Board shall determine. For purposes
of grants to
<PAGE> 2
such individuals, references in the Plan to the "Committee" shall be deemed to
be references to the Non-Executive Stock Incentive Plan Committee. If the Board
does not delegate administration of the Plan to the Committee, then each
reference in this Plan to the "Committee" shall be construed to refer to the
Board.
The Committee shall determine which eligible individuals (as defined
in Section 4, below) shall be granted options and DERs under the Plan, the
timing of such grants, the terms thereof (including any restrictions on the
Stock), and the number of shares or performance stock units subject to such
options or DERs. Individuals authorized before the date of the Company's initial
public offering to be granted options under the Plan and the number of shares
that are subject to such options are set forth in Exhibit A.
The Committee may amend the terms of any outstanding option or DER
granted under this Plan, but any amendment which would adversely affect the
holder's rights under an outstanding option or DER shall not be made without the
holder's written consent. The Committee may, with the holder's written consent,
cancel any outstanding stock option or DER or accept any outstanding stock
option or DER in exchange for a new option or DER.
The Committee shall also determine which eligible individuals (as
defined in Section 4, below) shall be granted or issued Stock or performance
stock units under the Plan, the timing of such grants or issuances, the terms
thereof (including any restrictions), and the number of shares or performance
stock units to be granted. The Stock or performance stock units shall be issued
for such consideration (if any) as the Committee deems appropriate. Stock issued
subject to restrictions and performance stock units shall be evidenced by a
written agreement (the "Restricted Stock Purchase Agreement," the "Restricted
Stock Bonus Agreement", or the "Performance Stock Unit Agreement"). The
Committee may amend any Restricted Stock Purchase Agreement, Restricted Stock
Bonus Agreement or Performance Stock Unit Agreement, but any amendment which
would adversely affect the holder's rights to the Stock or performance stock
unit shall not be made without his or her written consent.
The Committee shall have the sole authority, in its absolute
discretion to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable for the administration of the Plan, to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing options, Stock, performance stock units, or DERs granted under the
Plan and to make all other determinations deemed necessary or advisable for the
administration of the Plan. All decisions, determinations and interpretations of
the Committee shall be binding on all participants.
Notwithstanding the foregoing provisions of this Section 2, if the
Committee at any time is not composed solely of two or more outside directors
(as defined below), then any grant of Stock, an option, a performance stock
unit, or a DER to a Named Executive (as defined below) shall be made only by a
separate committee or subcommittee of the Committee which shall be so composed
(the "Subcommittee"). A "Named Executive" shall mean, for each taxable year of
the Company, the Chief Executive Officer of the Company as of the close of such
taxable year and each Employee whose total compensation is required to be
reported to shareholders under the Securities Exchange Act of 1934 by reason of
such Employee being among the four (4) highest compensated Employees for such
taxable year. Any actions taken by the Committee under this Section 2 shall
apply to options or DERs granted to a Named Executive or restricted stock or
performance stock units issued to a Named Executive only if also authorized by
the Subcommittee. Solely for purposes of this Section 2(f), "outside directors"
means directors other than (i) current employees of the Company or any of its
subsidiaries, (ii) former employees of the Company or any of its subsidiaries
who are currently receiving compensation for prior services (other than benefits
under a tax-qualified pension plan), (iii) current or former officers of the
Company or any of its subsidiaries, and (iv) persons currently receiving
remuneration directly or indirectly as set forth in Treasury Regulations
pursuant to Internal Revenue Code Section 162(m). If the Subcommittee has not
been formed pursuant to this Section 2(f), then all references to the
Subcommittee herein shall be treated as references to the Committee.
<PAGE> 3
Stock Subject to the Plan.
The aggregate number of shares of Stock available for issuance under
the Plan initially shall be 2,000,000 shares, and commencing with January 2,
1996 and the first business day of each fiscal quarter of the Company
thereafter, such maximum number of shares of Stock reserved for issuance
hereunder shall be the number of shares equal to 9.9% of the number of shares of
Stock outstanding as of the last day of the immediately preceding quarter
reduced by the number of shares of Stock reserved for issuance under other stock
compensation plans of the Company, including but not limited to, the Company's
1993 Directors' Stock Option Plan, as amended; provided that the maximum number
of shares of Stock available for issuance hereunder shall not be reduced in any
quarter that the number of outstanding shares of Stock on the last day of the
immediately preceding fiscal quarter is less than the number of outstanding
shares of Stock on the last day of. any previous fiscal quarter. For purposes of
calculating the number of outstanding shares of Stock, all classes of securities
of the Company (including partnership units of Spieker Properties, L.P., the
Company's Series A preferred stock, Class B common stock, Class C common stock,
and all classes of securities of the Company that may be issued in the future)
that are convertible presently or in the future by the security holder into
shares of Stock shall be deemed to be outstanding shares of Stock equal to the
number of shares of Stock into which the securities are convertible presently or
in the future. Notwithstanding the foregoing, the aggregate number of shares of
Stock available for the grant of incentive stock options shall be 3,450,000
shares, and such number shall not be subject to quarterly adjustment. If an
option is surrendered (except surrender for shares of Stock) or for any other
reason ceases to be exercisable in whole or in part, the shares which were
subject to such option but as to which the option had not been exercised shall
continue to be available under the Plan. Any Stock which is retained by the
Company upon exercise of an option in order to satisfy the exercise price for
such option or any withholding taxes due with respect to such exercise of an
option shall be treated as issued to the optionee and will thereafter not be
available under the Plan, except as provided in Sections 13 and 14.
If there is any change in the Stock subject to either the Plan, an
option agreement, a DER, a Restricted Stock Purchase Agreement, a Restricted
Stock Bonus Agreement, or a Performance Stock Unit Agreement through merger,
consolidation, reorganization, recapitalization, reincorporation, stock split,
stock dividend, or other change in the capital structure of the Company,
appropriate adjustments shall be made by the Committee in order to preserve but
not to increase the benefits to the individual, including adjustments to the
aggregate number, kind of shares, and price per share subject to either the
Plan, an option agreement, a DER, a Restricted Stock Purchase Agreement, a
Restricted Stock Bonus Agreement, or a Performance Stock Unit Agreement.
Eligible Individuals.
Individuals who shall be eligible to have granted to them the
options, the Stock, the performance stock units, or the DERs provided for by the
Plan shall be such employees, officers, directors, independent contractors and
consultants of the Company, an Affiliate, Spieker Properties, L.P. or Spieker
Northwest, Inc. as the Committee, in its discretion, shall designate from time
to time. Notwithstanding the foregoing, only employees of the Company or an
Affiliate (including officers and directors who are bona fide employees) shall
be eligible to receive incentive stock options.
The number of shares with respect to which options may be granted or
restricted stock or performance stock units issued to any employee in any
calendar year shall be limited to 200,000. The exercise price of any option or
purchase price for any share of restricted stock with respect to a Named
Executive shall not be less than the fair market value of the Stock on the date
of grant of an option or date of issuance of restricted stock.
The Option Price. The exercise price of the Stock covered by each
incentive stock option and each nonqualified stock option shall be not less than
the per share fair market value of such Stock on the date the option is granted.
Notwithstanding the foregoing, in the case of an incentive stock option granted
to a person possessing more than 10 percent of the combined voting power of the
Company or an Affiliate, the exercise price shall be not less than 110 percent
of the fair market value of the Stock on the date the option is granted. The
exercise price of an
<PAGE> 4
option shall be subject to adjustment only to the extent provided in Section
3(b), above, and the exercise price of an option may not otherwise be reduced.
Terms and Conditions of Options.
Each option granted pursuant to the Plan will be evidenced by a
written stock option agreement executed by the Company and the person to whom
such option is granted.
The Committee shall determine the term of each option granted under
the Plan; provided, however, that the term of an incentive stock option shall
not be for more than 10 years and that, in the case of an incentive stock option
granted to a person possessing more than 10 percent of the combined voting power
of the Company or an Affiliate, the term shall be for no more than five years.
In the case of incentive stock options, the aggregate fair market
value (determined as of the time such option is granted) of the Stock with
respect to which incentive stock options are exercisable for the first time by
an eligible employee in any calendar year (under this Plan and any other plans
of the Company or its Affiliates) shall not exceed $100,000. If the aggregate
fair market value of Stock with respect to which incentive stock options are
exercisable by an optionee for the first time during any calendar year exceeds
$100,000, such options shall be treated as nonqualified stock options to the
extent required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking options into account in the order in which
they were granted.
The stock option agreement may contain such other terms, provisions
and conditions consistent with this Plan as may be determined by the Committee.
If an option, or any part thereof is intended to qualify as an incentive stock
option, the stock option agreement shall contain those terms and conditions
which are necessary to so qualify it.
Terms and Conditions of Stock Purchases and Bonuses.
Each sale or grant of Stock pursuant to the Plan will be evidenced
by a written Restricted Stock Purchase Agreement or Restricted Stock Bonus
Agreement executed by the Company and the person to whom such Stock is sold or
granted.
The Restricted Stock Purchase Agreement or Restricted Stock Bonus
Agreement may contain such other terms, provisions and conditions consistent
with this Plan as may be determined by the Committee, including not by way of
limitation, restrictions on transfer, forfeiture provisions, repurchase
provisions, vesting provisions, and satisfaction of any performance criteria.
Terms and Conditions of Dividend Equivalent Rights. The Committee may,
under such terms and conditions as it deems appropriate, authorize the issuance
of DERs evidenced by a written DER agreement (which may be a part of the option
agreement or Performance Stock Unit Agreement to which the DER relates) executed
by the Company and the person to whom such DER is granted. In respect of an
option or a Performance Stock Unit Agreement that is outstanding on the dividend
record date for Stock, a DER shall entitle the holder to be credited with an
amount equal to the cash or stock dividends or other distributions that would
have been paid on the shares of Stock subject to the option or the Performance
Stock Unit Agreement had such shares of Stock been issued and outstanding of
such dividend record date. The Committee shall establish such terms, conditions,
rules and procedures governing the grant of DERs, including the timing, form of
payment and payment contingencies, as it deems are appropriate.
Terms and Conditions of Performance Stock Units. The Committee may, under
such terms and conditions as it deems appropriate, authorize the issuance of
performance stock units evidenced by a written Performance Stock Unit Agreement
executed by the Company and the person to whom the performance stock units is
granted. The Performance Stock Unit Agreement shall specify the term for the
performance stock units covered thereby, the cash amount payable or securities
issuable upon exercise of the performance stock unit. The Committee shall
<PAGE> 5
establish such terms, conditions, rules and procedures governing the issuance of
performance stock units, including any performance criteria that must be
satisfied as a condition to payment.
Use of Proceeds. Cash proceeds realized from the issuance of Stock under
the Plan shall constitute general funds of the Company.
Amendment, Suspension or Termination of the Plan.
The Board may at any time amend, suspend or terminate the Plan as
it deems advisable; provided, however, that such amendment, suspension or
termination complies with all applicable requirements of state and federal law,
including any applicable requirement that the Plan or an amendment to the Plan
be approved by the Company's shareholders, and provided further that, except as
provided in Section 3(b), above, the Board shall in no event amend the Plan in
the following respects without the consent of shareholders then sufficient to
approve the Plan in the first instance:
To materially increase the benefits accruing to
participants under the Plan;
To materially increase the number of shares of Stock
available under the Plan; or
To materially modify the eligibility requirements for
participation in the Plan.
No option, performance stock unit, or DER may be granted nor any
Stock issued under the Plan during any suspension or after the termination of
the Plan, and no amendment, suspension or termination of the Plan shall, without
the affected individual's consent, alter or impair any rights or obligations
under any option, performance stock unit, or DER previously granted under the
Plan. The Plan shall terminate with respect to the grant of incentive stock
options on the tenth anniversary of the date this Plan was adopted unless
previously terminated by the Board pursuant to this Section 11.
Assignability. Each option, performance stock unit, or DER granted
pursuant to this Plan shall, during the holder's lifetime, be exercisable only
by him, and each option, performance stock unit, and DER shall not be
transferable by the holder by operation of law or otherwise other than by will
or the laws of descent and distribution. Stock subject to a Restricted Stock
Purchase Agreement or a Restricted Stock Bonus Agreement shall be transferable
only as provided in such agreement.
Payment Upon Exercise of Options.
Payment of the purchase price upon exercise of any option granted
under this Plan shall be made in cash; provided, however, that the Committee, in
its sole discretion, may permit an optionee to pay the option price in whole or
in part (i) with shares of Stock owned by the optionee (or in the case of a
nonqualified stock option, with shares of restricted stock issued under the
Plan); (ii) by delivery on a form prescribed by the Committee of an irrevocable
direction to a securities broker approved by the Committee to sell shares and
deliver all or a portion of the proceeds to the Company in payment for the
Stock; (iii) by delivery of the optionee's promissory note with such recourse,
interest, security and redemption provisions as the Committee in its discretion
determines appropriate; or (iv) in any combination of the foregoing. If payment
of the purchase price of a nonqualified stock option is made in whole or in part
with shares of restricted stock, the number of shares of Stock to be received
upon such exercise equal to the number of shares of restricted stock used for
payment of the purchase price shall be subject to the same restrictions on
transfer, forfeiture provisions, repurchase provisions, vesting provisions, and
performance criteria to which such restricted stock was subject, unless
otherwise determined by the Committee. Any Stock used to exercise options shall
be valued at its fair market value on the date of the exercise of the option;
provided that the fair market value of restricted stock shall be determined
without regard to the restrictions thereon. In addition, the Committee, in its
sole discretion, may authorize the surrender by an optionee of all or part of an
unexercised option and authorize a payment in consideration thereof of an amount
equal to the difference between the aggregate fair market value of the Stock
subject to such option and the aggregate option price of such Stock. In
<PAGE> 6
the Committee's discretion, such payment may be made in cash, shares of Stock
with a fair market value on the date of surrender equal to the payment amount,
or some combination thereof.
In the event that the exercise price is satisfied by the Committee
retaining from the shares of Stock otherwise to be issued to optionee shares of
Stock having a value equal to the exercise price, the Committee may issue
optionee an additional option, with terms identical to such option agreement,
entitling optionee to purchase additional Stock in an amount equal to the number
of shares so retained.
Withholding Taxes.
No Stock shall be granted or sold under the Plan, and no
compensation shall be paid with respect to a DER or a performance stock unit, to
any individual until the individual has made arrangements acceptable to the
Committee for the satisfaction of federal, state, and local income and
employment tax withholding obligations, including without limitation obligations
incident to the receipt of Stock under the Plan, the lapsing of restrictions
applicable to such Stock, the failure to satisfy the conditions for treatment as
incentive stock options under applicable tax law, or the receipt of cash
payments. Upon the exercise of a stock option or a performance stock unit or the
lapsing of a restriction on Stock issued under the Plan, the Company or the
optionee's or holder's employer may satisfy its withholding obligations by
withholding from the optionee or requiring the holder to surrender shares of the
Company's stock sufficient to satisfy federal, state and local income and
employment tax withholding obligations.
In the event that such withholding is satisfied by the Company or
the optionee's or holder's employer retaining from the shares of Stock otherwise
to be issued to optionee shares of Stock having a value equal to such withheld
income or employment tax, the Committee may issue optionee an additional option,
with terms identical to the option agreement under which the option was
received, entitling optionee to purchase additional Stock in an amount equal to
the number of shares so retained.
Restrictions on Transfer of Shares. The Stock acquired pursuant to the
Plan shall be subject to such restrictions and agreements regarding sale,
assignment, encumbrances or other transfer as are in effect among the
shareholders of the Company at the time such Stock is acquired, as well as to
such other restrictions as the Committee shall deem appropriate.
Change in Control.
For purposes of this Section 16, a "Change in Control" shall be
deemed to occur if:
any acquisition by shareholders acting as a group (other
than an acquisition from the Company or by the Company, the management of
the Company or a Company-sponsored employee benefit plan) of 20% or more
of the outstanding Stock;
a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members
cease, by reason of one or more contested elections for Board membership
or by one or more actions by written consent of shareholders, to be
comprised of individuals who either (a) have been Board members
continuously since the beginning of such period or (b) have been elected
or nominated for election as Board members during such period by at least
a majority of the Board members described in clause (a) who were still in
office at the time such election or nomination was approved by the Board;
approval by the Company's shareholders of a merger or
consolidation in which the Company is not the surviving entity, except for
a transaction the principal purpose of which is to change the state in
which the Company is incorporated;
<PAGE> 7
approval by the Company's shareholders of (x) the sale,
transfer or other disposition of all or substantially all of the assets of
the Company (including the capital stock of the Company's subsidiary
corporations) or (y) the complete liquidation or dissolution of the
Company; or
approval by the Company's shareholders of any reverse merger
in which the Company survives as an entity but in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities are transferred to a person
or persons different from those who held such securities immediately prior
to such merger.
In the event of any Change in Control, any option, DER,
performance stock unit or restricted stock agreement shall be fully vested,
nonforfeitable and become exercisable, or with respect to restricted stock, be
released from restrictions on transfer and repurchase or forfeiture rights,
immediately prior to the specified effective date of the Change in Control.
Stockholder Approval. The Plan became effective when adopted by the Board
on December 13, 1993, and was approved by the Company's stockholders on May 25,
1994. On March 20, 1996, the Board adopted and approved an amendment to the Plan
to permit the grant of DERs and performance stock units, to increase the maximum
number of shares of Stock with respect to which options, performance stock
units, or restricted Stock may be granted to any employee in any calendar year,
to permit the payment of the purchase price of nonqualified options with
restricted stock, and to determine the maximum aggregate number of shares of
Stock issuable by a formula intended to increase annually the maximum aggregate
number of shares issuable over the term of the Plan (collectively, the
"Amendments"), subject to stockholder approval of the Amendments within twelve
(12) months of the date of approval by the Board. Options may be granted and
Stock and may be issued in reliance on the formula increase, the per year per
employee maximum share increase, or the increase and in the number of shares of
Stock issuable as incentive stock options prior to approval of such increase by
the Company's stockholders, but no option granted or Stock issued in reliance on
such increases shall become exercisable, or, with respect to restricted stock,
be released from restrictions on transfer and repurchase or forfeiture rights,
in whole or in part, unless and until the Amendments shall have been approved by
the Company's stockholders. DERs and performance stock units may be granted on
reliance of the amendment to the Plan, but no payments shall be made or Stock
issued with respect to a DER or a performance stock unit unless and until the
Amendments shall have been approved by the Company's stockholders. The purchase
price of a nonqualified stock option may not be satisfied with restricted stock
unless and until the Amendments shall have been approved by the Company's
stockholders. If such stockholder approval is not obtained within twelve (12)
months after the date of the Board's approval of the Amendments, then all
options, DERs, and performance stock units, previously granted or Stock
previously issued in reliance on the Amendments shall terminate, or, with
respect to restricted stock, be forfeited to the Company.
Rule 16b-3 Compliance. With respect to persons subject to Section 16 of
the Securities Exchange Act of 1934, transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3. To the extent any provision
of the Plan or action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee. Moreover, in the event the Plan does not include a provision required
by Rule 16b-3 to be stated therein, such provision (other than one relating to
eligibility requirements or the price and amount of awards) shall be deemed
automatically to be incorporated by reference into the Plan insofar as persons
subject to Section 16 are concerned.
<PAGE> 1
EXHIBIT 10.1
Loan No. 8210ZS
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT ("Amendment") is dated as of July 24,
1996, by and among SPIEKER PROPERTIES, L.P., a California limited partnership
("Borrower"), WELLS FARGO BANK, NATIONAL ASSOCIATION ("Agent"), and each of the
Lenders a party to this Amendment.
RECITALS
A. Borrower, Agent and Lenders are parties to a Credit Agreement dated
November 6, 1995 ("Credit Agreement"). Unless otherwise defined in this
Agreement, all capitalized terms used herein shall have the meanings
given to them in the Credit Agreement; all Article references herein
refer to provisions of the Credit Agreement.
B. The parties desire to modify and amend certain terms and provisions of
the Credit Agreement.
NOW, THEREFORE, Borrower, Agent and Lenders hereby agree as follows:
1. "Applicable LIBOR Rate Margin." The definition of "Applicable LIBOR Rate
Margin" in Article 1.1 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
"Applicable LIBOR Rate Margin" means, as of any date of determination:
(i) 1.00%, if Borrower's senior long-term unsecured debt obligations are
rated at least A-/A3 by both Rating Agencies, (ii) 1.125%, if Borrower's
senior long-term unsecured debt obligations are rated at least BBB+/
Baa1 by both Rating Agencies but the condition set forth in clause (i)
of this definition, is not satisfied, (iii) 1.25%, if Borrower's senior
long-term unsecured debt obligations are rated at least BBB/Baa2 by both
Rating Agencies but neither the condition set forth in clause (i) of
this definition nor the condition set forth in clause (ii) of this
definition is satisfied, (iv) 1.50%, if Borrower's senior long-term
unsecured debt obligations are rated at least BBB-/Baa3 by both Rating
Agencies but neither the condition set forth in clause (i) of this
definition, nor the condition set forth in clause (ii) of this
definition, nor the condition set forth in clause (iii) of this
definition is satisfied, or (v) 1.75%, in any other case (including,
without limitation, if Borrower's senior long-term unsecured debt
obligations are not rated by either or both of the Rating Agencies). If
one Rating Agency assigns a lower rating to Borrower's senior long-term
unsecured debt obligations than does the other Rating Agency, the lower
of the two ratings shall control for purposes of determining the
Applicable LIBOR Rate Margin. This Applicable LIBOR Rate Margin shall
remain in effect until such time as Borrower elects to extend the
Termination Date pursuant to Article 2.1.4 of the Credit Agreement. If
Borrower elects, and Agent and/or Lenders agree to extend the
Termination Date, Borrower, Agent and/or Lenders shall have the right to
renegotiate the Applicable LIBOR Rate Margin.
2. Quarterly Operating Reports. Article 6.1.1 of the Credit Agreement
entitled Quarterly Operating Reports, is hereby deleted in its entirety
and replaced with the following:
Quarterly Operating Reports: As soon as practicable, and in any event
within twenty-five (25) days after the end of each Fiscal Quarter,
operating statements in the form of Exhibit C or other form approved by
Agent for each Unencumbered Pool Property dated as of the last day of
such Fiscal Quarter (the "Quarterly Operating Reports"), in form and
substance satisfactory to Agent, certified by the REIT's chief financial
officer. As soon as practicable, and in any event within ninety (90)
days after the end of each Fiscal Year, rent rolls (on Borrower's
detailed form of rent roll) for each Unencumbered Pool Property dated as
of the last day of such Fiscal Year in form and substance satisfactory
to Agent and certified by the REIT's chief financial officer. In
addition, if requested by Agent, rent rolls (on Borrower's detailed form
of rent roll) for any or all the Unencumbered Pool Property dated within
the last 60 days of such request, in form and substance satisfactory to
Agent and certified by the REIT's chief financial officer.
<PAGE> 2
Loan No. 8210ZS
3. Conditions to Effectiveness. This Amendment shall become effective on
August 1, 1996, the date that each of the following conditions precedent has
been satisfied:
a. This Amendment, including the reconfirmations of Guaranty attached
hereto, shall have been fully executed and unconditionally delivered by
all parties hereto;
b. Borrower shall be in compliance with all terms and conditions of this
Amendment, including the representations and warranties referred to in
paragraph 4.a below.
4. Miscellaneous.
a. Borrower hereby restates and reconfirms all representations, warranties
and covenants set forth in the Loan Documents as of the date of this
Amendment, and further represents and warrants to Lenders that there
exists no Event of Default or Unmatured Event of Default.
b. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute a single agreement, and shall not
become effective until all parties hereto, including the Guarantors,
have executed and delivered this Amendment. Borrower represents and
warrants that this Amendment shall be executed and delivered by duly
authorized officers of Borrower and each Guarantor.
c. Except as expressly provided herein, nothing in this Amendment shall
alter or affect any provision, condition or covenant contained in the
Credit Agreement or other Loan Documents, or limit or impair any
rights, powers or remedies of Agent or Lenders thereunder, it being the
intent of the parties hereto that the provisions of the Loan Documents
shall continue in full force and effect as expressly modified hereby.
d. This Amendment contains the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior written
or oral communications between the parties with respect thereto.
Borrower shall pay all costs and expenses of Agent incurred in
connection with the preparation, execution and delivery of this
Amendment.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date set forth above.
Borrower SPIEKER PROPERTIES, L.P.,
a California limited partnership
By: SPIEKER PROPERTIES, INC.
a Maryland corporation
Its: General Partner
By: /s/
___________________________
Its: ___________________________
Agent WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: ________________________________
Its: ________________________________
Lenders WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: ________________________________
Its: ________________________________
THE FIRST NATIONAL BANK OF BOSTON
By: ________________________________
Its: ________________________________
FIRST BANK NATIONAL ASSOCIATION
By: ________________________________
Its: ________________________________
SEATTLE-FIRST NATIONAL BANK
By: ________________________________
Its: ________________________________
UNION BANK
By: ________________________________
Its: ________________________________
By: ________________________________
Its: ________________________________
<PAGE> 4
Loan No. 821OZS
REAFFIRMATION OF GUARANTY
The undersigned hereby acknowledges and approves the foregoing Amendment
No. 1 to Credit Agreement and restates and reconfirms each and every
representation, warranty and convenant as set forth in the Repayment Guaranty
dated November 6, 1995 executed in favor of Lenders.
Dated as of: July 24, 1996 "GUARANTOR"
SPIEKER PROPERTIES, INC.
a Maryland corporation
By: /s/ Craig G. Vought
------------------------
Craig G. Vought
Its: Executive Vice President
and C.F.O.
<PAGE> 5
Loan No. 821OZS
REAFFIRMATION OF GUARANTY
The undersigned hereby acknowledges and approves the foregoing Amendment
No. 1 to Credit Agreement and restates and reconfirms each and every
representation, warranty and covenant as set forth in the Repayment Guaranty
dated November 6, 1995 executed in favor of Lenders.
Dated as of: July 24, 1996 "GUARANTOR"
SPIEKER PROPERTIES, #177
a California limited partnership
By: SPIEKER PROPERTIES, L.P.
a California limited partnership
Its: General Partner
By: SPIEKER PROPERTIES, INC.
a Maryland corporation
Its: General Partner
By: /s/ Craig G. Vought
------------------------
Craig G. Vought
Its: Executive Vice President
and C.F.O.
<PAGE> 6
Loan No. 821OZS
REAFFIRMATION OF GUARANTY
The undersigned hereby acknowledges and approves the foregoing Amendment
No. 1 to Credit Agreement and restates and reconfirms each and every
representation, warranty and covenant as set forth in the Repayment Guaranty
dated November 6, 1995 executed in favor of Lenders.
Dated as of: July 24, 1996 "GUARANTOR"
SPIEKER PROPERTIES, #185
a California limited partnership
By: SPIEKER PROPERTIES, L.P.,
a California limited partnership
Its: General Partner
By: SPIEKER PROPERTIES, INC.
a Maryland corporation
Its: General Partner
By: /s/ Craig G. Vought
------------------------
Craig G. Vought
Its: Executive Vice President
and C.F.O.
<PAGE> 7
Loan No. 821OZS
REAFFIRMATION OF GUARANTY
The undersigned hereby acknowledges and approves the foregoing Amendment
No. 1 to Credit Agreement and restates and reconfirms each and every
representation, warranty and covenant as set forth in the Repayment Guaranty
dated November 6, 1995 executed in favor of Lenders.
Dated as of: July 24, 1996 "GUARANTOR"
SAND HILL NORTHWEST PROPERTIES, LLC,
a California limited liability company
By: SPIEKER PROPERTIES, L.P.,
a California limited partnership
Its: Manager
By: SPIEKER PROPERTIES, INC.
a Maryland corporation
Its: General Partner
By: /s/ Craig G. Vought
------------------------
Craig G. Vought
Its: Executive Vice President
and C.F.O.
<PAGE> 1
EXHIBIT 12.1
SPIEKER PROPERTIES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED DIVIDENDS
(IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Earnings:
Income from operations before minority interest and
extraordinary items.................................. $ 17,131 $ 6,991 $ 31,960 $ 11,431
Interest expense(1)..................................... 7,845 12,052 16,682 25,021
Amortization of capitalized interest.................... 60 58 115 104
-------- -------- -------- --------
Total earnings.......................................... $25,036 $ 19,101 $ 48,757 $ 36,556
======= ======= ======= =======
Fixed charges:
Interest expense(1)..................................... $ 7,845 $ 12,052 $ 16,682 $ 25,021
Capitalized interest.................................... 620 325 1,201 651
Series A Preferred Dividends............................ 524 512 1,049 1,024
Series B Preferred Dividends(2)......................... 2,510 - 5,020 -
-------- -------- -------- --------
Total fixed charges and preferred dividends............. $ 11,499 $ 12,889 $ 23,952 $ 26,696
======== ======== ======== ========
Ratio of earnings to fixed charges
(excluding preferred dividends)......................... 2.96 1.54 2.73 1.42
======== ======== ======== ========
Ratio of earnings to combined fixed charges
and preferred dividends(2).............................. 2.18 1.48 2.04 1.37
======== ======== ======== =======
Fixed charges in excess of earnings....................... $ -- $ -- $ -- $ --
======= ======= ======= =======
</TABLE>
Notes:
(1) Includes amortization of debt discount and deferred financing fees.
2
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000911361
<NAME> SPIEKER PROPERTIES, INC.
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 11,940
<SECURITIES> 0
<RECEIVABLES> 2,840
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,227,740
<DEPRECIATION> 129,807
<TOTAL-ASSETS> 1,154,329
<CURRENT-LIABILITIES> 0
<BONDS> 486,434
0
126,013
<COMMON> 3
<OTHER-SE> 437,341
<TOTAL-LIABILITY-AND-EQUITY> 1,154,329
<SALES> 0
<TOTAL-REVENUES> 92,864
<CGS> 0
<TOTAL-COSTS> 22,078
<OTHER-EXPENSES> 22,144
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,682
<INCOME-PRETAX> 31,960
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 150
<CHANGES> 0
<NET-INCOME> 21,748
<EPS-PRIMARY> .65
<EPS-DILUTED> .00
</TABLE>
